As filed with the Securities and Exchange Commission on August [ ], 1996
Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
----------
CPS AUTO GRANTOR TRUSTS
(Issuer of the Certificates)
----------
CONSUMER PORTFOLIO SERVICES, INC.
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
California 33-0459135
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
2 Ada, Suite 100
Irvine, California 92718
(714) 753-6800
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Charles E. Bradley, Jr.
Consumer Portfolio Services, Inc.
2 Ada, Suite 100
Irvine, California 92718
(714) 753-6800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Laura A. DeFelice, Esq.
MAYER, BROWN & PLATT
1675 Broadway
New York, New York 10019
(212) 506-2500
Approximate date of commencement of proposed sale to the public:
From time to time on or after the effective date of this registration
statement, as determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Title of securities to Amount to be Proposed maximum Proposed maximum Amount of
be registered registered offering price per certificate* aggregate offering price* registration fee
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<S> <C> <C> <C> <C>
Asset Backed Certificates,
Class A $1,000,000 100% $1,000,000 $344.83
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Asset Backed Certificates,
Class B $0 100% $0 $0
============================================================================================================================
</TABLE>
* Estimated solely for the purpose of calculating the registration fee.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating to
the offering of Series of Asset Backed Certificates by various CPS Auto Grantor
trusts created from time to time by Consumer Portfolio Services, Inc. and (ii) a
form of Prospectus Supplement relating to the offering by CPS Auto Grantor Trust
199[ ]-[ ] of the particular Series of Asset Backed Certificates described
therein. The form of Prospectus Supplement relates only to the securities
described therein and is a form that may be used, among others, by Consumer
Portfolio Services, Inc. to offer Asset Backed Certificates under this
Registration Statement.
<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. [ ]
FORM OF PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED [ ], 199[ ]
$[ ]
CPS Auto Grantor Trust 199[ ]-[ ]
$[ ] [ ]% Asset-Backed Certificates, Class A
$[ ] [ ]% Asset-Backed Certificates, Class B
CPS Receivables Corp.
(Seller)
Consumer Portfolio Services, Inc.
(Servicer)
The Asset-Backed Certificates will consist of two classes of certificates,
Class A (the "Class A Certificates") and Class B (the "Class B Certificates"
and, collectively, the "Certificates"), evidencing beneficial ownership
interests in a trust (the "Trust") to be formed pursuant to a Pooling and
Servicing Agreement among CPS Receivables Corp., as Seller (the "Seller"),
Consumer Portfolio Services, Inc., as Servicer (individually, "CPS", and in its
capacity as the Servicer, the "Servicer"), and [ ], as Trustee and Standby
Servicer (the "Trustee" and "Standby Servicer", respectively). The Class A
Certificates will evidence, in the aggregate, beneficial ownership of an
undivided [ ] percent ([ ]%) interest in the Trust Assets, other than interest
received by the Trust in excess of the Class A Pass-Through Rate of [ ]% per
annum, and the Class B Certificates will evidence, in the aggregate, beneficial
ownership of an undivided [ ] percent ([ ]%) interest in the Trust Assets, other
than interest received by the Trust in excess of the Class B Pass-Through Rate
of [ ]% per annum. The rights of the Class B Certificateholders to receive
distributions with respect to the Receivables are subordinated to the rights of
the holders of the Class A Certificates [and the Credit Enhancer] to the extent
described herein.
The Underwriters have agreed to purchase from the Seller the Class A
Certificates and the Class B Certificates at [ ]% and [ ]%, respectively, of
the principal amount thereof, subject to the terms and conditions set forth
in the Underwriting Agreement referred to herein under "Underwriting".
The aggregate proceeds to the Seller, before deducting expenses payable by the
Seller estimated at $[ ], will be $[ ] for the Class A Certificates
plus accrued interest at the Class A Pass-Through Rate from [ ], 199[ ]
and $[ ] for the Class B Certificates plus accrued interest at the Class B
Pass-Through Rate from [ ], 199[ ].
The Underwriters propose to offer the Securities
from time to time in negotiated transactions or otherwise, at
prices determined at the time of sale. For further
information with respect to the plan of distribution and any
discounts, commissions or profits that may be deemed
underwriting discounts or commissions, see "Underwriting" herein.
The Trust Assets will include a pool of retail installment sale
contracts and all rights thereunder (collectively, the "Receivables"),
certain monies due or received thereunder after [ ], 199[ ], security
interests in the new and used automobiles, light trucks,
vans and minivans securing the Receivables, certain bank accounts and
the proceeds thereof, [Credit Enhancement] with respect to the Class A
Certificates, and the right of CPS to receive certain insurance proceeds
and certain other property, as more fully described herein. The
Receivables will be purchased by the Seller from CPS on or prior to the
date of the issuance of the Certificates.
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE TRANSACTION, SEE "RISK
FACTORS" AT PAGE S-15 HEREIN AND PAGE [ ] IN THE ACCOMPANYING PROSPECTUS.
[Credit Enhancement (the "Credit Enhancement") with respect to the Class A
Certificates will be provided by [Credit Enhancer] on each Distribution Date.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT INTEREST
IN OR OBLIGATIONS OF THE SELLER, THE SERVICER OR ANY AFFILIATE THEREOF.
THE CERTIFICATES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Certificates are offered hereby by the Underwriters when, as and if
issued by the Seller, delivered to and accepted by the Underwriters
and subject to its right to reject orders in whole or in part. It is
expected that delivery of the
Certificates will be made on or about [ ], 199[ ] only
through The Depository Trust Company.
[Underwriters]
The date of this Prospectus Supplement is [ ], 199[ ].
<PAGE>
(cover continued from previous page)
AVAILABLE INFORMATION
CPS has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
Certificates offered pursuant to this Prospectus Supplement. For further
information, reference is made to the Registration Statement which may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the
Commission's regional office at 500 West Madison, 14th Floor, Chicago, Illinois
60661 and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies
of the Registration Statement may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Servicer, on behalf of the Trust, will also file or cause
to be filed with the commission such periodic reports as may be required under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by CPS with the Registration Statement,
either on its own behalf or on behalf of the Trust, relating to the
Certificates, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act, after the date of this Prospectus Supplement and prior to
the termination of the offering of the Certificates offered hereby, shall be
deemed to be incorporated by reference in this Prospectus Supplement and to be a
part of this Prospectus Supplement from the date of the filing of such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus Supplement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein, modifies or
replaces such statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
CPS will provide without charge to each person to whom this Prospectus
Supplement is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above that have been or may be
incorporated by reference in this Prospectus Supplement (not including exhibits
to the information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
Supplement incorporates). Written requests for such copies should be directed
to: Consumer Portfolio Services, Inc., 2 Ada, Suite 100, Irvine, California
92718, Attention: [ ]. Telephone requests for such copies should be directed to
Consumer Portfolio Services, Inc. at (714) 753-6800.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued periodic reports
containing information concerning the Receivables will be prepared by the
Servicer and sent on behalf of the Trust only to Cede & Co. ("Cede"), as nominee
of The Depository Trust Company ("DTC") and registered holder of the
Certificates. Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Servicer will file
with the Commission such periodic reports as are required under the Exchange
Act, and the rules and regulations thereunder and as are otherwise agreed to by
the Commission. Copies of such periodic reports may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
S-3
<PAGE>
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SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Certain capitalized terms used in the Summary are
defined elsewhere in this Prospectus Supplement. An Index of Terms appears at
the end of this Prospectus Supplement.
Trust............................. CPS Auto Grantor Trust 199[ ]-[ ] (the
"Trust") to be formed pursuant to the Pooling
and Servicing Agreement, dated as of [ ],
199[ ] among the Seller, the Servicer and the
Trustee and Standby Servicer (the
"Agreement").
Seller............................ CPS Receivables Corp. (the "Seller"). See
"The Seller and CPS" in this Prospectus
Supplement.
Servicer.......................... Consumer Portfolio Services, Inc. ("CPS" or,
in its capacity as the servicer, the
"Servicer"). See "CPS's Automobile Contract
Portfolio" and "The Seller and CPS" in this
Prospectus Supplement.
Trustee........................... [name and address].
[Credit Enhancer]................. [Credit Enhancer Information].
Closing Date...................... On or about [ ], 199[ ].
Description of the
Securities Offered................ The Certificates consist of two classes,
entitled [ ]% Asset-Backed Certificates,
Class A (the "Class A Certificates") and [ ]%
Asset- Backed Certificates, Class B (the
"Class B Certificates" and, together with the
Class A Certificates, the "Certificates").
Each Certificate will evidence beneficial
ownership of an undivided interest in the
Trust. The Class A Certificates will
evidence, in the aggregate, beneficial
ownership of an undivided interest in the
Trust Assets equal to the Class A Percentage
of the Trust Assets, but not including any
interest received by the Trust in excess of
the Class A Pass-Through Rate. The Class B
Certificates will evidence, in the aggregate,
beneficial ownership of an undivided interest
in the Trust Assets equal to the Class B
Percentage of the Trust Assets, but not
including any interest received by the Trust
in excess of the Class B Pass-Through Rate.
The "Class A Percentage" as of any date of
determination will be [ ]%. The "Class B
Percentage" as of any date of determination
will be [ ]%.
The Certificates will be offered for purchase
in denominations of $1,000 and in integral
multiples thereof.
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S-4
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Trust Assets...................... The property of the Trust (the "Trust
Assets") will include (i) a pool of retail
installment sale contracts (collectively, the
"Receivables") secured by the new and used
automobiles, light trucks, vans and minivans
financed thereby (the "Financed Vehicles"),
(ii) with respect to Rule of 78's
Receivables, all payments due thereon after
[ ], 199[ ] (the "Cutoff Date"), and, with
respect to Simple Interest Receivables, all
payments received thereunder after the Cutoff
Date, (iii) security interests in the
Financed Vehicles, (iv) certain bank accounts
and the proceeds thereof, (v) the right of
the Seller to receive proceeds from claims
under, or refunds of unearned premiums from,
certain insurance policies and extended
service contracts, (vi) all right, title and
interest of the Seller in and to the Purchase
Agreement (the "Purchase Agreement") between
the Seller and CPS, (vii) [Credit
Enhancement] issued by the [Credit Enhancer]
with respect to the Class A Certificates, and
(viii) certain other property, as more fully
described herein. See "Formation of the
Trust" in this Prospectus Supplement and "The
Trust Assets" in the Prospectus. The
Receivables will be purchased by the Seller
from CPS pursuant to the Purchase Agreement
on or prior to the Closing Date. The
Receivables arise from loans originated by
automobile dealers for assignment to CPS
pursuant to CPS's auto loan programs.
The Receivables................... As of the Cutoff Date, the aggregate
outstanding principal balance of the
Receivables was $[ ] (the "Original Pool
Balance"). The Receivables consist of retail
installment sale contracts secured by new and
used automobiles, light trucks, vans and
minivans including, with respect to Rule of
78's Receivables, the rights to all payments
due with respect to such Receivables after
the Cutoff Date, and, with respect to Simple
Interest Receivables, the rights to all
payments received with respect to such
Receivables after the Cutoff Date. As of the
Cutoff Date, approximately [ ]% of the
aggregate principal balance of the
Receivables represented financing of used
vehicles. The Receivables arise from loans
originated by automobile dealers for
assignment to CPS pursuant to CPS's auto loan
programs. The auto loan programs target
automobile purchasers with marginal credit
ratings who are generally unable to obtain
credit from banks or other low-risk lenders.
See "CPS's Automobile Contract Portfolio
-General" in this Prospectus Supplement and
"Risk Factors-Nature of Obligors" in the
Prospectus. The Receivables have been
selected from the contracts owned by CPS
based on the criteria specified in the
Agreement and described herein.
Each Receivable is a Rule of 78's Receivable
or a Simple Interest Receivable. As of the
Cutoff Date, the weighted average annual
percentage rate (the "APR") of the
Receivables was approximately [ ]%, the
weighted average remaining term to maturity
of the Receivables was approximately [ ]
months and the weighted
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S-5
<PAGE>
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average original term to maturity of the
Receivables was approximately [ ] months. As
of the Cutoff Date, no Receivable had a
scheduled maturity later than [ ].
Class A Certificate Balance....... The "Class A Certificate Balance" will equal,
initially, the Class A Percentage of the
Original Pool Balance as of the close of
business on the Cutoff Date, and thereafter
will equal the initial Class A Certificate
Balance reduced by all principal
distributions on the Class A Certificates.
Class A Pass-Through Rate......... Interest will accrue on the Class A
Certificate Balance at a rate of [ ]% per
annum, calculated on the basis of a 360-day
year consisting of twelve 30-day months (the
"Class A Pass-Through Rate").
Class B Certificate Balance....... The "Class B Certificate Balance" will equal,
initially, the Class B Percentage of the
Original Pool Balance as of the close of
business on the Cutoff Date, and thereafter
will equal the initial Class B Certificate
Balance reduced by all principal
distributions on the Class B Certificates.
Class B Pass-Through Rate......... Interest will accrue on the principal balance
of the Class B Certificates outstanding from
time to time at a rate of [ ]% per annum,
calculated on the basis of a 360-day year
consisting of twelve 30-day months (the
"Class B Pass-Through Rate").
Interest.......................... On the 15th of each month (or the next
following Business Day) beginning [ ], 199[ ]
(each, a "Distribution Date"), the Trustee
will, to the extent there are funds available
from the sources described herein,
pass-through and (i) distribute pro rata to
the holders of record of the Class A
Certificates (the "Class A
Certificateholders") as of the related Record
Date 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 and (ii) distribute pro
rata to the holders of record of the Class B
Certificates (the "Class B
Certificateholders") as of the related Record
Date 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; provided, however, that on
the first Distribution Date, the
Certificateholders will be entitled to
interest at the Class A Pass-Through Rate or
the Class B Pass-Through Rate, as applicable,
on the initial Class A Certificate Balance or
the initial Class B Certificate Balance, as
applicable, from and including the Closing
Date through and including [ ]. The final
scheduled Distribution Date on the
Certificates will be the [ ] Distribution
Date (the "Final Scheduled Distribution
Date").
Principal......................... On each Distribution Date, the Trustee will,
to the extent that there are funds available
from the sources described herein, distribute
to
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S-6
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(a) the Class A Certificateholders as of the
related Record Date an amount equal to the
Class A Percentage of the Principal
Distributable Amount and (b) the Class B
Certificateholders as of the related Record
Date an amount equal to the Class B
Percentage of the Principal Distributable
Amount. The "Principal Distributable Amount"
for a Distribution Date shall equal the sum
of (a) the principal portion of all Scheduled
Payments received during the preceding
Collection Period on Rule of 78's Receivables
and all payments of principal received on
Simple Interest Receivables during the
preceding Collection Period; (b) the
principal portion of all prepayments in full
(including prepayments in full resulting from
collections with respect to a Receivable
received during the preceding Collection
Period plus any amounts applied from the
Payahead Account with respect to such
Receivable) (without duplication of amounts
included in (a) above and (d) below); (c) the
portion of the Purchase Amount allocable to
principal of each Receivable that was
repurchased by CPS or purchased by the
Servicer as of the last day of the related
Collection Period (without duplication of the
amounts referred to in (a) and (b) above);
(d) the Principal Balance of each Receivable
that first became a Liquidated Receivable
during the preceding Collection Period
(without duplication of the amounts included
in (a) and (b) above); and (e) the aggregate
amount of Cram Down Losses that shall have
occurred during the preceding Collection
Period (without duplication of amounts
included in (a) through (d) above). In
addition, on the Final Scheduled Distribution
Date, to the extent amounts are available
therefor, the principal required to be
distributed to the Class A Certificateholders
will equal the then outstanding Class A
Certificate Balance and the principal
required to be distributed to the Class B
Certificateholders will equal the then
outstanding Class B Certificate Balance.
A "Collection Period" with respect to a
Distribution Date will be the calendar month
preceding the month in which such
Distribution Date occurs; provided however,
that with respect to the first Distribution
Date, the "Collection Period" will be the
period from and excluding the Cutoff Date to
and including [ ], 199[ ].
Priority of Payments.............. On each Distribution Date, the Trustee shall
make the following distributions in the
following order of priority:
[(i) to the Servicer, the Servicing Fee and
all unpaid Servicing Fees; provided, however,
that as long as CPS is the Servicer and [ ],
is the Standby Servicer, the Trustee will
first pay to the Standby Servicer out of the
Servicing Fee otherwise payable to CPS an
amount equal to the Standby Fee;
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S-7
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(ii) in the event the Standby Servicer
becomes the successor Servicer, to the
Standby Servicer, reasonable transition
expenses (up to a maximum of $[ ]) incurred
in acting as successor Servicer;
(iii) to the Trustee, the Trustee Fee (as
defined herein) and other reasonable
expenses;
(iv) to the Collateral Agent, all fees and
expenses payable to the Collateral Agent with
respect to such Distribution Date;
(v) to the Class A Certificateholders, the
Class A Interest Distributable Amount (as
defined herein) and any Class A Interest
Carryover Shortfall (as defined herein);
(vi) to the Class B Certificateholders, the
Class B Interest Distributable Amount
(defined herein) and any Class B Interest
Carryover Shortfall (defined herein);
(vii) to the Class A Certificateholders, the
Class A Principal Distributable Amount
(defined herein) and any Class A Principal
Carryover Shortfall (defined herein);
(viii) to the [Credit Enhancer], any amounts
due to the [Credit Enhancer] under the terms
of the Agreement and under the [Enhancement
Agreement] (defined herein);
(ix) to any successor Servicer, reasonable
transition expenses (up to a maximum of $[ ])
incurred in acting as successor Servicer;
(x) to the Class B Certificateholders, the
Class B Principal Distributable Amount
(defined herein) and any Class B Principal
Carryover Shortfall (defined herein); and
(xi) to the Collateral Agent, for deposit
into the Spread Account, the remaining Total
Distribution Amount, if any. See "The
Certificates -- Distributions on Certificates
- Priority of Distribution Amounts" in this
Prospectus Supplement.]
[Spread Account................... The Seller has agreed to cause the Spread
Account to be established with the Collateral
Agent for the benefit of the [Credit
Enhancer] and the Trustee on behalf of the
Class A Certificateholders. Any portion of
the Total Distribution Amount remaining on
any Distribution Date after payment of all
fees and expenses due on such date to the
Servicer, the Standby Servicer, the Trustee,
the Collateral Agent, the [Credit Enhancer],
any successor Servicer and all principal and
interest payments due to the
Certificateholders on such Distribution Date,
will be deposited in the Spread Account and
held by the Collateral Agent for the benefit
of the Trustee, on behalf of the Class A
Certificateholders, and the [Credit
Enhancer]. The Collateral Agent [will] [will
not] hold for the benefit of the Class B
Certificateholders the amounts
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S-8
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on deposit in the Spread Account on any
Distribution Date, which (after all payments
required to be made on such date have been
made) are in excess of the requisite amount
determined from time to time in accordance
with certain portfolio performance tests
agreed upon by the [Credit Enhancer] and the
Seller as a condition to the issuance of the
[Credit Enhancement] (such requisite amount,
the "Requisite Amount"). If on any
Distribution Date, the Total Distribution
Amount is insufficient (taking into account
the application of the Total Distribution
Amount to the payment of the Class B Interest
Distributable Amount and any Class B Interest
Carryover Shortfall) to pay all distributions
required to be made on such day pursuant to
priorities (i), (ii), (iii), (iv), (v),
(vii), (viii) and (ix) referred to above in
"Priority of Payments", amounts on deposit in
the Spread Account will be applied to pay the
amounts due on such Distribution Date
pursuant to such priorities (i), (ii), (iii),
(iv), (v), (vii), (viii) and (ix). See "The
Certificates -- Distributions on Certificates
-- The Spread Account" in this Prospectus
Supplement.]
[Other Spread Account Arrangement]
Subordination..................... Distributions of interest on the Class B
Certificates will be subordinated in priority
of payment to interest due on the Class A
Certificates. Distributions of principal on
the Class B Certificates will be subordinated
in priority of payment to interest and
principal due on the Class A Certificates.
Accordingly, the Class A Certificates will
receive the benefit of amounts otherwise due
on the Class B Certificates as credit
enhancement. Funds representing the interest
of the Class B Certificateholders in the
Trust Assets will be applied first to the
payment of any amounts due to the Class A
Certificateholders on account of the Class A
Interest Distributable Amount and any Class A
Interest Carryover Shortfall before any
portion thereof is paid to the Class B
Certificateholders and funds otherwise due to
pay principal of the Class B Certificates
will be applied first to the payment of the
Class A Principal Distributable Amount and
any Class A Principal Carryover Shortfall
before any portion thereof is paid to the
Class B Certificateholders.
Distribution and
Record Dates...................... A "Distribution Date" will be the 15th day of
each month (or if such 15th day is not a
business day, the next following business
day) commencing [ ], 199[ ]. The record date
applicable to each Distribution Date (each, a
"Record Date") will be the 10th day of the
calendar month in which such Distribution
Date occurs.
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S-9
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Repurchases and
Purchases of
Certain Receivables............... CPS has made certain representations and
warranties relating to the Receivables to the
Seller in the Purchase Agreement, and the
Seller has made such representations and
warranties for the benefit of the Trust and
the [Credit Enhancer] in the Agreement. The
Trustee, as acknowledged assignee of the
repurchase obligations of CPS under the
Purchase Agreement, will be entitled to
require CPS to repurchase any Receivable if
such Receivable is materially adversely
affected by a breach of any representation or
warranty made by CPS with respect to the
Receivable and such breach has not been cured
following discovery by the Seller or CPS or
notice to the Seller and CPS.
The Servicer will be obligated to repurchase
any Receivable if, among other things, it
extends the date for final payment by the
Obligor of such Receivable beyond the last
day of the penultimate Collection Period
preceding the Final Scheduled Distribution
Date or fails to maintain a perfected
security interest in the Financed Vehicle.
See "Description of the Certificates -
Servicing Procedures" in this Prospectus
Supplement and "Description of the Pooling
and Servicing Agreements-- Servicing
Procedures" in the Prospectus.
The [Credit Enhancement].......... [Describe credit enhancement]
Servicing......................... The Servicer will be responsible for
servicing, managing and making collections on
the Receivables. On or prior to the next
billing period after the Cutoff Date, the
Servicer will notify each Obligor to make
payments with respect to the Receivables
after the Cutoff Date directly to a post
office box in the name of the Trustee for the
benefit of the Certificateholders and the
[Credit Enhancer] (the "Post Office Box"). On
each Business Day, Cash Flex, L.P., as the
lock-box processor (the "Lock-Box
Processor"), will transfer any such payments
received in the Post Office Box to a
segregated lock-box account at Bank of
America (the "Lock-Box Bank"), in the name of
the Trustee for the benefit of the
Certificateholders and the [Credit Enhancer]
(the "Lock-Box Account"). Within two Business
Days of receipt of funds into the Lock-Box
Account, the Servicer is required to direct
the Lock-Box Bank to effect a transfer of
funds from the Lock-Box Account to one or
more accounts established with the Trustee.
See "The Certificates -- Accounts", and "--
Payments on Receivables" in this Prospectus
Supplement.
Standby Servicer.................. [ ].
[If an Event of Default occurs and remains
unremedied, (1) provided no [Enhancement
Default] has occurred and is continuing, then
the [Credit Enhancer] in its sole and
absolute
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discretion, or (2) if an [Enhancement
Default] shall have occurred and be
continuing, then the Trustee or the holders
of Class A Certificates evidencing not less
than 25% of the Class A Certificate Balance,
may terminate the rights and obligations of
the Servicer under the Agreement.] If such
event occurs when CPS is the Servicer, or, if
CPS resigns as Servicer or is terminated as
Servicer by the [Credit Enhancer], [ ] (in
such capacity, the "Standby Servicer"), has
agreed to serve as successor Servicer under
the Agreement pursuant to a Servicing
Assumption Agreement dated as of [ ], 199[ ]
among CPS, the Standby Servicer and the
Trustee (the "Servicing Assumption
Agreement"). The Standby Servicer will
receive a portion of the Servicing Fee (the
"Standby Fee") for agreeing to stand by as
successor Servicer and for performing other
functions. If the Standby Servicer or any
other entity serving at the time as Standby
Servicer becomes the successor Servicer, it
will receive compensation at a Servicing Fee
Rate not to exceed [ ]% per annum. See
"Standby Servicer" in this Prospectus
Supplement.
Servicing Fee..................... The Servicer will be entitled to receive a
Servicing Fee on each Distribution Date equal
to the product of one-twelfth times [ ]% (the
"Servicing Fee Rate") of the Pool Balance as
of the close of business on the last day of
the second preceding Collection Period;
provided, however, that with respect to the
first Distribution Date the Servicer will be
entitled to receive a Servicing Fee equal to
the product of one-twelfth times [ ]% of the
Pool Balance as of the close of business on
the Cutoff Date. As additional servicing
compensation, the Servicer will also be
entitled to certain late fees, prepayment
charges and other administrative fees or
similar charges. For so long as CPS is
Servicer, a portion of the Servicing Fee,
equal to the Standby Fee, will be payable to
the Standby Servicer.
Optional Purchase................. The Servicer may at its option purchase all
the Receivables as of the last day of any
month on or after which the aggregate
principal balance of the Receivables is equal
to 10% or less of the Original Pool Balance,
at a purchase price equal to the aggregate
principal balance of the Receivables, plus
accrued interest at the respective APRs;
provided that the Servicer's right to
exercise such option will be subject to the
prior approval of the [Credit Enhancer], but
only if, after giving effect thereto, a claim
under the [Credit Enhancement] would occur or
any amount owing to the [Credit Enhancer] or
the holders of the Class A Certificates would
remain unpaid.
Certain Legal Aspects of
the Receivables; Purchase
Obligations....................... In connection with the sale of the
Receivables, security interests in the
Financed Vehicles securing the Receivables
will be assigned by CPS to the Seller
pursuant to the Purchase Agreement and by the
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Seller to the Trustee pursuant to the
Agreement. Due to the administrative burden
and expense, the certificates of title to the
Financed Vehicles will not be amended or
re-issued to reflect the assignment thereof
to the Trustee. In the absence of such an
amendment, the Trustee may not have a
perfected security interest in the Financed
Vehicles securing the Receivables in some
states. The Seller will be obligated to
purchase any Receivable sold to the Trust as
to which there did not exist on the Closing
Date a perfected security interest in the
name of the Seller in the Financed Vehicle,
and the Servicer will be obligated to
purchase any Receivable sold to the Trust as
to which it failed to maintain a perfected
security interest in the name of CPS in the
Financed Vehicle securing such Receivable
(which perfected security interest has been
assigned to, and is for the benefit of, the
Trustee) if, in either case, such breach
materially and adversely affects the interest
of the Trust, the Trustee or the [Credit
Enhancer] in such Receivable and if such
failure or breach is not cured by the last
day of the second (or, if CPS or the
Servicer, as the case may be, elects, the
first) month following the discovery by or
notice to CPS or the Servicer, as the case
may be, of such breach. To the extent the
security interest of CPS is perfected, the
Trustee will have a prior claim over
subsequent purchasers of such Financed
Vehicle and holders of subsequently perfected
security interests. However, as against liens
for repairs of a Financed Vehicle or for
unpaid storage charges or for taxes unpaid by
an Obligor under a Receivable, or through
fraud, forgery or negligence or error, CPS,
and therefore the Trust could lose its prior
perfected security interest in a Financed
Vehicle. Neither CPS nor the Servicer will
have any obligation to purchase a Receivable
as to which a lien for repairs of a Financed
Vehicle or for taxes unpaid by an Obligor
under a Receivable result in losing the
priority of the security interest in such
Financed Vehicle after the Closing Date. See
"Risk Factors -- Certain Legal Aspects" in
this Prospectus Supplement.
Book-Entry
Certificates...................... The Certificates initially will be
represented by certificates registered in the
name of Cede & Co. ("Cede") as the nominee of
The Depository Trust Company ("DTC"), and
will only be available in the form of
book-entries on the records of DTC and
participating members thereof. Certificates
representing the Certificates will be issued
in definitive form only under the limited
circumstances described herein. All
references herein to "holders" or
"Certificateholders" shall reflect the rights
of beneficial owners of the Certificates
("Certificate Owners") as they may indirectly
exercise such rights through DTC and
participating members thereof, except as
otherwise specified herein. See "Risk
Factors" and "The Certificates-- Registration
of Certificates" in this Prospectus
Supplement and "[Description or the
Securities-- Book-Entry Registration]" in the
Prospectus.
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Tax Status........................ In the opinion of special tax counsel to the
Seller, the Trust will be classified for
federal income tax purposes as a grantor
trust and not as an association taxable as a
corporation. Certificateholders must report
their respective allocable shares of income
earned on Trust Assets (other than any
amounts treated as "stripped coupons") and,
subject to certain limitations applicable to
individuals, estates and trusts, may deduct
their respective allocable shares of
reasonable servicing and other expenses. See
"Certain Federal Income Tax Consequences" in
this Prospectus Supplement. Prospective
investors should note that no rulings have
been or will be sought from the Internal
Revenue Service (the "Service") with respect
to any of the federal income tax consequences
discussed herein, and no assurance can be
given that the Service will not take contrary
positions. See "Certain Federal Income Tax
Consequences" in this Prospectus Supplement.
ERISA Considerations.............. As described herein, the Class A Certificates
may be purchased by employee benefit plans
that are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"). Any benefit plan fiduciary
considering the purchase of Class A
Certificates should, among other things,
consult with its counsel in determining
whether all required conditions have been
satisfied.
The Class B Certificates may not be sold or
transferred to any employee benefit plan
under Section 3(3) of ERISA which is subject
to Title I of ERISA or comparable provisions
of state law, or Section 4975 of the Internal
Revenue Code of 1986, as amended ("Code"), or
any fund, account or other entity deemed to
hold assets of any such plan. Such plans,
funds, accounts or other entities will herein
be referred to collectively as "Employee
Plans".
The foregoing restriction on Employee Plans,
however, for purposes of this offering will
not apply to prevent the initial sale of the
Class B Certificates to an insurance company,
insurance service, or insurance organization
that is qualified to do business in a state
(an "Insurer") and that purchases Class B
Certificates with funds held in one or more
of its general accounts, provided that
certain conditions are met. None of the
Servicer, the Seller, the Trustee, the
[Credit Enhancer], nor any of their
respective affiliates makes any
representations or express any opinion as to
whether an Insurer constitutes an Employee
Plan.
Fiduciaries of Employee Plans are required to
discharge their duties, including, without
limitation, their duty to invest "plan
assets", in accordance with the fiduciary
standards of ERISA. In addition, a fiduciary
may not engage or cause the Employee Plan to
engage in a "prohibited transaction" under
Section 406 of ERISA and Section 4975 of the
Code. If an Insurer is determined to be an
Employee Plan under ERISA or to be a
fiduciary with respect to Employee Plan
assets, the purchase of Class B
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Certificates with "plan assets" would be
subject to these fiduciary requirements.
Insurers contemplating purchasing Class B
Certificates should consult their counsel
before making a purchase. See "ERISA
Considerations" in this Prospectus
Supplement.
Rating of the Certificates........ It is a condition of issuance that the Class
A Certificates be rated [investment grade by
at least one nationally recognized rating
agency.] A security rating is not a
recommendation to buy, sell or hold
securities and may be revised or withdrawn at
any time by the assigning Rating Agency.
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RISK FACTORS
Prospective Certificateholders should consider the following factors, as
well as those matters discussed in "Risk Factors" in the Prospectus, in
connection with the purchase of the Certificates:
Subordination of Class B Certificates
Distributions of interest on the Class B Certificates will be subordinated
in priority of payment to interest due on the Class A Certificates.
Distributions of principal on the Class B Certificates will be subordinated in
priority of payment to interest and principal due on the Class A Certificates.
Accordingly, the Class A Certificates will, if necessary, receive the benefit of
amounts otherwise due on the Class B Certificates as credit enhancement. Funds
representing the interest of the Class B Certificateholders in the Trust Assets
will be applied first to the payment of any amounts due to the Class A
Certificateholders on account of the Class A Interest Distributable Amount and
any Class A Interest Carryover Shortfall before any portion thereof is paid to
the Class B Certificateholders and funds otherwise due to pay principal of the
Class B Certificates will be applied first to the payment of the Class A
Principal Distributable Amount and any Class A Principal Carryover Shortfall
before any portion thereof is paid to the Class B Certificateholders. See "The
Certificates -- Distributions on Certificates" in this Prospectus Supplement.
Nature of Obligors; Servicing
CPS purchases loans originated for assignment to CPS through automobile
dealers. CPS services its dealers through a network of independent marketing
representatives. CPS's customers are generally considered to have marginal
credit and fall into one of two categories: customers with moderate income,
limited assets and other income characteristics which cause difficulty in
borrowing from banks, captive finance companies of automakers or other
traditional sources of auto loan financing; and customers with a derogatory
credit record including a history of irregular employment, previous bankruptcy
filings, repossessions of property, charged-off loans and garnishment of wages.
The payment experience on Receivables of Obligors with marginal credit is likely
to be different than that on receivables of traditional auto financing sources
and is likely to be more sensitive to changes in the economic climate in the
areas in which such Obligors reside.
The servicing of receivables of customers with marginal credit requires
special skill and diligence. The Servicer believes that its credit loss and
delinquency experience reflects in part its trained staff and collection
procedures. If an Event of Default occurs and CPS is removed as Servicer, or, if
CPS resigns or is terminated by the [Credit Enhancer] as Servicer, the Standby
Servicer has agreed to assume the obligations of successor Servicer under the
Agreement. See "The Certificates -- Rights Upon Event of Default" in this
Prospectus Supplement. There can be no assurance, however, that collections with
respect to the Receivables will not be adversely affected by any change in
Servicer. See "Standby Servicer" in this Prospectus Supplement.
The Agreement provides that the rights and obligations of the Servicer
terminate after 90 days unless renewed by the [Credit Enhancer] for successive
90-day periods. The [Credit Enhancer] will agree to grant continuous renewals so
long as (i) no Event of Default under the Agreement has occurred and (ii) no
event of default under the insurance and indemnity agreement among CPS, the
Seller and the [Credit Enhancer] (the "[Enhancement Agreement]") has occurred.
Geographic Concentration
As of the Cutoff Date, [ ]% of the Receivables by Principal Balance
had Obligors residing in the State of California. Economic conditions in the
State of California may affect the delinquency,
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loan loss and repossession experience of the Trust with respect to the
Receivables. See "The Receivables Pool" in this Prospectus Supplement.
Ratings of the Certificates
It is a condition to the issuance of the Certificates that [they be rated
investment grade by a nationally recognized rating agency]. A rating is not a
recommendation to purchase, hold or sell the Certificates, inasmuch as such
rating does not comment as to market price or suitability for a particular
investor. The Rating Agencies do not evaluate, and the ratings do not address,
the possibility that Certificateholders may receive a lower than anticipated
yield. There is no assurance that a rating will remain for any given period of
time or that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances in the future so warrant. [The ratings
of the Class A Certificates are based primarily on the rating of the [Credit
Enhancer]. Upon an [Enhancement Default] the rating on the Class A Certificates
may be lowered or withdrawn entirely.] In the event that any rating initially
assigned to the Class A Certificates were subsequently lowered or withdrawn for
any reason, including by reason of a downgrading of the [Credit Enhancer], no
person or entity will be obligated to provide any additional credit enhancement
with respect to the Class A Certificates. Any reduction or withdrawal of a
rating may have an adverse effect on the liquidity and market price of the Class
A Certificates.
Limited Assets
The Trust does not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and amounts on
deposit in certain accounts held by the Trustee on behalf of the
Certificateholders. The Certificates represent interests solely in the Trust and
the Certificates will not be insured or guaranteed by the Seller, the Servicer,
the Trustee or any other person or entity [except as described herein].
Distributions of interest and principal on the Class A Certificates will be
dependent primarily upon collections on the Receivables and amounts paid
pursuant to the [Credit Enhancement]. The Class B Certificateholders will not
receive any distributions of interest or principal with respect to a Monthly
Period until the full amount of interest and principal on the Class A
Certificates relating to such Monthly Period and any related Class A Interest
and Principal Carryover Shortfall has been funded. See "The Certificates --
Distributions on Certificates" in this Prospectus Supplement.
Delinquency and Loan Loss Experience
CPS began purchasing Contracts from Dealers in October 1991. Although CPS
has calculated and presented herein its net loss experience with respect to its
servicing portfolio, there can be no assurance that the information presented
will reflect actual experience with respect to the Receivables. In addition,
there can be no assurance that the future delinquency or loan loss experience of
the Trust with respect to the Receivables will be better or worse than that set
forth herein with respect to CPS's servicing portfolio. See "CPS's Automobile
Contract Portfolio -- Delinquency and Loss Experience" in this Prospectus
Supplement.
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FORMATION OF THE TRUST
The Seller and CPS will establish the Trust by selling and assigning the
Receivables and the other Trust Assets [(other than the Credit Enhancement)] to
the Trustee in exchange for the Certificates. Prior to such sale and assignment,
the Trust will have no assets or obligations or any operating history. The Trust
will not engage in any business. The Trust will hold the Receivables, issue the
Certificates and distribute payments on the Certificates.
The Servicer will initially service the Receivables pursuant to the
Agreement and will be compensated for acting as the Servicer. See "The
Certificates - Servicing Compensation" in this Prospectus Supplement. The
Trustee will be appointed custodian for the Receivables and the certificates of
title relating to the Financed Vehicles, and the Receivables and such
certificates of title will be delivered to and held in physical custody by the
Trustee. However, the Receivables will not be marked or stamped to indicate that
they have been sold to the Trust, and the certificates of title of the Financed
Vehicles will not be endorsed or otherwise amended to identify the Trust as the
new secured party. In the absence of amendments to the certificates of title,
the Trustee may not have perfected security interests in the Financed Vehicles
securing the Receivables originated in some states. See "Certain Legal Aspects
of the Receivables" in the Prospectus.
The Trust will not acquire any assets other than the Trust Assets, and it
is not anticipated that the Trust will have any need for additional capital
resources. Because the Trust will have no operating history upon its
establishment and will not engage in any business other than acquiring and
holding the Trust Assets, issuing the Certificates and distributing payments on
the Certificates, no historical or pro forma financial statements or ratios of
earnings to fixed charges with respect to the Trust have been included herein.
The Seller also will take such steps as are necessary for the [Credit
Enhancer] to issue the [Credit Enhancement] to the Trustee for the benefit of
the Class A Certificateholders. In the event of an [Enhancement Default], the
Class A Certificateholders must rely on amounts, if any, available in the Spread
Account, the amount otherwise due on the Class B Certificates, the Obligors on
the Receivables, and the proceeds from the repossession and sale of Financed
Vehicles which secure defaulted Receivables. In such event, certain factors,
such as the Trustee's not having perfected security interests in some of the
Financed Vehicles, may affect the Trust's ability to realize on the collateral
securing the Receivables and thus may reduce the proceeds to be distributed to
Class A Certificateholders on a current basis. See "Certain Legal Aspects of the
Receivables" in the Prospectus.
THE TRUST ASSETS
Each Certificate will represent a fractional undivided interest in
the Trust, other than interest received by the Trust in excess of the Class A
Pass-Through Rate or the Class B Pass-Through Rate, as applicable. The Trust
Assets include retail installment sale contracts between dealers (the "Dealers")
in new and used automobiles, light trucks, vans and minivans and retail
purchasers (the "Obligors") and, with respect to Rule of 78's Receivables,
certain monies due thereunder after the Cutoff Date, and, with respect to Simple
Interest Receivables, certain monies received thereunder after the Cutoff Date.
The Receivables were originated by the Dealers for assignment to CPS. Pursuant
to agreements between the Dealers and CPS ("Dealer Agreements"), the Receivables
were purchased by CPS and, prior to the Closing Date, evidenced financing made
available by CPS to the Obligors. The Trust Assets also include (i) such amounts
as from time to time may be held in one or more trust accounts established and
maintained by the Trustee pursuant to the Agreement, as described below; see
"The Certificates - Accounts"; (ii) the rights of the Seller under the Purchase
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Agreement; (iii) security interests in the Financed Vehicles; (iv) the rights of
the Seller to receive any proceeds with respect to the Receivables from claims
on physical damage, credit life and credit accident and health insurance
policies covering the Financed Vehicles or the Obligors, as the case may be; (v)
the rights of the Seller to refunds for the costs of extended service contracts
and to refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies covering the Financed Vehicles or
Obligors, as the case may be; and (vi) any and all proceeds of the foregoing.
The Trust Assets also will include the [Credit Enhancement] for the benefit of
the Class A Certificateholders. The Payahead Account will be maintained with the
Trustee for the benefit of the Obligors, but will not be part of the Trust.
CPS'S AUTOMOBILE CONTRACT PORTFOLIO
General
CPS was incorporated in the State of California on March 8, 1991. CPS and
its subsidiaries engage primarily in the business of purchasing, selling and
servicing retail automobile installment sales contracts ("Contracts") originated
by Dealers located primarily in California, Florida, Pennsylvania, Texas,
Illinois and Nevada. CPS specializes in Contracts with borrowers ("Sub-Prime
Borrowers") who generally would not be expected to qualify for traditional
financing such as that provided by commercial banks or automobile manufacturers'
captive finance companies. Sub-Prime Borrowers generally have limited credit
history, lower than average income or past credit problems.
On May 31, 1991, CPS acquired 100% of the stock of G&A Financial Services,
Inc., a consumer loan servicing company, whose assets consisted primarily of
servicing contracts with respect to loan portfolios owned by third parties. G&A
Financial Services, Inc. has subsequently been dissolved. On September 1, 1991,
CPS was engaged to act as a servicer for loan portfolios aggregating $16.5
million by two companies who had purchased such portfolios from the Resolution
Trust Corp. As of December 31, 1994, CPS had terminated all such third-party
servicing arrangements. On October 1, 1991, CPS began its program of purchasing
Contracts from Dealers and selling them to institutional investors. Through
March 31, 1996, CPS had purchased $450.2 million of Contracts from Dealers and
sold $391.6 million of Contracts to institutional investors. CPS continues to
service all of the Contracts it has purchased, including those it has re-sold.
CPS has relationships and is party to Dealer Agreements with over 1,200
dealerships located in 32 states of the United States. CPS purchases Contracts
from Dealers at a discount ranging from 0% to 10% of the total amount financed
under the Contracts. In addition, CPS generally charges Dealers an acquisition
fee to defray the direct administrative costs associated with the processing of
Contracts that are ultimately purchased by CPS. A Dealer Agreement does not
obligate a Dealer to submit Contracts for purchase by CPS, nor does it obligate
CPS to purchase Contracts offered by the Dealers.
CPS purchases Contracts from Dealers with the intent to resell them. Prior
to the issuance of the Certificates, Contracts have been sold to institutional
investors either as bulk sales or as private placements of securities
collateralized by the Contracts. Purchasers of the Contracts receive a pass-
through rate of interest set at the time of the sale, and CPS receives a base
servicing fee for its duties relating to the accounting for and collection of
the Contracts. In addition, CPS is entitled to certain excess servicing fees
that represent collections on the Contracts in excess of those required to pay
principal and interest due to the investor and the base servicing fee to CPS.
Generally, CPS sells the Contracts to such institutional investors at face value
and without recourse except that the representations and warranties made to CPS
by the Dealers are similarly made to the investors by CPS. CPS has some credit
risk with respect to the excess servicing fees it receives in connection
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with the sale of Contracts to investors and its continued servicing function
since the receipt by CPS of such excess servicing fees is dependent upon the
credit performance of the Contracts.
The principal executive offices of CPS are located at 2 Ada, Suite 100,
Irvine, California 92718. CPS's telephone number is (714) 753-6800.
Underwriting
CPS markets its services to Dealers under three programs: the CPS standard
program (the "Standard Program"), the CPS Alpha Program (the "Alpha Program")
and the CPS Delta Program (the "Delta Program"). CPS applies underwriting
standards in purchasing loans on new and used vehicles from Dealers based upon
the particular program under which the loan was submitted for purchase. The
Alpha Program guidelines are designed to accommodate applicants who meet all the
requirements of the Standard Program and exceed such requirements in respect of
job stability, residence stability, income level or the nature of the credit
history. The Delta Program guidelines are designed to accommodate applicants who
may not meet all of the requirements of the Standard Program but who are deemed
by CPS to be generally as creditworthy as Standard Program applicants. CPS uses
the degree of the applicant's creditworthiness and the collateral value of the
financed vehicle as the basic criteria in determining whether to purchase an
installment sales contract from a Dealer. Each credit application provides
current information regarding the applicant's employment and residence history,
bank account information, debts, credit references, and other factors that bear
on an applicant's creditworthiness. Upon receiving from the Dealer the completed
application of a prospective purchaser and a one-page Dealer summary of the
proposed financing, generally by facsimile copy, CPS obtains a credit report
compiling credit information on the applicant from three credit bureaus. The
credit report summarizes the applicant's credit history and paying habits,
including such information as open accounts, delinquent payments, bankruptcy,
repossessions, lawsuits and judgments. At this point a CPS loan officer will
review the credit application, Dealer summary and credit report and will either
conditionally approve or reject the application. Such conditional approval or
rejection by the loan officer usually occurs within one business day of receipt
of the credit application. The loan officer determines the conditions to his or
her approval of a credit application based on many factors such as the
applicant's residential situation, downpayment, and collateral value with regard
to the loan, employment history, monthly income level, household debt ratio and
the applicant's credit history. Based on the stipulations of the loan officer,
the Dealer and the applicant compile a more complete application package which
is forwarded to CPS and reviewed by a processor for deficiencies. As part of
this review, references are checked, direct calls are made to the applicant and
employment income and residence verification is done. Upon the completion of his
or her review, the processor forwards the application package to an underwriter
for further review. The underwriter will confirm the satisfaction of any
remaining deficiencies in the application package. Finally, before the loan is
funded, the application package is checked for deficiencies again by a loan
review officer. CPS conditionally approves approximately 50% of the credit
applications it receives and ultimately purchases approximately 20% of the
received applications.
Generally, the amount funded by CPS will not exceed, in the case of new
cars, 110% of the dealer invoice plus taxes, license fees, insurance and the
cost of the service contract, and in the case of used cars, 110% of the value
quoted in industry-accepted used car guides (such as the Kelley Wholesale Blue
Book) plus the same additions as are allowed for new cars. The maximum amount
that will be financed on any vehicle generally will not exceed $25,000. The
maximum term of the Contract depends primarily on the age of the vehicle and its
mileage. Vehicles having in excess of 80,000 miles will not be financed.
The minimum downpayment required on the purchase of a vehicle is
generally 10% to 15% of the purchase price. The downpayment may be made in cash,
and/or with a trade-in car and, if
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available, a proven manufacturer's rebate. The cash and trade-in value must
equal at least 50% of the minimum downpayment required, with the proven
manufacturer's rebate constituting the remainder of the downpayment. CPS
believes that the relatively high downpayment requirement will result in higher
collateral values as a percentage of the amount financed and the selection of
buyers with stronger commitment to the vehicle.
Prior to purchasing any Contract, CPS verifies that the Obligor has
arranged for casualty insurance by reviewing documentary evidence of the policy
or by contacting the insurance company or agent. The policy must indicate that
CPS is the lien holder and loss payee. The insurance company's name and policy
expiration date are recorded in CPS' computerized system for ongoing monitoring.
As loss payee, CPS receives all correspondence relevant to renewals or
cancellations on the policy. Information from all such correspondence is updated
to the computerized records. In the event that a policy reaches its expiration
date without a renewal, or if CPS receives a notice that the policy has been
cancelled prior to its expiration date, a letter is generated to advise the
borrower of its obligation to continue to provide insurance. If no action is
taken by the borrower to insure the vehicle, two successive and more forceful
letters are generated, after which the collection department will contact the
borrower telephonically to further counsel the borrower, including possibly
advising them that CPS has the right to repossess the vehicle if the borrower
refuses to obtain insurance. Although it has the right, CPS rarely repossesses
vehicles in such circumstances. In addition, CPS does not force place a policy
and add the premium to the borrower's outstanding obligation, although it also
has the right to do so. Rather in such circumstances the account is flagged as
not having insurance and continuing efforts are made to get the Obligor to
comply with the insurance requirement in the Contract. CPS believes that
handling non-compliance with insurance requirements in this manner ultimately
results in better portfolio performance because it believes that the increased
monthly payment obligation of the borrower which would result from force placing
insurance and adding the premium to the borrower's outstanding obligation would
increase the likelihood of delinquency or default by such borrower on future
monthly payments.
Servicing and Collections
CPS's servicing activities, both with respect to portfolios of Contracts
sold by it to investors and with respect to portfolios of loans owned or
originated by third parties, consist of collecting, accounting for and posting
of all payments received with respect to such Contracts or loans, responding to
borrower inquiries, taking steps to maintain the security interest granted in
the Financed Vehicle or other collateral, investigating delinquencies,
communicating with the borrower, repossessing and liquidating collateral when
necessary, and generally monitoring each Contract or loan and related
collateral. CPS maintains sophisticated data processing and management
information systems to support its Contract and loan servicing activities.
Upon the sale of a portfolio of Contracts to an investor, or upon the
engagement of CPS by a loan portfolio owner for CPS's services, CPS mails to
borrowers monthly billing statements directing them to mail payments on the
Contracts or loans to a lock-box account which is unique for each investor or
portfolio owner. CPS engages an independent lock-box processing agent to
retrieve and process payments received in the lock-box account. This results in
a daily deposit to the investor or portfolio owner's account of the day's
lock-box account receipts and a simultaneous electronic data transfer to CPS of
the borrower payment data for posting to CPS's computerized records. Pursuant to
the various servicing agreements with each investor or portfolio owner, CPS is
required to deliver monthly reports reflecting all transaction activity with
respect to the Contracts or loans.
S-20
<PAGE>
If an account becomes six days past due, CPS's collection staff typically
attempts to contact the borrower with the aid of a high-penetration auto-dialing
computer. A collection officer tries to establish contact with the customer and
obtain a promise by the customer to make the overdue payment within seven days.
If payment is not received by the end of such seven-day period, the customer is
called again through the auto dialer system and the collection officer attempts
to elicit a second promise to make the overdue payment within seven days. If a
second promise to make the overdue payment is not satisfied, the account
automatically is referred to a supervisor for further action. In most cases, if
payment is not received by the tenth day after the due date, a late fee of
approximately 5% of the delinquent payment is imposed. If the customer cannot be
reached by a collection officer, a letter is automatically generated and the
customer's references are contacted. Field agents (who are independent
contractors) often make calls on customers who are unreachable or whose payment
is thirty days or more delinquent. A decision to repossess the vehicle is
generally made after 30 to 45 days of delinquency or three unfulfilled promises
to make the overdue payment. Other than granting such limited extensions as are
described under the heading "The Certificates -- Servicing Procedures", CPS does
not modify or rewrite delinquent Contracts.
Delinquency and Loss Experience
Set forth on the following page is certain information concerning the
experience of CPS pertaining to retail new and used automobile, light truck, van
and minivan receivables, including those previously sold, which CPS continues to
service. Loans were first originated under the Delta Program in August 1994 and
under the Alpha Program in April 1995. CPS has found that the delinquency and
net credit loss and repossession experience with respect to the Delta Program is
comparable to that under its Standard Program. CPS has not yet experienced any
losses under the Alpha Program, but expects that the delinquency and net credit
loss and repossession experience with respect to the Alpha Program will be lower
than that experienced under the Standard Program. There can be no assurance,
however, that the delinquency and net credit loss and repossession experience on
the Receivables will continue to be comparable to CPS's experience shown in the
following tables.
S-21
<PAGE>
<TABLE>
<CAPTION>
Consumer Portfolio Services, Inc.
Delinquency Experience
December 31, 1992 December 31, 1993
----------------------------------------------- ----------------------------------------------
Number of Amount Number of Amount
---------- ------ ---------- ------
Loans Loans
----- -----
<S> <C> <C> <C> <C>
Portfolio(1) 1,480 22,494,000 4,224 60,725,000
Period of
Delinquency(2)
31-60 11 165,000 54 806,000
61-90 3 39,000 11 182,000
91+ 5 70,000 10 167,000
--------------------------------------------------------------------------------------------------
Total 19 274,000 75 1,155,000
Delinquencies
Amount in 15 206,000 44 595,000
Repossession(3)
--------------------------------------------------------------------------------------------------
Total 34 480,000 119 1,750,000
Delinquencies
and Amount in
Repossession(4)
==================================================================================================
Delinquencies 1.28% 1.22% 1.78% 1.90%
as a Percent
of the Portfolio
Repo Inventory 1.01% 0.92% 1.04% 0.98%
as a Percent
of the Portfolio
Total 2.30% 2.13% 2.82% 2.88%
Delinquencies
and Amount in
Repossession
as a Percent
of Portfolio
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1995
------------------------------------------------ -------------------------------------------
Number of Amount Number of Amount
---------- ------ ---------- ------
Loans Loans
----- -----
<S>
Portfolio(1) <C> <C> <C> <C>
14,235 203,879,000 27,113 355,965,000
Period of
Delinquency(2)
31-60
243 3,539,000 909 11,520,000
61-90
68 1,091,000 203 2,654,000
91+
56 876,000 272 3,899,000
--------------------------------------------------------------------------------------------------
Total
Delinquencies 367 5,506,000 1,384 18,073,000
Amount in
Repossession(3) 271 3,759,000 834 10,151,000
Total --------------------------------------------------------------------------------------------------
Delinquencies 638 9,265,000 2,218 28,224,000
and Amount in
Repossession(4)
==================================================================================================
Delinquencies
as a Percent 2.58% 2.70% 5.10% 5.08%
of the Portfolio
Repo Inventory
as a Percent 1.90% 1.84% 3.08% 2.85%
of the Portfolio
Total
Delinquencies 4.48% 4.54% 8.18% 7.93%
and Amount in
Repossession
as a Percent
of Portfolio
</TABLE>
(1) All amounts and percentages are based on the full amount remaining to be
repaid on each Contract, including, for Rule of 78s Contracts, any unearned
finance charges. The information in the table represents all Contracts
originated by CPS including sold Contracts CPS continues to service.
(2) CPS considers a Contract delinquent when an obligor fails to make at least
90% of a contractually due payment by the due date. The period of
delinquency is based on the number of days payments are contractually past
due.
(3) Amount in Repossession represents Financed Vehicles which have been
repossessed but not yet liquidated.
(4) Amounts shown do not include Contracts which are less than 31 days
delinquent.
S-22
<PAGE>
<TABLE>
<CAPTION>
Consumer Portfolio Services, Inc.
Net Credit Loss/Repossession Experience
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1992 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Average Amount Outstanding $ 8,446,675 $ 29,440,272 $ 98,916,991 $ 221,926,489
During the Period (1)
Average Number of Loans 805 2,762 9,171 20,809
Outstanding During the Period
Number of Repossessions 39 177 669 2,018
Gross Charge-Offs (2) $ 164,782 $ 954,704 $ 3,166,408 $ 11,658,461
Recoveries (3) $ 9,563 $ 60,963 $ 347,519 $ 1,028,378
Net Losses $ 155,219 $ 893,741 $ 2,818,889 $ 10,630,083
Repossessions as a Percentage of 4.84% 6.41% 7.29% 9.70%
Average Number of Loans
Outstanding
Net Losses as a Percentage of 1.84% 3.04% 2.85% 4.79%
Average Amount Outstanding
</TABLE>
(1) All amounts and percentages are based on the principal amount scheduled to
be paid on each Contract. The information in the table represents all
Contracts originated by CPS including sold Contracts which CPS continues to
service.
(2) Amount charged off includes the remaining principal balance, after the
application of the net proceeds from the liquidation of the vehicle,
excluding accrued and unpaid interest.
(3) Recoveries are reflected in the period in which they are realized and may
pertain to charge offs from prior periods.
S-23
<PAGE>
THE RECEIVABLES POOL
The Receivables Pool existing as of the Cutoff Date consists of Receivables
selected from CPS's Portfolio by several criteria, including the following: each
Receivable was originated, based on the billing address of the Obligors, in the
United States, has an original term of not more than [ ] months, provides for
level monthly payments which fully amortize the amount financed over the
original term (except for the last payment, which may be different from the
level payment for various reasons, including late or early payments during the
term of the Contract), has a remaining maturity of [ ] months or less as of the
Cutoff Date, has an outstanding principal balance of not more than $[ ], is not
more than 30 days past due as of the Cutoff Date and has an APR of not less than
[ ]%. On the Cutoff Date, as of the date of each Obligor's application for the
loan from which the related Receivable arises, each Obligor (i) did not have any
material past due credit obligations or any repossessions or garnishments of
property within one year prior to the date of application, unless such amounts
have been repaid or discharged through bankruptcy, (ii) was not the subject of
any bankruptcy or insolvency proceeding that is not discharged, and (iii) had
not been the subject of more than one bankruptcy proceeding. As of the Cutoff
Date, the latest scheduled maturity of any Receivable is not later than [ ],
200[ ].
As of the Cutoff Date, approximately [ ]% of the aggregate principal
balance of the Receivables Pool, constituting [ ]% of the number of Contracts,
represents financing of used vehicles; the remainder of the Receivables Pool
represents financing of new vehicles. Approximately [ ]% of the aggregate
principal balance of the Receivables were originated under the Delta Program and
approximately [ ]% of the aggregate principal balance of the Receivables were
originated under the Alpha Program; the remainder of the Receivables represent
financing under the Standard Program. The composition, geographic distribution,
distribution by APR, and distribution by remaining term of the Receivables as of
the Cutoff Date are set forth in the following tables.
<TABLE>
<CAPTION>
Composition of the Receivables as of the Cutoff Date
Aggregate Number of Average Weighted Weighted
Weighted Average APR Principal Receivables Principal Average Average
of Receivables Balance in Pool Balance Remaining Term Original Term
-------------- ------- ------- ------- -------------- -------------
<S> <C> <C> <C> <C> <C>
[ ]% $[ ] [ ] $[ ] [ ] mos. [ ] mos.
</TABLE>
S-24
<PAGE>
Geographic Distribution of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Percent of
Percent of Aggregate Aggregate
Number of Number of Principal Principal
State(1) Receivables Receivables Balance Balance
- -------- ----------- ----------- ------- -------
<S> <C> <C> <C> <C>
All Others(2)
----------- ----------- ----------- ----------
TOTAL 100.00%(3) 100.00%(3)
====== ======
</TABLE>
- -------------------------
(1) Based on billing address of Obligor.
(2) No other state represents a percent of the Aggregate Principal Balance as
of the Cutoff Date in excess of one percent.
(3) Percentages may not add up to 100% because of rounding.
S-25
<PAGE>
Distribution of the Receivables by APR as of the Cutoff Date
<TABLE>
<CAPTION>
Percent of Percent of
APR Number of Number of Aggregate Aggregate
Range Receivables Receivables Principal Balance Principal Balance
- ----- ----------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C>
15.00% to
15.99%
16.00% to
16.99%
17.00% to
17.99%
18.00% to
18.99%
19.00% to
19.99%
20.00% to
20.99%
21.00% to
21.99%
22.00% to
22.99%
23.00% to
23.99%
24.00% to
24.99%
25.00% to
25.99%
26.00% and ---------------- ---------------- ---------------- ----------------
over
TOTAL 100.00%(1) 100.00%(1)
====== ======
</TABLE>
- -------------
(1) Percentages may not add up to 100% because of rounding.
S-26
<PAGE>
Distribution of Receivables by Remaining Term to
Scheduled Maturity as of the Cutoff Date
<TABLE>
<CAPTION>
Percent of
Remaining Term to Percent Aggregate
Scheduled Number of of Number of Aggregate Principal
Maturity Receivables Receivables Principal Balance Balance
-------- ----------- ----------- ----------------- -------
<S> <C> <C> <C> <C>
16-20 months
21-25 months
26-30 months
31-35 months
36-40 months
41-45 months
46-50 months
51-55 months
56-60 months ------------ ---------- -------------- ----------
TOTAL 100.00%(1) 100.00%(1)
====== ======
</TABLE>
- ---------------
(1) Percentages may not add up to 100% because of rounding.
S-27
<PAGE>
<TABLE>
<CAPTION>
Distribution of Receivables by Model Year of Financed Vehicle as of the Cutoff Date
Percent of
Aggregate
Number of Percent of Aggregate Principal
Model Year Receivables Number of Receivables Principal Balance Balance
- ---------- ----------- --------------------- ----------------- -------
<S> <C> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 ------------ --------------- --------------- ----------
TOTAL 100.00%(1) 100.00%(1)
====== ======
</TABLE>
- ---------------
(1) Percentages may not add up to 100% because of rounding.
S-28
<PAGE>
<TABLE>
Distribution of Receivables by Original Principal Balance as of the Cutoff Date
<CAPTION>
Percent of
Aggregate Aggregate
Range of Original Number of Percent of Principal Principal
Principal Balances Receivables Number of Receivables Balance Balance
- ------------------ ----------- --------------------- ------- -------
<S> <C> <C> <C> <C>
$0 - 4,999
5,000 - 9,999
10,000 - 14,999
15,000 - 19,999
20,000 - 24,999
25,000 and above ----------- --------------------- --------- ----------
TOTAL 100.00%(1) 100.00%(1)
====== ======
</TABLE>
- ---------------
(1) Percentages may not add up to 100% because of rounding.
S-29
<PAGE>
As of the Cutoff Date, approximately [ ]% of the Receivables in the
Receivables Pool provide for allocation of payments according to the "sum of
periodic balances" or "sum of monthly payments" method, similar to the "Rule of
78's" ("Rule of 78's Receivables") and, approximately [ ]% of the Receivables in
the Receivables Pool in the Trust provide for allocation of payments according
to the "simple interest" method ("Simple Interest Receivables"). A Simple
Interest Receivable provides for the amortization of the amount financed under
the Receivable over a series of fixed level monthly payments. Each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the Receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are received
under a Simple Interest Receivable, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
In the event of the prepayment in full (voluntarily or by acceleration) of
a Rule of 78's Receivable, under the terms of the contract, a "refund" or
"rebate" will be made to the Obligor of the portion of the total amount of
payments then due and payable under the contract allocable to "unearned" add-on
interest, calculated in accordance with a method equivalent to the Rule of 78's.
If a Simple Interest Receivable is prepaid, rather than receive a rebate, the
Obligor is required to pay interest only to the date of prepayment. The amount
of a rebate under a Rule of 78's Receivable generally will be less than the
remaining scheduled payments of interest that would have been due under a Simple
Interest Receivable for which all payments were made on schedule.
The Trust will account for the Rule of 78's Receivables as if such
Receivables provided for amortization of the loan over a series of fixed level
payment monthly installments ("Actuarial Receivables"). Amounts received upon
prepayment in full of a Rule of 78's Receivable in excess of the then
outstanding Principal Balance of such Receivable and accrued interest thereon
(calculated pursuant to the actuarial method) will not be passed through to
Certificateholders but will be paid to the Servicer as additional servicing
compensation.
YIELD CONSIDERATIONS
On each Distribution Date, interest on the Receivables will be passed
through to the Certificateholders to the extent of thirty (30) days' interest at
the Class A Pass-Through Rate applied to the Class A Certificate Balance on the
last day of the preceding Collection Period and to the Class B
Certificateholders to the extent of thirty (30) days interest at the Class B
Pass-Through Rate applied to the Class B Certificate Balance on the last day of
the preceding Collection Period; provided, however, that on the first
Distribution Date, Certificateholders will be entitled to interest at the Class
A Pass-Through Rate or the Class B Pass-Through Rate, as applicable, on the
original Class A Certificate Balance or Class B Certificate Balance, as
applicable, from the Closing Date through and including [ ], 199[ ]. In the
event of prepayments on Receivables, Certificateholders will nonetheless be
entitled to receive interest for the full month on the Certificates.
S-30
<PAGE>
All of the Receivables are prepayable at any time. (For this purpose
"prepayments" include prepayments in full, liquidations due to default, as well
as receipts of proceeds from physical damage, credit life and credit accident
and health insurance policies and certain other Receivables repurchased for
administrative reasons.) The rate of prepayments on the Receivables may be
influenced by a variety of economic, social, and other factors, including the
fact that an Obligor generally may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of CPS. In addition, the rate of
prepayments on the Receivables may be affected by the nature of the Obligors and
the Financed Vehicles and servicing decisions. See "Risk Factors - Nature of
Obligors; Servicing" in this Prospectus Supplement. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables will be
borne entirely by the Certificateholders. See also "The Certificates -
Termination" in this Prospectus Supplement regarding the Servicer's option to
purchase the Receivables when the aggregate principal balance thereof is less
than or equal to 10% of the aggregate principal balance as of the Cutoff Date.
POOL FACTORS AND OTHER INFORMATION
The "Pool Balance" at any time represents the aggregate principal balance
of the Receivables at the end of the preceding Collection Period, after giving
effect to all payments (other than Payaheads) received from Obligors, all
payments and Purchase Amounts remitted by CPS or the Servicer, as the case may
be, all for such Collection Period, all losses realized on Receivables
liquidated during such Collection Period and any Cram Down Losses with respect
to such Receivables. The Pool Balance is computed by allocating payments to
principal and to interest, with respect to Rule of 78's Receivables, using the
constant yield or actuarial method, and with respect to Simple Interest
Receivables, using the simple interest method. The "Class A Pool Factor" is a
seven-digit decimal which the Servicer will compute each month indicating the
Class A Certificate Balance as a fraction of the initial Class A Certificate
Balance. The "Class B Pool Factor" is a seven-digit decimal which the Servicer
will compute each month indicating the Class B Certificate Balance as a fraction
of the initial Class B Certificate Balance. The Class A Pool Factor and the
Class B Pool Factor will be 1.0000000 as of the Closing Date; thereafter, the
Class A Pool Factor and the Class B Pool Factor will decline to reflect
reductions in the Class A Certificate Balance or Class B Certificate Balance, as
applicable. An individual Certificateholder's share of the Class A Certificate
Balance or Class B Certificate Balance, as applicable, is the product of (i) the
original denomination of the Certificateholder's Certificate and (ii) the Class
A Pool Factor or the Class B Pool Factor, as applicable. The Class A Pool Factor
and the Class B Pool Factor will be made available on or about the eighth
business day of each month.
Pursuant to the Agreement, the Certificateholders will receive monthly
reports concerning the payments received on the Receivables, the Pool Balance,
the Class A Pool Factor, the Class B Pool Factor and various other items of
information. Certificateholders of record during any calendar year will be
furnished information for tax reporting purposes not later than the latest date
permitted by law. See "The Certificates Statements to Certificateholders".
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the
Certificates will be applied to the purchase of the Receivables from CPS. CPS
will apply the net proceeds received from the Seller to purchase new Contracts
or to repay debt incurred to purchase the Contracts.
S-31
<PAGE>
THE SELLER AND CPS
The Seller is a wholly-owned subsidiary of CPS. The Seller was incorporated
in the State of California in June of 1994. The Seller was organized for the
limited purpose of purchasing automobile installment sale contracts from CPS and
transferring such receivables to third parties and any activities incidental to
and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Seller are located at 2 Ada, Suite 100,
Irvine, California 92718; telephone (714) 753-6800. For further information
regarding the Seller and CPS See "The Seller and CPS" in the Prospectus.
STANDBY SERVICER
If CPS is terminated or resigns as Servicer, [ ] (in such capacity,
the "Standby Servicer") will serve as successor Servicer. The Standby Servicer
will receive a fee on each Distribution Date for agreeing to stand by as
successor Servicer and for performing certain other functions. Such fee will be
payable to the Standby Servicer from the Servicing Fee payable to CPS. If the
Standby Servicer, or any other entity serving at the time as Standby Servicer,
becomes the successor Servicer, it will receive compensation at a Servicing Fee
Rate not to exceed [ ]% per annum.
DESCRIPTION OF THE CERTIFICATES
General
Each of the Class A Certificates and the Class B Certificates initially
will be represented by certificates registered in the name of Cede & Co.
("Cede") as the nominee of The Depository Trust Company ("DTC"), and will only
be available in the form of book-entries on the records of DTC and participating
members thereof in denominations of $1,000. All references to "holders" or
"Certificateholders," and to authorized denominations, when used with respect to
the Certificates, shall reflect the rights of beneficial owners of the
Certificates ("Certificate Owners"), and limitations thereof, as they may be
indirectly exercised through DTC and its participating members, except as
otherwise specified herein. See "--Registration of Certificates" below.
In general, it is intended that the Class A Certificateholders receive, on
each Distribution Date, a distribution equal to the Class A Distributable Amount
and that the Class B Certificateholders receive, on each Distribution Date, a
distribution equal to the Class B Distributable Amount, as applicable. See "-
Distributions on Certificates" below.
Distributions of interest on the Class B Certificates will be subordinated
in priority of payment to interest due on the Class A Certificates.
Distributions of principal of the Class B Certificates will be subordinated in
priority of payment to interest and principal due on the Class A Certificates.
Accordingly, the Class A Certificates will receive, if necessary, the benefit of
amounts otherwise owing to the Class B Certificateholders as credit enhancement.
Funds representing the interest of the Class B Certificateholders in the Trust
Assets will be applied first to the payment of any amounts due to the Class A
Certificateholders on account of the Class A Interest Distributable Amount and
any Class A Interest Carryover Shortfall before any portion thereof is paid to
the Class B Certificateholders and funds otherwise due to pay principal of the
Class B Certificates will be applied first to the payment of the Class A
Principal Distributable Amount and any Class A Principal Carryover Shortfall
before any portion thereof is paid to the Class B Certificateholders.
Registration of Certificates
S-32
<PAGE>
Each of the Class A Certificates and the Class B Certificates will
initially be registered in the name of Cede & Co. ("Cede"), the nominee of DTC.
DTC is a limited-purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC accepts securities for deposit from its
participating organizations ("Participants") and facilitates the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks and trust companies and clearing
corporations and may include certain other organizations. Indirect access to the
DTC system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. See "Description of the Securities
- -- Book-Entry Registration" in the Prospectus.
Sale and Assignment of Receivables
On or prior to the Closing Date, CPS will sell and assign to the Seller,
without recourse, except as provided in the Purchase Agreement, its entire
interest in the Receivables, together with its security interests in the
Financed Vehicles, pursuant to the Purchase Agreement and CPS will sell and
assign to the Trust, without recourse. At the time of issuance of the
Certificates, the Seller will sell and assign to the Trust, without recourse
except as provided in the Agreement, its entire interest in the Receivables,
together with its security interests in the Financed Vehicles. Each Receivable
will be identified in a schedule appearing as an exhibit to the Agreement. The
Trustee will concurrently with such sale and assignment, execute, authenticate,
and deliver the Certificates to the Seller in exchange for the Receivables. The
Seller will sell the Certificates to the Underwriters. See "Underwriting" in
this Prospectus Supplement.
In the Purchase Agreement, CPS will represent and warrant to the Seller,
among other things, that (i) the information provided with respect to the
Receivables is correct in all material respects; (ii) at the date of issuance of
the Certificates, physical damage insurance covering each Financed Vehicle is in
effect in accordance with CPS's normal requirements; (iii) at the date of
issuance of the Certificates, the Receivables are free and clear of all security
interests, liens, charges, and encumbrances and no offsets, defenses, or
counterclaims against Dealers have been asserted or threatened; (iv) at the date
of issuance of the Certificates, each of the Receivables is or will be secured
by a first-priority perfected security interest in the Financed Vehicle in favor
of CPS; and (v) each Receivable, at the time it was originated, complied and, at
the date of issuance of the Certificates, complies in all material respects with
applicable federal and state laws, including, without limitation, consumer
credit, truth in lending, equal credit opportunity and disclosure laws. As of
the last day of the second (or, if CPS elects, the first) month following the
discovery by or notice to the Seller and CPS of a breach of any representation
or warranty that materially and adversely affects a Receivable, unless the
breach is cured, CPS will purchase such Receivable from the Trust for the
Purchase Amount. The "Purchase Amount" equals the unpaid principal balance owed
by the Obligor plus interest thereon at the respective APR to the last day of
the month of repurchase. The repurchase obligation will constitute the sole
remedy available to the Certificateholders, the [Credit Enhancer] or the Trustee
for any such uncured breach.
On or prior to the Closing Date, the Contracts will be delivered to the
Trustee as custodian, and the Trustee thereafter will maintain physical
possession of the Receivables except as may be necessary for the servicing
thereof by the Servicer. The Receivables will not be stamped to show the
ownership thereof by the Trust. However, CPS's accounting records and computer
systems will reflect the sale and assignment of the Receivables to the Seller,
and Uniform Commercial Code ("UCC") financing statements reflecting such sales
and assignments will be filed. See "Formation of the Trust" in this Prospectus
Supplement and "Certain Legal Aspects of the Receivables" in the Prospectus.
S-33
<PAGE>
Accounts
A segregated lock-box account will be established and maintained with Bank
of America in the name of the Trustee for the benefit of the Certificateholders
and the [Credit Enhancer], into which all payments made by Obligors on or with
respect to the Receivables must be deposited by the Lock-Box Processor (the
"Lock-Box Account"). See "-- Payments on Receivables" below. The Trustee will
also establish and maintain initially with itself one or more accounts, in the
name of the Trustee on behalf of the Certificateholders and the [Credit
Enhancer], into which all amounts previously deposited in the Lock-Box Account
will be transferred within two Business Days of the receipt of funds therein
(the "Collection Account"). Upon receipt, the Servicer will deposit all amounts
received by it in respect of the Receivables in the Lock-Box Account or the
Collection Account. The Trustee will also establish and maintain initially with
itself one or more accounts, in the name of the Trustee on behalf of the
Certificateholders and the [Credit Enhancer], from which all distributions with
respect to the Certificates and payments to the [Credit Enhancer] will be made
(the "Certificate Account"). In addition, the Trustee will establish and
maintain initially with itself one or more accounts, in the name of the Trustee
on behalf of the Obligors, in which early payments with respect to Rule of 78's
Receivables by or on behalf of the Obligors which do not constitute current
scheduled payments, late fees or full repayments will be deposited until such
time as the payment falls due or until such funds are applied to shortfalls in
the scheduled payments with respect to Rule of 78's Receivables (the "Payahead
Account"). Until such time as payments are transferred from the Payahead Account
to the Certificate Account, they will not constitute collected interest or
collected principal, and will not be available for distribution to the
Certificateholders. The Collection Account, Certificate Account and Payahead
Account will be maintained with the Trustee so long as the Trustee's deposits
have a rating acceptable to the [Credit Enhancer] and the Rating Agencies. If
the deposits of the Trustee or its corporate parent no longer have such
acceptable rating, the Trustee shall cause such Accounts to be moved to a bank
acceptable to the [Credit Enhancer]. In addition, the Trustee may transfer the
Payahead Account at any time to any depository bank or trust company which is
acceptable to the [Credit Enhancer].
The Collateral Agent will establish the Spread Account as a segregated
trust account at its office or at another depository institution or trust
company.
Servicing Compensation
The Servicer will be entitled to receive the Servicing Fee on each
Distribution Date, equal to the product of one-twelfth of the Servicing Fee Rate
and the Pool Balance as of the close of business on the last day of the second
preceding Collection Period; provided, however, that with respect to the first
Distribution Date, the Servicing Fee will equal the product of one-twelfth of
the Servicing Fee Rate and the Pool Balance as of the Cutoff Date (the
"Servicing Fee"). So long as CPS is Servicer, a portion of the Servicing Fee,
equal to the Standby Fee, will be payable to the Standby Servicer for agreeing
to stand by as successor Servicer and for performing certain other functions. If
the Standby Servicer, or any other entity serving at the time as Standby
Servicer, becomes the successor Servicer, it will receive compensation at a
Servicing Fee Rate not to exceed [ ]% per annum. See "Standby Servicer" in this
Prospectus Supplement. The Servicer will also collect and retain, as additional
servicing compensation, any late fees, prepayment charges and other
administrative fees or similar charges allowed by applicable law with respect to
the Receivables, and will be entitled to reimbursement from the Trust for
certain liabilities. Payments by or on behalf of Obligors will be allocated to
scheduled payments, late fees and other charges and principal and interest in
accordance with the Servicer's normal practices and procedures. The Servicing
Fee will be paid out of collections from the Receivables, prior to distributions
to Certificateholders.
The Servicing Fee and additional servicing compensation will compensate the
Servicer for performing the functions of a third party servicer of automotive
receivables as an agent for their beneficial owner, including collecting and
posting all payments, responding to inquiries of Obligors on the
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Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, paying costs of disposition of defaults
and policing the collateral. The Servicing Fee also will compensate the Servicer
for administering the Receivables, including accounting for collections and
furnishing monthly and annual statements to the Trustee and the [Credit
Enhancer] with respect to distributions and generating federal income tax
information. The Servicing Fee also will reimburse the Servicer for certain
taxes, accounting fees, outside auditor fees, data processing costs and other
costs incurred in connection with administering the Receivables.
Distributions on Certificates
No later than [ ] a.m., [ ] time, on each Determination Date, the Servicer
will inform the Trustee of the amount of aggregate collections on the
Receivables, and the aggregate Purchase Amount of Receivables to be repurchased
by CPS or to be purchased by the Servicer, in each case, with respect to the
related Collection Period.
On or before each Distribution Date, the Trustee will cause to be
transferred from the Payahead Account to the Certificate Account the amounts
then on deposit in the Payahead Account that constitute scheduled payments due
during the related Collection Period or that may be applied to full prepayments
on the Rule of 78's Receivables.
The Servicer will determine prior to such Determination Date the Total
Distribution Amount, the Class A Interest Distributable Amount, the Class B
Interest Distributable Amount, the Class A Principal Distributable Amount, the
Class B Principal Distributable Amount, the Class A Distributable Amount and the
Class B Distributable Amount.
The "Determination Date" applicable to any Distribution Date will be the
earlier of (i) the seventh business day of the month of such Distribution Date
and (ii) the fifth business day preceding such Distribution Date.
Determination of Total Distribution Amount. The "Total Distribution Amount"
for a Distribution Date (being the funds available for distribution to the
Certificateholders with respect to such Distribution Date in accordance with the
priorities described below) will be the sum of the following amounts with
respect to the preceding Collection Period: (i) all collections on Receivables
(including amounts withdrawn from the Payahead Account but excluding amounts
deposited into the Payahead Account); (ii) all 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, net of the reasonable expenses incurred by the Servicer in
connection with such liquidation and any amounts required by law to be remitted
to the Obligor on such Liquidated Receivable ("Liquidation Proceeds") in
accordance with the Servicer's customary servicing procedures; (iii) proceeds
from Recoveries with respect to Liquidated Receivables; and (iv) the Purchase
Amount of each Receivable that was repurchased by CPS or purchased by the
Servicer as of the last day of the related Collection Period.
"Liquidated Receivable" means a 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.
"Purchase Amount" means, with respect to a Receivable, the amount, as of
the close of business on the last day of Collection Period, required to prepay
in full such Receivable under the terms thereof including interest to the end of
the month of purchase.
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"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the amount financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments 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.
"Recoveries" means, with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor.
"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 granted
to Obligors by the Servicer pursuant to the Agreement or any rescheduling of
payments in any insolvency or similar proceedings).
Calculation of Distribution Amounts. The Class A Certificateholders will be
entitled to receive, to the extent funds are available therefor, the "Class A
Distributable Amount" with respect to each Distribution Date. The "Class A
Distributable Amount" with respect to a Distribution Date will be an amount
equal to the sum of:
(i) the "Class A Principal Distributable Amount", consisting of the
Class A Percentage of the following:
(a) the principal portion of all Scheduled Payments received
during the preceding Collection Period on Rule of 78's Receivables and
all payments of principal received on Simple Interest Receivables
during such Collection Period (including amounts withdrawn from the
Payahead Account but excluding amounts deposited into the Payahead
Account);
(b) the principal portion of all prepayments in full received
during the preceding Collection Period, including amounts withdrawn
from the Payahead Account with respect to such Distribution Date but
excluding amounts deposited in the Payahead Account (except to the
extent included in clauses (a) or (d));
(c) the principal balance of each Receivable that was repurchased
by CPS or purchased by the Servicer in each case as of the last day of
the preceding Collection Period and at the option of the [Credit
Enhancer], the Principal Balance of each Receivable that was required
to be but was not so purchased or repurchased (except to the extent
included in (a) and (b) above);
(d) the principal balance of each Liquidated Receivable which
became such during the preceding Collection Period (except to the
extent included in (a) and (b) above); and
(e) the aggregate amount of Cram Down Losses that occurred during
the preceding Collection Period (a "Cram Down Loss" means with respect
to a Receivable, if a court of appropriate jurisdiction in an
insolvency proceeding has issued an order reducing the amount owed on
a Receivable or otherwise modifying or restructuring the Scheduled
Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the net present value
(using as the discount rate the lower of
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the contract rate or the rate of interest specified by the court in
such order) of the Scheduled Payments as so modified; a Cram Down Loss
shall be deemed to have occurred on the date of issuance of such
order)(the amounts set forth in (a) through (e), the "Principal
Distributable Amount"); plus
(ii) the "Class A Interest Distributable Amount", consisting of thirty
(30) days' 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; provided, however, that on the first
Distribution Date, the Class A Interest Distributable Amount will include
interest from and including the Closing Date through and including [ ],
199[ ].
The Class B Certificateholders will be entitled to receive, to the extent
funds are available therefor, the "Class B Distributable Amount" with respect to
each Distribution Date. The "Class B Distributable Amount" with respect to a
Distribution Date will be an amount equal to the sum of:
(i) the "Class B Principal Distributable Amount", consisting of the
Class B Percentage of the Principal Distributable Amount; plus
(ii) the "Class B Interest Distributable Amount", consisting of thirty
(30) days' 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; provided, however, that on the first
Distribution Date, the Class B Interest Distributable Amount will include
interest from and including the Closing Date through and including [ ],
199[ ].
On the Final Scheduled Distribution Date, the Class A Principal
Distributable Amount and the Class B Principal Distributable Amount will equal
the then outstanding Class A Certificate Balance and Class B Certificate
Balance, respectively.
Priority of Distribution Amounts. On each Determination Date, the Servicer
will calculate the amount to be distributed to the Certificateholders.
On each Distribution Date, the Trustee (based on the Servicer's
determination made on the related Determination Date) shall make the following
distributions in the following order of priority:
[(i) to the Servicer, from the Total Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
provided, however, that as long as CPS is the Servicer and [ ], is the
Standby Servicer, the Trustee will 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), to the extent not previously paid by the predecessor Servicer
pursuant to the Agreement, reasonable transition expenses (up to a maximum
of $[ ]) 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), the fees and expenses payable to the Trustee for its
services pursuant to the Agreement (the "Trustee Fee") and reasonable
out-of-pocket expenses of the Trustee, (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
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expenses payable to the collateral agent pursuant to clause (iv) below,
shall be limited to $[ ] 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 (iii) above), all fees and expenses payable to the
collateral agent with respect to such Distribution Date;
(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) 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) 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), 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 [Credit Enhancer], from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments made
pursuant to clauses (i) through (vii) above), any amounts due to the
[Credit Enhancer] under the terms of the Agreement and under the
[Enhancement Agreement];
(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 the Agreement, to the extent not paid
pursuant to clause (ii) above, reasonable transition expenses (up to a
maximum of $[ ]) 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) 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 in to the Spread Account,
the remaining Total Distribution Amount, if any.]
The right of the Class B Certificateholders to receive distributions of
interest pursuant to clause (vi) above will be subordinated to the prior payment
in full of all amounts payable pursuant to clauses (i) through (v). The right of
the Class B Certificateholders to receive distributions of principal pursuant to
clause (x) above will be subordinated to the prior payment in full of all
amounts payable pursuant to clauses (i) through (ix).
For purposes hereof, the following terms shall have the following meanings:
"Class A Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Interest Distributable Amount for
such Distribution Date, plus any outstanding Class A Interest Carryover
Shortfall from the preceding Distribution Date, plus interest on such
outstanding Class A
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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, over the amount of interest that the holders of the Class A
Certificates actually received on such current Distribution Date.
"Class A Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Principal Distributable Amount plus
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.
"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, plus 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, over the amount of interest that the
holders of the Class B Certificates actually received on such current
Distribution Date.
"Class B Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Principal Distributable Amount plus
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.
On the third business day prior to a Distribution Date, the Trustee will
determine, based on a certificate from the Servicer, whether there are amounts
sufficient, after payment of amounts as set forth in the priorities of
distribution in the Agreement, to distribute the Class A Distributable Amount.
[The Spread Account. The Seller has agreed to cause to be established with
[ ] (in such capacity, the "Collateral Agent") an account (the "Spread Account")
for the benefit of the [Credit Enhancer] and the Trustee on behalf of the Class
A Certificateholders. The Collateral Agent [will] [will not] hold the Requisite
Amount for the benefit of the Class B Certificateholders. Any portion of the
Total Distribution Amount remaining on any Distribution Date after payment of
all fees and expenses due on such date to the Servicer, the Standby Servicer,
the Trustee and the Collateral Agent and all principal and interest payments due
to the Certificateholders on such Distribution Date, will be deposited in the
Spread Account and held by the Collateral Agent for the benefit of the [Credit
Enhancer] and the Trustee on behalf of the Class A Certificateholders. If on any
Distribution Date, the Total Distribution Amount is insufficient (taking into
account the application of the Total Distribution Amount to the payment of the
Class B Interest Distributable Amount and any Class B Interest Carryover
Shortfall) to pay all distributions required to be made on such day pursuant to
priorities (i), (ii), (iii), (iv), (v), (vii), (viii) and (ix) under " --
Priority of Distribution Amounts", then amounts on deposit in the Spread Account
will be applied to pay the amounts due on such Distribution Date pursuant to
such priorities (i), (ii), (iii), (iv), (v), (vii), (viii) and (ix).]
Statements to Certificateholders
On each Distribution Date, the Trustee will include with each distribution
to each Certificateholder of record as of the close of business on the
applicable Record Date and each rating agency that is currently rating the
Certificates a statement (prepared by the Servicer) setting forth the following
information with respect to the preceding Collection Period, to the extent
applicable:
[(i) the amount of the distribution allocable to principal of the
Class A Certificates and the Class B Certificates, respectively;
(ii) the amount of the distribution allocable to interest on the Class
A Certificates and the Class B Certificates, respectively;
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(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 aggregate Class A 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 aggregate 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;
(vi) the amount of the Servicing Fee paid to the Servicer with respect
to the related Collection Period and the Class A Percentage and the Class B
Percentage of the Servicing Fee (inclusive of the Standby Fee), the amount
of any unpaid Servicing Fees and the change in such amount from that of the
prior Distribution Date;
(vii) the amount of the Class A Interest Carryover Shortfall, if
applicable, and Class A Principal Carryover Shortfall, if applicable, on
such Distribution Date and the change in such amounts from those on the
prior Distribution Date;
(viii) the amount of the Class B Interest Carryover Shortfall, if
applicable, and Class B Principal Carryover Shortfall, if applicable, on
such Distribution Date and the change in such amounts from those on the
prior Distribution Date;
(ix) the amount paid to the Class A Certificateholders under the
[Credit Enhancement] for such Distribution Date;
(x) the amount distributable to the [Credit Enhancer] on such
Distribution Date;
(xi) the aggregate amount in the Payahead Account and the Spread
Account and the change in such amount from the previous Distribution Date;
(xii) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned finance and other charges,
for which the related Obligors are delinquent in making scheduled payments
between 31 and 59 days and 60 days or more; and
(xiii) the number and the aggregate Purchase Amount of Receivables
repurchased by CPS or purchased by the Servicer.]
Each amount set forth pursuant to subclauses (i), (ii), (vi), (vii) and
(viii) above shall be expressed in the aggregate and as a dollar amount per
$1,000 of original principal balance of a Certificate.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee will
mail to each person who at any time during such calendar year shall have been a
Certificateholder and received any payment on such holder's Certificates, a
statement (prepared by the Servicer) containing the sum of the amounts described
in (i), (ii) and (vi) above for the purposes of such Certificateholder's
preparation of federal income tax returns. See "The Certificates -- Statements
to Certificateholders" in this Prospectus Supplement. See "Certain Federal
Income Tax Consequences" in this Prospectus Supplement.
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Evidence as to Compliance
The Agreement will provide that a firm of independent certified public
accountants will furnish to the Trustee and the [Credit Enhancer] on or before
July 31 of each year, beginning [ ], 199[ ], a report as to compliance by the
Servicer during the preceding twelve months ended March 31 with certain
standards relating to the servicing of the Receivables (or in the case of the
first such certificate, the period from the Closing Date to [ ], 199[ ]).
The Agreement will also provide for delivery to the Trustee and the [Credit
Enhancer], on or before July 31 of each year, commencing [ ], 199[ ] of a
certificate signed by an officer of the Servicer stating that the Servicer has
fulfilled its obligations under the Agreement throughout the preceding twelve
months ended March 31 or, if there has been a default in the fulfillment of any
such obligation, describing each such default (or in the case of the first such
certificate, the period from the Cutoff Date to [ ], 199[ ]). The Servicer has
agreed to give the Trustee and the [Credit Enhancer] notice of any Events of
Default under the Agreement.
Copies of such statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the Trustee.
Certain Matters Regarding the Servicer
The Agreement will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder except upon determination that its
performance of such duties is no longer permissible under applicable law and
with the consent of the [Credit Enhancer]. No such resignation will become
effective until a successor servicer has assumed the servicing obligations and
duties under the Agreement. In the event CPS resigns as Servicer or is
terminated as Servicer, the Standby Servicer has agreed pursuant to the
Servicing Assumption Agreement to assume the servicing obligations and duties
under the Agreement.
The Agreement will further provide that neither the Servicer nor any of its
directors, officers, employees, and agents will be under any liability to the
Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the Agreement, or for errors in judgment;
provided, however, that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties thereunder. In addition,
the Agreement will provide that the Servicer is under no obligation to appear
in, prosecute, or defend any legal action that is not incidental to its
servicing responsibilities under the Agreement and that, in its opinion, may
cause it to incur any expense or liability.
Under the circumstances specified in the Agreement any entity into which
the Servicer may be merged or consolidated, or any entity resulting from any
merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer which corporation or other entity in
each of the foregoing cases assumes the obligations of the Servicer, will be the
successor of the Servicer under the Agreement.
The Servicer is retained for an initial term commencing on the Closing Date
and ending on [ ], 199[ ], which term may be extended in ninety day increments
by the [Credit Enhancer]. In the absence of an Event of Default under the
Agreement, the [Credit Enhancer] has agreed to extend such term. See "The
Certificates -- Certain Matters Regarding the Servicer" in the Prospectus.
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Events of Default
"Events of Default" under the Agreement will consist of (i) any failure by
the Servicer to deliver to the Trustee for distribution to the
Certificateholders any required payment, which failure continues unremedied for
two Business Days, or any failure to deliver to the Trustee the annual
accountants report, the annual statement as to compliance or the statement to
the Certificateholders, in each case, within [ ] days of the date it is due and
which shall comply with the requirements therefor; (ii) any failure by the
Servicer or the Seller, as the case may be, duly to observe or perform in any
material respect any other covenant or agreement in the Agreement which
continues unremedied for [ ] days after the giving of written notice of such
failure (1) to the Servicer or the Seller, as the case may be, by the [Credit
Enhancer] or by the Trustee, or (2) to the Servicer or the Seller, as the case
may be, and to the Trustee and the [Credit Enhancer] by the holders of Class A
Certificates evidencing not less than [ ] of the Class A Certificate Balance or,
after the Class A Certificates have been paid in full and all outstanding
amounts due to the [Credit Enhancer] have been paid in full, by the holders of
Class B Certificates evidencing not less than [ ] of the Class B Certificate
Balance; (iii) certain events of insolvency, readjustment of debt, marshalling
of assets and liabilities, or similar proceedings with respect to the Servicer
or the Seller, or, so long as CPS is Servicer, of any of its affiliates, and
certain actions by the Servicer, the Seller or, so long as CPS is Servicer, of
any of its affiliates, indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations; or (iv) the
occurrence of an Event of Default under the [Enhancement Agreement].
Rights Upon Event of Default
As long as an Event of Default under the Agreement remains unremedied, (x)
provided no [Enhancement Default] shall have occurred and be continuing, the
[Credit Enhancer] in its sole and absolute discretion or (y) if an [Enhancement
Default] shall have occurred and be continuing, then the Trustee or the holders
of Class A Certificates evidencing not less than [ ] of the Class A Certificate
Balance or (z) if the Class A Certificates have been paid in full and either (i)
all outstanding amounts due to the [Credit Enhancer] have been paid in full or
(ii) an [Enhancement Default] shall have occurred and be continuing, then either
the Trustee or the holders of Class B Certificates evidencing not less than [ ]
of the Class B Certificate Balance, may terminate all the rights and obligations
of the Servicer under the Agreement, whereupon the Standby Servicer, or such
other successor Servicer as shall be or have been appointed by the [Credit
Enhancer] (or, if an [Enhancement Default] shall have occurred and be
continuing, by the Trustee or the Class A or Class B Certificateholders, as
described above) will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Agreement; provided, however, that such
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 such
successor Servicer becomes the Servicer or the claim of a third party (including
a Certificateholder) based on any alleged action or inaction of the predecessor
Servicer as Servicer.
["[Enhancement Default]" shall mean any one of the following events shall
have occurred and be continuing: (i) the [Credit Enhancer] fails to make a
payment required under the [Credit Enhancement] in accordance with its terms;
(ii) the [Credit Enhancer] (A) files any petition or commences any case or
proceeding under any provision or chapter of the United States Bankruptcy Code
or any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general assignment
for the benefit of its creditors, or (C) has an order for relief entered against
it under the United States Bankruptcy Code or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or (iii) a court of competent
jurisdiction or other competent court or regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian, trustee,
agent or receiver for the [Credit Enhancer] or for all or any material portion
of its property or (B) authorizing the taking of possession by a custodian,
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trustee, agent or receiver of the [Credit Enhancer] (or the taking of possession
of all or any material portion of the property of the [Credit Enhancer]).]
Waiver Of Past Defaults
With respect to the Trust, subject to the approval of [the Credit
Enhancer], the holders of Certificates evidencing at least a majority of the
voting rights of such then outstanding Certificates may, on behalf of all
Certificateholders of the related Certificates, waive any default by the
Servicer in the performance of its obligations under the Pooling and Servicing
Agreement and its consequences, except a default in making any required deposits
to or payments from any of the Trust Accounts in accordance with the Pooling and
Servicing Agreement. No such waiver shall impair the Certificateholders' rights
with respect to subsequent defaults.
Termination
The obligations of the Servicer, the Seller and the Trustee pursuant to the
Agreement will terminate upon (i) the maturity or other liquidation of the last
Receivable and the disposition of any amounts received upon liquidation of any
remaining Receivables and (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the expiration of any
preference period related thereto.
In order to avoid excessive administrative expense, the Servicer, or its
successor, is permitted at its option to purchase from the Trust [(with the
consent of the [Credit Enhancer] if such purchase would result in a claim under
the [Credit Enhancement] or any amount owing to the [Credit Enhancer] or on the
Certificates would remain unpaid)], as of the last day of any month as of which
the then outstanding Pool Balance is equal to 10% or less of the original Pool
Balance, all remaining Receivables at a price equal to the aggregate of the
Purchase Amounts thereof as of such last day. Exercise of such right will effect
early retirement of the Certificates. The Trustee will give written notice of
termination to each Certificateholder of record. The final distribution to any
Certificateholder will be made only upon surrender and cancellation of such
holder's Certificate at the office or agency of the Trustee specified in the
notice of termination. Any funds remaining with the Trustee, after the Trustee
has taken certain measures to locate a Certificateholder and such measures have
failed, will be distributed to The American Red Cross.
[THE CREDIT ENHANCEMENT]
[Description of the [Credit Enhancement]].
[CREDIT ENHANCER]
[Description of Credit Enhancer]
ERISA CONSIDERATIONS
[Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan subject to ERISA and an individual
retirement account (collectively, "Benefit Plans") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the plan. ERISA also
imposes certain duties and certain prohibitions on persons who are fiduciaries
of plans subject to ERISA. Generally, any person who exercises any authority or
control
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with respect to the management or disposition of the assets of a plan subject to
ERISA is considered to be a fiduciary of such plan. A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and the Code.
Pursuant to a regulation issued by the Department of Labor concerning the
definition of what constitutes the "plan assets" of a Benefit Plan, the assets
and properties of certain entities in which a Benefit Plan makes an equity
investment could be deemed to be assets of the Benefit Plan in certain
circumstances. Accordingly, if a Benefit Plan purchases a Certificate, the Trust
could be deemed to hold plan assets. If the assets of the Trust were deemed to
constitute plan assets of a Benefit Plan, the Benefit Plan's investment in the
Certificates might be deemed to constitute delegation under ERISA of the duty to
manage plan assets by the fiduciaries making the decision on behalf of the
Benefit Plan to make the investment, and transactions involving the Trust and
the Trust Assets might be viewed as transactions with the Benefit Plan for the
purpose of ERISA's fiduciary and prohibited transaction rules.
[The Department of Labor has granted [underwriter] an
administrative exemption (Prohibited Transaction Exemption [ ], 59 Fed. Reg.
65,400 (1994)) (the "Exemption") from certain of the prohibited transaction
rules of ERISA with respect to the initial purchase, the purchase in the
secondary market and the holding and the subsequent resale by Benefit Plans of
certificates in certain trusts with respect to which [underwriter] is the sole
underwriter or placement agent or the managing or co-managing underwriter or
placement agent in an underwriting syndicate or selling group and that consist
of certain receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The obligations covered by the Exemption include
retail installment sale contracts such as the Receivables. The Exemption would
apply to the acquisition, holding and resale of the Class A Certificates by a
Benefit Plan only if specific conditions (certain of which are described below)
are met. It is not clear whether the Exemption applies to participant directed
plans as described in Section 404(c) of ERISA or plans that are subject to
Section 4975 of the Code but that are not subject to Title I of ERISA, such as
certain Keogh plans and certain individual retirement accounts.
Among the conditions which must be satisfied for the Exemption to apply to
the acquisition by a Benefit Plan of the Class A Certificates are the following:
(1) The acquisition of the Class A Certificates by a Benefit Plan is
on terms (including the price for the Class A Certificates) that are
at least as favorable to the Benefit Plan as they would be in an
arm's-length transaction with an unrelated party;
(2) The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the Trust;
(3) The Class A Certificates acquired by the Benefit Plan have a
rating at the time of such acquisition that is in one of the three
highest generic rating categories from Standard & Poor's Corporation,
Moody's Investors Service, Inc., Duff & Phelps Inc. or Fitch
Investors Service, Inc.;
(4) The sum of all payments made to the Underwriters in connection
with the distribution of the Class A Certificates represents not more
than reasonable compensation for placement of the Class A
Certificates. The sum of all payments made to and retained by the
Seller pursuant to the sale of the Receivables to the Trust
represents not more than the fair market value of such Receivables.
The sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's
services under the Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith;
(5) The Trustee is not an "affiliate" (as defined in the Exemption)
of the Seller, the Underwriters, the Servicer, the [Credit Enhancer]
or any "obligor" (as defined in the Exemption)
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with respect to Receivables included in the Trust constituting more
than 5% of the aggregate unamortized principal balance of the assets
in the Trust (including the Trustee, the "Restricted Group");
(6) The Benefit Plan investing in the Class A Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D
under the Securities Act; and
(7) The Trust satisfies the following requirements:
(a) the corpus of the Trust consists solely of assets of
the type which have been included in other investment
pools,
(b) certificates in such other investment pools have been
rated in one of the three highest generic rating categories
of Standard & Poor's Corporation, Moody's Investors
Service, Inc., Duff & Phelps Inc. or Fitch Investors
Service, Inc. for at least one year prior to the Benefit
Plan's acquisition of Class A Certificates, and
(c) certificates evidencing interests in such other
investment pools have been purchased by investors other
than Benefit Plans for at least one year prior to any
Benefit Plan's acquisition of Class A Certificates.
The Exemption does not provide an exemption from ERISA Sections
406(a)(1)(E), 406(a)(2) or 407 for the purchase or holding of Class A
Certificates to any person who has discretionary authority or renders investment
advice to Benefit Plans sponsored by any member of the Restricted Group or any
affiliate of such person.]
Exemptive relief from the self-dealing/conflict of interest prohibited
transaction rules of ERISA is available to an obligor acting as a fiduciary with
respect to the investment of a Benefit Plan's assets in the Class A Certificates
(or such person's affiliate) only if, among other requirements (i) such
fiduciary (or its affiliate) is an obligor with respect to 5% percent or less of
the fair market value of the Trust Assets, (ii) a Benefit Plan's investment in
Class A Certificates does not exceed 25% of all of the Class A Certificates
outstanding at the time of the acquisition, (iii) immediately after the
acquisition, no more than 25% of the assets of the Benefit Plan are invested in
certificates representing an interest in trusts (including the Trust) containing
assets sold or serviced by the same entity, and (iv) in the case of the
acquisition of the Class A Certificates in connection with their initial
issuance, at least 50% of the Class A Certificates are acquired by persons
independent of the Restricted Group and at least 50% of the aggregate interest
in the Trust is acquired by persons independent of the Restricted Group.
The Exemption also applies to transactions in connection with the
servicing, management and operation of the Trust, provided that, in addition to
the general requirements described above, (a) such transactions are carried out
in accordance with the terms of a binding pooling and servicing agreement and
(b) the pooling and servicing agreement is provided to, or described in all
material respects in the prospectus or private placement memorandum provided to,
investing Benefit Plans before their purchase of certificates issued by the
Trust. The Agreement is a pooling and servicing agreement as defined in the
Exemption. All transactions relating to the servicing, management, and
operations of the Trust will be carried out in accordance with the Agreement.
See "The Certificates" in this Prospectus Supplement.
Any Benefit Plan fiduciary considering the purchase of Class A Certificates
should consult with its counsel with respect to the applicability of the
Exemption and other issues and determine on its own whether all conditions have
been satisfied and whether the Certificates are an appropriate investment for a
Benefit Plan under ERISA and the Code. By its purchase of a Class A Certificate,
each Benefit Plan purchaser shall be deemed to represent and warrant that it is
an "accredited investor" as defined in Rule 501(a)(1) of Regulation D under the
Securities Act, in accordance with condition (6) above.
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<PAGE>
The Class B Certificates may not be sold or transferred to a Benefit Plan,
a trustee of any Benefit Plan, or an entity, account or other pooled investment
fund the underlying assets of which include or are deemed to include a Benefit
Plan's assets by reason of a Benefit Plan's investment in the entity, account or
other pooled investment fund.
Generally, for purposes of ERISA, an insurance company, insurance service,
or insurance organization qualified to do business in a state (referred to
herein as an "Insurer") is not a Benefit Plan; therefore, the foregoing
restriction for sale or transfer to a Benefit Plan generally would not be
applicable to an Insurer. However, under John Hancock Mutual Life Insurance Co.
v. Harris Bank and Trust, 114 S.Ct. 517 (1993), certain assets held in an
Insurer's general account may be treated as Benefit Plan assets and thus the use
of such "plan assets" to purchase the Class B Certificates may be subject to the
fiduciary requirements of ERISA.
The Seller and the Servicer do not intend to preclude Insurers that are
otherwise qualified investors from purchasing the Class B Certificates;
therefore, for purposes of this offering, the restriction for sale or transfer
to a Benefit Plan will not be applied to prevent the transfer of Class B
Certificates to an Insurer if such Insurer purchases such Class B Certificates
with funds held in one or more of its general accounts, provided that the
Insurer confirms that Section III of Prohibited Transaction Class Exemption
95-60 (the "Class Exemption") applies to the Insurer's acquisition and holding
of such Class B Certificates. Neither the Servicer, the Seller, the Trustee, the
[Credit Enhancer], any Underwriter nor any of their respective affiliates makes
any representation or expresses any opinion as to whether an Insurer constitutes
a Benefit Plan or will be treated as managing Benefit Plan assets.]
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement, CPS and the Seller have agreed to cause the Trust to sell to
[Underwriters] (the "Underwriters") and each Underwriter has agreed to purchase
the principal amount of Class A Certificates and Class B Certificates set forth
opposite its name below.
Underwriters Class A Certificates Class B Certificates
------------ Principal Amount Principal Amount
---------------- ----------------
[Underwriter] $ [ ] $ [ ]
[Underwriter] [ ] [ ]
------------ ------------
Total $ [ ] $
============ ============
CPS and the Seller have been advised by the Underwriters that they propose
to offer Class A Certificates and Class B Certificates from time to time for
sale in negotiated transactions or otherwise, at prices determined at the time
of sale. The Underwriters may effect such transactions by selling each of the
Class A Certificates and Class B Certificates to or through dealers and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters and any purchasers of Class A
Certificates or Class B Certificates for whom they may act as agents. The
Underwriters and any dealers that participate with the Underwriters in the
distribution of each of the Class A Certificates and Class B Certificates may be
deemed to be underwriters, and any discounts or commissions received by them and
any profit on the resale of Class A Certificates or Class B Certificates by them
may be deemed to be underwriting discounts or commissions, under the Securities
Act of 1933, as amended.
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<PAGE>
Each of the Class A Certificates and Class B Certificates are a new issue
of securities with no established trading market. The Underwriters have advised
CPS and the Seller that they intend to act as market makers for each of the
Class A Certificates and Class B Certificates. However, the Underwriters are not
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of any trading market for
the Class A Certificates or Class B Certificates.
CPS and the Seller have agreed to indemnify the Underwriters against
certain liabilities, including civil liabilities under the Securities Act, or
contribute to payments which the Underwriters may be required to make in respect
thereof.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Seller, the Servicer and the Underwriters by Mayer, Brown & Platt, New York,
New York. Certain legal matters related to the [Credit Enhancement] will be
passed upon for the [Credit Enhancer] by [ ].
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<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and the pages on which the definitions of such terms may be found
herein.
Page
----
Actuarial Receivables........................................................30
Agreement .........................................................4
Alpha Program ........................................................19
APR .........................................................5
Certificate Account ........................................................34
Certificates ......................................................1, 4
Class A Certificate Balance...................................................6
Class A Certificateholders....................................................6
Class A Certificates ......................................................1, 4
Class A Distributable Amount.................................................36
Class A Interest Carryover Shortfall.........................................38
Class A Interest Distributable Amount........................................37
Class A Pass-Through Rate.....................................................6
Class A Percentage .........................................................4
Class A Pool Factor ........................................................31
Class A Principal Carryover Shortfall........................................39
Class A Principal Distributable Amount.......................................36
Class B Certificate Balance...................................................6
Class B Certificateholders....................................................6
Class B Certificates ......................................................1, 4
Class B Interest Carryover Shortfall.........................................39
Class B Interest Distributable Amount........................................37
Class B Pass-Through Rate.....................................................6
Class B Percentage .........................................................4
Class B Pool Factor ........................................................31
Class B Principal Distributable Amount.......................................37
Class Exemption ........................................................46
Code ........................................................13
Collateral Agent ........................................................39
Collection Account ........................................................34
Contracts ........................................................18
CPS ......................................................1, 4
Cram Down Loss ........................................................36
Credit Enhancement .........................................................1
Cutoff Date .........................................................5
Dealer Agreements ........................................................17
Dealers ........................................................17
Determination Date ........................................................35
disqualified persons ........................................................43
Distribution Date ......................................................6, 9
Employee Plans ........................................................13
ERISA ....................................................13, 43
Events of Default ........................................................42
Exemption ........................................................44
Final Scheduled Distribution Date.............................................6
Financed Vehicles .........................................................5
Insurer ....................................................13, 46
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Page
Liquidated Receivable........................................................35
Liquidation Proceeds ........................................................35
Lock-Box Account ....................................................10, 34
Lock-Box Bank ........................................................10
Lock-Box Processor ........................................................10
Obligors ........................................................17
Original Pool Balance.........................................................5
parties in interest ........................................................43
Payahead Account ........................................................34
plan assets ............................................13, 14, 44, 46
Pool Balance ........................................................31
Post Office Box ........................................................10
prepayments ........................................................31
Principal Balance ........................................................36
Principal Distributable Amount............................................7, 37
prohibited transaction...................................................13, 44
Purchase Agreement .........................................................5
Purchase Amount ....................................................33, 35
rebate ........................................................30
Receivables ......................................................1, 5
Record Date .........................................................9
Recoveries ........................................................36
refund ........................................................30
Requisite Amount .........................................................9
Restricted Group ........................................................45
Rule of 78's Receivables.....................................................30
Rule of 78's ........................................................30
Scheduled Payment ........................................................36
Securities Act .........................................................2
Seller ......................................................1, 4
Servicer ......................................................1, 4
Servicing Assumption Agreement...............................................11
Servicing Fee Rate ........................................................11
Servicing Fee ........................................................34
Simple Interest Receivables..................................................30
simple interest ........................................................30
Spread Account ........................................................39
Standard Program ........................................................19
Standby Fee ........................................................11
Standby Servicer .........................................1, 11, 15, 32, 34
Sub-Prime Borrowers ........................................................18
sum of monthly payments......................................................30
sum of periodic balances.....................................................30
Total Distribution Amount....................................................35
Trust Assets .........................................................5
Trust ......................................................1, 4
Trustee Fee ........................................................37
Trustee .........................................................1
UCC ........................................................33
S-49
<PAGE>
PROSPECTUS
CPS Auto Grantor Trusts
Auto Receivables Backed Certificates Issuable in Series
CPS Receivables Corp.
Seller
Consumer Portfolio Services
Sponsor and Servicer
This Prospectus describes certain Auto Receivables Backed Certificates
(the "Certificates") that may be sold from time to time in one or more series
(each, a "Series"), in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each Series of Certificates may include one or more
classes of Certificates, which will be issued by a trust to be formed by the
Seller for the purpose of issuing one or more Series of such Certificates (each,
a "Trust").
Each class of Certificates of any Series will evidence beneficial
ownership in a segregated pool of assets (the "Trust Assets"), as described
herein and in the related Prospectus Supplement. The Trust Assets may consist of
any combination of retail installment sales contracts between manufacturers,
dealers or certain other originators and retail purchasers secured by new and
used automobiles, light trucks, vans and minivans financed thereby, or
participation interests therein, together with all monies received relating
thereto (the "Contracts"). The Trust Assets may also include a security interest
in the underlying new and used automobiles, light trucks, vans and minivans and
property relating thereto, together with the proceeds thereof (the "Financed
Vehicles" and, together with the Contracts, the "Receivables"). If and to the
extent specified in the related Prospectus Supplement, credit enhancement with
respect to the Trust Assets or any class of Certificates may include any one or
more of the following: a financial guaranty insurance policy (a "Policy") issued
by an insurer specified in the related Prospectus Supplement, a reserve account,
a spread account, letters of credit, credit or liquidity facilities, third party
payments or other support, cash deposits or other arrangements. In addition to
or in lieu of the foregoing, credit enhancement may be provided by means of
subordination, cross-support among the Receivables or over-collateralization.
See "Description of the Pooling and Servicing Agreements--Credit and Cash Flow
Enhancement". Except to the extent the Prospectus Supplement for a Series
provides for a pre-funding period, the Receivables in the Trust Assets for a
Series will have been originated or acquired by CPS on or prior to the date of
issuance of the related Certificates, as described herein and in the related
Prospectus Supplement. The Receivables included in a Trust will be serviced by a
servicer (the "Servicer") described in the related Prospectus Supplement.
Each Series of Certificates may include one or more classes (each, a
"class"). The rights of one or more classes of Certificates of any Series may be
senior or subordinate to the rights of one or more of the other classes of
Certificates. A Series may include two or more classes of Certificates which may
differ as to the timing, order or priority of payment, pass-through rate or
amount of distributions of principal or interest or both. Information regarding
each class of Certificates of a Series, together with certain characteristics of
the related Receivables, will be set forth in the related Prospectus Supplement.
The rate of payment in respect of principal of the Certificates of any class
will depend on the priority of payment of such class and the rate and timing of
payments (including prepayments, defaults, liquidations or repurchases of
Receivables) on the related Receivables. A rate of payment lower or higher than
that anticipated may affect the weighted average life of each class of
Certificates in the manner described herein and in the related Prospectus
Supplement. See "Description of the Certificates".
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" BEGINNING ON [PAGE 13] HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE CERTIFICATES OF A GIVEN SERIES REPRESENT BENEFICIAL INTERESTS IN THE RELATED
TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF CPS, ANY SELLER,
ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE CERTIFICATES NOR
THE UNDERLYING RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY OR BY CPS, ANY SELLER, ANY SERVICER, ANY TRUSTEE OR
ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH IN THE RELATED
PROSPECTUS SUPPLEMENT. THESE CERTIFICATES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Offers of the Certificates may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Certificates of any Series,
and there can be no assurance that a secondary market for the Certificates will
develop, or if it does develop, that it will continue.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Certificates unless accompanied by a Prospectus
Supplement.
The date of this Prospectus is [_________], 1996.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Certificates to be
offered hereunder, among other things, will set forth with respect to such
Series of Certificates: (i) a description of the class or classes of such
Certificates, (ii) the "Pass-Through Rate" or other applicable rate (or the
manner of determining such rate) and authorized denominations of each class of
such Certificates; (iii) certain information concerning the Receivables and
insurance polices, cash accounts, letters of credit, financial guaranty
insurance policies, third party guarantees or other forms of credit enhancement,
if any, relating to one or more pools of Receivables or all or part of the
related Certificates; (iv) the specified interest, if any, of each class of
Certificates in, and manner and priority of, the distributions from the Trust
Assets; (v) information as to the nature and extent of subordination with
respect to such Series of Certificates, if any; (vi) the payment date to
Certificateholders; (vii) information regarding the Servicer(s) for the related
Receivables; (viii) the circumstances, if any, under which the Trust may be
subject to early termination; (ix) information regarding tax considerations; and
(x) additional information with respect to the method of distribution of such
Certificates.
AVAILABLE INFORMATION
The Sponsor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Certificates
offered hereby and thereby, nor an offer of the Certificates to any person in
any state or other jurisdiction in which such offer would be unlawful. The
delivery of this Prospectus at any time does not imply that information herein
is correct as of any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Sponsor with respect to the
Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any Series of Certificates referred to in the accompanying
Prospectus Supplement, with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Prospectus and prior to the termination of any
offering of the Certificates issued by the Trust, shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this Prospectus
from the date of the filing of such documents. Any statement contained herein or
in a document
-2-
<PAGE>
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
REPORTS TO CERTIFICATEHOLDERS
So long as the Certificates of a Series are in book-entry form, monthly
and annual reports concerning the Certificates and the related Trust will be
sent by the Trustee to Cede & Co., as the nominee of DTC and as registered
holder of such Certificates pursuant to the related Pooling and Servicing
Agreement. DTC will supply such reports to Certificateholders in accordance with
its procedures. To the extent required by the Securities Exchange Act of 1934,
as amended, the Trust will provide financial information to the
Certificateholders which has been examined and reported upon, with an opinion
expressed by, an independent public accountant; to the extent not so required,
such financial information will be unaudited. Each Trust will be formed to own
the Receivables related to the Certificates to be issued by such Trust, to issue
the related Certificates and to acquire Subsequent Receivables, if available. No
Trust will have any assets or obligations prior to issuance of the Certificates
or will engage in any activities other than those described herein. Accordingly,
no financial statements with respect to the related Trust will be included in
any Prospectus Supplement.
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<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Certificates of any Series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Certificates. Certain capitalized terms used in the summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index of
Terms".
Issuer....................... With respect to any Series of Certificates, a
Trust formed pursuant to a pooling and servicing
agreement (a "Pooling and Servicing Agreement")
among the Seller, the Servicer and the Trustee
for such Trust.
Seller....................... CPS Receivables Corp. or another special-purpose
subsidiary of CPS (each, a "Seller"). See "The
Seller and CPS.
Sponsor...................... Consumer Portfolio Services, Inc. ("CPS" or the
"Sponsor"). See "CPS's Automobile Contract
Portfolio" and "The Seller and CPS".
Servicer..................... The entity named as Servicer in the related
Prospectus Supplement (the "Servicer"). Each
Prospectus Supplement will specify whether the
Servicer will service the Receivables in the
related Receivables Pool directly or indirectly
through one or more subservicers (each, a
"Subservicer").
Trustee...................... The Trustee (the "Trustee") for each Series of
Certificates will be specified in the related
Prospectus Supplement.
The Certificates............. Each Series of Certificates will be issued
pursuant to the related Pooling and Servicing
Agreement. The related Prospectus Supplement will
specify which class or classes of Certificates of
the related Series are being offered thereby.
Each class of Certificates will have a stated
certificate balance (the "Certificate Balance")
and will accrue interest on such Certificate
Balance at a specified rate (with respect to each
class of Certificates the "Pass- Through Rate")
as set forth in the related Prospectus
Supplement. Each class of Certificates may have a
different Pass-Through Rate, which may be a
fixed,
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variable or adjustable Pass-Through Rate, or any
combination of the foregoing. The related
Prospectus Supplement will specify the
Pass-Through Rate, or the method for determining
the applicable Pass-Through Rate, for each class
of Certificates.
A Series of Certificates may include two or more
classes of Certificates that differ as to timing
and priority of distributions, seniority,
allocations of losses, Pass-Through Rate or
amount of distributions in respect of principal
or interest. Additionally, distributions in
respect of principal or interest in respect of
any such class or classes may or may not be made
upon the occurrence of specified events or on the
basis of collections from designated portions of
the related Receivables Pool. If specified in the
related Prospectus Supplement, one or more
classes of Certificates ("Strip Certificates")
may be entitled to (i) principal distributions
with disproportionate, nominal or no interest
distributions or (ii) interest distributions with
disproportionate, nominal or no principal
distributions. See "Description of the
Certificates--Distributions of Principal and
Interest".
Certificates will be available for purchase in
the minimum denomination specified in the related
Prospectus Supplement and will be available in
book- entry form unless otherwise specified in
the related Prospectus Supplement.
Certificateholders will be able to receive
Definitive Certificates only in the limited
circumstances described herein or in the related
Prospectus Supplement. See "Certain Information
Regarding the Certificates--Definitive
Certificates".
If the Servicer or any Subservicer exercises its
option to purchase the Receivables of a Trust (or
if not and, if and to the extent provided in the
related Prospectus Supplement, satisfactory bids
for the purchase of such Receivables are
received), in the manner and on the respective
terms and conditions described under "Description
of the Pooling and Servicing
Agreements--Termination", the Certificates will
be prepaid as set forth in the related Prospectus
Supplement. In addition, if the related
Prospectus Supplement provides that the property
of a Trust will
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include a Pre-Funding Account that will be used
to purchase additional Receivables after the
applicable Closing Date, one or more classes of
Certificates may be subject to a partial
prepayment of principal at or immediately
following the end of the period specified in such
Prospectus Supplement for the purchase of such
additional Receivables, in the manner and to the
extent specified in the related Prospectus
Supplement.
The Trust Assets............. The property of each Trust will include a pool of
simple interest or precomputed interest motor
vehicle installment sale contracts or motor
vehicle installment loans secured by new and used
automobiles, light trucks, vans and minivans (the
"Receivables"), including the right to receive
payments received or due on or with respect to
such Receivables on or after the date or dates
specified in the related Prospectus Supplement
(each, a "Cutoff Date"), security interests in
the vehicles financed thereby (the "Financed
Vehicles"), and any proceeds from claims under
certain related insurance policies. On the date
of issuance of a Series of Certificates specified
in the related Prospectus Supplement (the
"Closing Date" for such Series), the applicable
Seller will convey Receivables having the
aggregate principal balance specified in such
Prospectus Supplement as of the Cutoff Date
specified therein to such Trust pursuant to a
Pooling and Servicing Agreement among the Seller,
the Servicer and the Trustee of such Trust. The
property of each Trust also will include amounts
on deposit in, or certain rights with respect to,
certain trust accounts, including the related
Collection Account, any Pre-Funding Account and
any other account identified in the applicable
Prospectus Supplement. See "Description of the
Pooling and Servicing Agreements--Trust
Accounts".
If the related Prospectus Supplement provides
that the property of a Trust will include monies
initially deposited into an account (a
"Pre-Funding Account") to purchase additional
Receivables after the Closing Date, the Seller
will be obligated pursuant to the Pooling and
Servicing Agreement to sell additional
Receivables (the "Subsequent Receivables") to the
related Trust, subject only to the availability
thereof,
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having an aggregate principal balance
approximately equal to the amount deposited to
the Pre-Funding Account on the Closing Date (the
"Pre-Funded Amount"), and the Trust will be
obligated to purchase such Subsequent Receivables
(subject to the satisfaction of certain
conditions set forth in such Pooling and
Servicing Agreement) from time to time during the
period (the "Funding Period") specified in such
Prospectus Supplement for the purchase of such
Subsequent Receivables. Any Subsequent
Receivables conveyed to a Trust will have been
acquired by the Seller, directly or indirectly,
from CPS and will meet all of the credit and
other criteria set forth set forth herein and in
the related Prospectus Supplement. See "Risk
Factors--Sales of Subsequent Receivables", "The
Receivables", and "Description of the Pooling and
Servicing Agreements--Sale and Assignment of
Receivables" herein and "The Receivables Pool" in
the related Prospectus Supplement.
As used in this Prospectus, the term Receivables
will include the Receivables transferred to a
Trust on the related Closing Date (such
Receivables, the "Initial Receivables") as well
as any Subsequent Receivables transferred to such
Trust during the related Funding Period, if any.
Amounts on deposit in any Pre-Funding Account
during the related Funding Period will be
invested by the Trustee (as directed by the
Servicer) in Eligible Investments, and any
resultant investment income, less any related
investment expenses ("Investment Income"), will
be added, on the Distribution Date immediately
following the date on which such Investment
Income is paid to the Trust, to interest
collections on the Receivables for the related
Collection Period and distributed in the manner
specified in the related Prospectus Supplement.
Any funds remaining in a Pre-Funding Account at
the end of the related Funding Period will be
distributed as a prepayment or early distribution
of principal to holders of one or more classes of
the Certificates of the related Series of
Certificates, in the amounts and in accordance
with the payment priorities specified in the
related Prospectus Supplement. In no event will a
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Funding Period continue for more than 90 days
after the related Closing Date. See "Risk
Factors--Pre-Funding Accounts", "--Sales of
Subsequent Receivables" and "Description of the
Pooling and Servicing Agreements--Trust
Accounts--Pre-Funding Accounts".
Credit and Cash Flow
Enhancement................ If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to a Trust or any class or classes of
Certificates may include any one or more of the
following: subordination of one or more other
classes of Certificates of the same Series,
reserve funds, spread accounts, surety bonds,
insurance policies, letters of credit, credit or
liquidity facilities, cash collateral accounts,
over-collateralization, guaranteed investment
contracts, swaps or other interest rate
protection agreements, repurchase obligations,
other agreements with respect to third party
payments or other support, cash deposits, or
other arrangements. To the extent specified in
the related Prospectus Supplement, a form of
credit enhancement with respect to a Trust or a
class or classes of Certificates may be subject
to certain limitations and exclusions from
converge thereunder.
Pooling and Servicing
Agreements................. The applicable Seller will transfer the related
Receivables to a Trust pursuant to a Pooling and
Servicing Agreement. The Servicer will agree with
each Trust to be responsible for servicing,
managing, maintaining custody of and making
collections on the Receivables, either directly
or indirectly through one or more Subservicers.
If so provided in the related Prospectus
Supplement, the Servicer will advance scheduled
payments under each Rule of 78s Receivable or
Actuarial Receivable that are not timely made (a
"Precomputed Advance") to the extent that the
Servicer, in its sole discretion, expects to
recoup such Precomputed Advance from subsequent
payments on or with respect to such Receivable or
from other Precomputed Receivables. If so
provided in the related Prospectus Supplement,
with
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<PAGE>
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respect to Simple Interest Receivables, the
Servicer will advance any interest shortfall (a
"Simple Interest Advance"). As used herein,
"Advance" means any Precomputed Advance or Simple
Interest Advance. The Servicer will be entitled
to reimbursement of Advances from subsequent
payments on or with respect to the Receivables to
the extent described in the related Prospectus
Supplement.
Unless otherwise specified in the related
Prospectus Supplement, the Servicer will receive
a fee for servicing the Receivables of each Trust
equal to the percentage specified in the related
Prospectus Supplement of the aggregate
outstanding principal balance of the related
Receivables Pool, plus certain late fees,
prepayment charges and other administrative fees
or similar charges. Fees payable to any
Subservicer as compensation for performing
certain servicing functions with respect to all
or a portion of the Receivables in a Receivables
Pool will be the responsibility of the Servicer
and will not be an additional expense of the
Trust. See "Description of the Pooling and
Servicing Agreements--Servicing Compensation and
Payment of Expenses" herein.
No Investment Companies...... None of CPS, any Seller or any Trust will
register as an "investment company" under the
Investment Company Act of 1940, as amended (the
"Investment Company Act").
Cross-Collateralization...... As described in the related Pooling and Servicing
Agreement and the related Prospectus Supplement,
the source of payment for Certificates of each
Series will be the assets of the related Trust
Assets only. However, as may be described in the
related Prospectus Supplement, a Series or class
of Certificates may include the right to receive
moneys from a common pool of Credit Enhancement
which may be available for more than one Series
of Certificates, such as a master reserve
account, master spread account, master insurance
policy or a master collateral pool consisting of
similar Receivables. Notwithstanding the
foregoing, and as described in the related
Prospectus Supplement, no payment received on any
Receivable held by any Trust may be applied
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to the payment of Certificates issued by any
other Trust (except to the limited extent that
certain collections in excess of the amounts
needed to pay the related Certificates may be
deposited in a common master reserve account,
common master spread account or
over-collateralization account that provides
credit enhancement for more than one Series of
Certificates issued pursuant to the related
Pooling and Servicing Agreement).
Registration of
Certificates ............... Certificates may be represented by global
securities registered in the name of Cede & Co.
("Cede"), as nominee of The Sellery Trust Company
("DTC"), or another nominee. In such case,
Certificateholders will not be entitled to
receive definitive securities representing such
Certificateholders' interests, except in certain
circumstances described in the related Prospectus
Supplement. See "Description of the
Certificates--Book-Entry Registration" herein.
Optional Termination......... The Servicer, CPS, or, if specified in the
related Prospectus Supplement, certain other
entities may, at their respective options, effect
early retirement of a Series of Certificates
under the circumstances and in the manner set
forth herein under "Description of The Pooling
and Servicing Agreement--Termination" and in the
related Prospectus Supplement.
Mandatory Termination........ The Trustee, the Servicer or certain other
entities specified in the related Prospectus
Supplement may be required to effect early
retirement of all or any portion of a Series of
Certificates by soliciting competitive bids for
the purchase of the Trust Assets or otherwise,
under other circumstances and in the manner
specified in "Description of The Pooling and
Servicing Agreement--Termination" and in the
related Prospectus Supplement.
Tax Considerations........... Certificates of each Series offered hereby will,
for federal income tax purposes, constitute
interests in a Trust treated as a grantor trust
under applicable provisions of the Code. The
Prospectus Supplement for each Series of
Certificates will summarize, subject to the
limitations stated therein, federal income tax
considerations relevant to the purchase,
ownership and
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<PAGE>
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disposition of such Certificates. Investors are
advised to consult their tax advisors and to
review "Certain Federal and State Income Tax
Consequences" in the related Prospectus
Supplement.
ERISA Considerations......... The Prospectus Supplement for each Series of
Certificates will summarize, subject to the
limitations discussed therein, considerations
under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), relevant to the
purchase of such Certificates by employee benefit
plans and individual retirement accounts. See
"ERISA Considerations" in the related Prospectus
Supplement.
Ratings...................... Each class of Certificates offered pursuant to
this Prospectus and the related Prospectus
Supplement will, unless otherwise specified in
the related Prospectus Supplement, be rated in
one of the four highest rating categories by one
or more "national statistical rating
organizations", as defined in the Exchange Act,
and commonly referred to as "Rating Agencies".
Such ratings will address, in the opinion of such
Rating Agencies, the likelihood that the Trust
will be able to make timely payment of all
amounts due on the related Certificates in
accordance with the terms thereof. Such ratings
will neither address any prepayment or yield
considerations applicable to any Certificates nor
constitute a recommendation to buy, sell or hold
any Certificates. The ratings expected to be
received with respect to any Certificates will be
set forth in the related Prospectus Supplement.
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<PAGE>
RISK FACTORS
Prospective Certificateholders should consider, among other things,
the following factors in connection with the purchase of Certificates:
Limited Liquidity. There can be no assurance that a secondary market
for the Certificates of any Series or class will develop or, if it does develop,
that it will provide Certificateholders with liquidity of investment or that it
will continue for the life of such Certificates. The Prospectus Supplement for
any Series of Certificates may indicate that an underwriter specified therein
intends to establish and maintain a secondary market in such Certificates;
however, no underwriter will be obligated to do so. The Certificates will not be
listed on any securities exchange.
Pre-Funding Accounts. If so provided in the related Prospectus
Supplement, on the Closing Date the Seller will deposit the Pre-Funded Amount
specified in such Prospectus Supplement into the Pre-Funding Account. In no
event will the Pre-Funded Amount exceed 25% of the initial aggregate principal
amount of the Certificates of the related Series. The Pre-Funded Amount will be
used to purchase Subsequent Receivables from the Seller (which, in turn, will
acquire such Subsequent Receivables from CPS or Originators specified in the
related Prospectus Supplement) from time to time during the related Funding
Period. During the related Funding Period and until such amounts are applied by
the Trustee to purchase Subsequent Receivables, amounts on deposit in the
Pre-Funding Account will be invested by the Trustee (as instructed by the
Servicer) in Eligible Investments, and any investment income with respect
thereto (net of any related investment expenses) will be added to amounts
received on or in respect of the Receivables during the related Collection
Period and allocated to interest and will be distributed on the Distribution
Date pursuant to the payment priorities specified in the related Prospectus
Supplement. No Funding Period will end more than 90 days after the related
Closing Date.
To the extent that the entire Pre-Funded Amount has not been applied
to the purchase of Subsequent Receivables by the end of the related Funding
Period, any amounts remaining in the Pre-Funding Account will be distributed as
a prepayment of principal to Certificateholders on the Distribution Date at or
immediately following the end of the Funding Period, in the amounts and pursuant
to the priorities set forth in the related Prospectus Supplement. Any such
prepayment of principal could have the effect of shortening the weighted average
life of the Certificates of the related Series. In addition, holders of the
related Certificates will bear the risk that they may be unable to reinvest any
such principal prepayment at yields at least equal to the yield on such
Certificates.
Sales of Subsequent Receivables. If so provided in the related
Prospectus Supplement, the Seller will be obligated pursuant to the Pooling and
Servicing Agreement to sell Subsequent Receivables to the Trust, and the Trust
will be obligated to purchase such Subsequent Receivables, subject only to the
satisfaction of certain conditions set forth in the Pooling and Servicing
Agreement and described in the related Prospectus Supplement. If the principal
amount of the eligible Subsequent Receivables acquired by the Seller from CPS
during a Funding Period is less than the Pre-Funded Amount, the Seller may have
insufficient Subsequent Receivables to transfer to a Trust and holders of one or
more classes of the related Series of Certificates may receive a prepayment or
early distribution of principal at the end of the Funding Period as described
above under "Pre-Funding Accounts".
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<PAGE>
Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a "Subsequent
Transfer Date"), of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria specified in
the related Pooling and Servicing Agreement; (ii) the Seller shall not have
selected such Subsequent Receivables in a manner that is adverse to the
interests of holders of the related Certificates; (iii) as of the respective
Cutoff Dates for such Subsequent Receivables, all of the Receivables in the
Trust, including the Subsequent Receivables to be conveyed to the Trust as of
such date, must satisfy the parameters described under "The Receivables Pools"
herein and "The Receivables Pool" in the related Prospectus Supplement; and (iv)
the Seller must execute and deliver to such Trust a written assignment conveying
such Subsequent Receivables to such Trust. In addition, as and to the extent
specified in the related Prospectus Supplement, the conveyance of Subsequent
Receivables to a Trust is subject to the satisfaction of the condition
subsequent, among others, which must be satisfied within the applicable time
period specified in the related Prospectus Supplement, that the Seller deliver
certain legal opinions to the related Trustee with respect to the validity of
the conveyance of the Subsequent Receivables to the Trust. If any such
conditions precedent or conditions subsequent are not met with respect to any
Subsequent Receivables within the time period specified in the related
Prospectus Supplement, CPS or the Seller, as specified in the related Prospectus
Supplement, will be required to repurchase such Subsequent Receivables from the
related Trust, at a purchase price equal to the related Repurchase Amounts
therefor.
Except as described herein and in the related Prospectus Supplement,
there will be no other required characteristics of Subsequent Receivables.
Therefore, the characteristics of the entire Receivables Pool included in any
Trust may vary significantly as Subsequent Receivables are conveyed to such
Trust from time to time during the Funding Period or Revolving Period. See "The
Receivables" herein.
Certain Legal Aspects--Consumer Protection Laws. Federal and state
consumer protection laws impose requirements on creditors in connection with
extensions of credit and collections of retail installment loans, and certain of
these laws make an assignee of such a loan (such as a Trust) liable to the
obligor thereon for any violation by the lender. To the extent specified herein
and in the related Prospectus Supplement, CPS will be obligated to repurchase
any Receivable that fails to comply with such legal requirements from the Seller
and the Seller from the Trust, and the Seller and the Servicer will undertake to
enforce such obligation on behalf of the Trust. See "Certain Legal Aspects of
the Receivables--Consumer Protection Laws".
Nature of Obligors. The Obligors on the Receivables to be conveyed to
a Trust will include "sub-prime" borrowers who have limited or adverse credit
histories, low income or past credit problems and, therefore, are unable to
obtain financing from traditional sources of consumer credit. The average
interest rate charged by CPS to such "sub-prime" borrowers is generally higher
than that charged to more creditworthy customers. The payment experience on
receivables of obligors with this credit profile is likely to be different from
that on receivables of traditional auto financing sources in that default rates
are likely to be higher. In addition, the payment experience on such receivables
is likely to be more sensitive to changes in the economic climate in the areas
in which such obligors reside. As a result of the credit profile of the obligors
and the APRs of such receivables, the historical credit loss and delinquency
rates on such receivables are generally higher than those experienced by banks
and the captive finance companies of the automobile manufacturers.
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Social, Economic and Other Factors. The ability of the Obligors to
make payments on the Receivables, as well as the prepayment experience thereon,
will be affected by a variety of social and economic factors. Economic factors
include interest rates, unemployment levels, the rate of inflation and consumer
perceptions of economic conditions generally. However, the Seller is unable to
determine and has no basis to predict whether or to what extent economic or
social factors will affect the Receivables.
Ownership of Receivables. In connection with the issuance of any
Series of Certificates, CPS will originate Receivables. CPS will warrant in a
Pooling and Servicing Agreement that the transfer of the Contracts to such Trust
is either a valid assignment, transfer and conveyance of the Receivables to the
Trust or the Trustee on behalf of the Certificateholders has a valid security
interest in such Receivables. As will be described in the related Prospectus
Supplement, the related Pooling and Servicing Agreement will provide that the
Trustee will be required to maintain possession of the original copies of all
Receivables that constitute chattel paper; provided that the Servicer may take
possession of such original copies as necessary for the enforcement of any
Receivable. If the Servicer, the Trustee or other third party, while in
possession of any Receivable, sells or pledges and delivers such Receivable to
another party, in violation of the Receivables Purchase Agreement or the Pooling
and Servicing Agreement, there is a risk that such other party could acquire an
interest in such Receivable having a priority over the Trust's interest.
Furthermore, if the Servicer or a third party, while in possession of any
Receivable, is rendered insolvent, such event of insolvency may result in
competing claims to ownership or security interests in such Receivable. Such an
attempt, even if unsuccessful, could result in delays in payments on the
Certificates. If successful, such attempt could result in losses to the
Certificateholders or an acceleration of the repayment of the Certificates. CPS
will be obligated to repurchase any Receivable if there is a breach of CPS's
representations and warranties that materially and adversely affects the
interests of the Trust in such Receivable and such breach has not been cured.
Certain Legal Aspects. The transfer of the Receivables by the
applicable Seller to the Trustee pursuant to the related Pooling and Servicing
Agreement, the perfection of the security interests in the Receivables and the
enforcement of rights to realize on the Financed Vehicles as collateral for the
Receivables are subject to a number of federal and state laws, including the UCC
as in effect in various states. As specified in each Prospectus Supplement, no
action will be taken to perfect the rights of the Trustee in proceeds of any VSI
insurance policy (as hereinafter defined) insurance policies covering individual
Financed Vehicles or Obligors. Therefore, the rights of a third party with an
interest in such proceeds could prevail against the rights of the Trust prior to
the time such proceeds are deposited by the Servicer into a Trust Account (as
hereinafter defined). See "Certain Legal Aspects of the Receivables".
In connection with each sale of Receivables, security interests in
the Financed Vehicles securing the Receivables will be assigned by CPS to the
Seller. Due to the administrative burden and expense, the certificates of title
to the Financed Vehicles will not be amended or reissued to reflect the
assignment to the Trust. In the absence of such an amendment or reissuance, the
Trust may not have a perfected security interest in the Financed Vehicles
securing the Receivables in some states. By virtue of the assignment of the
applicable Purchase Agreement to the related Trust, CPS will be obligated to
repurchase any Receivable sold to the Trust as to which there did not exist on
the Closing Date a perfected security interest in the name of CPS in the
Financed Vehicle, and the Servicer will be obligated to purchase any Receivable
sold to the Trust as to which it failed to
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maintain a perfected security interest in the name of CPS in the Financed
Vehicle securing such Receivable if, in either case, such breach materially and
adversely affects such Receivable and if such failure or breach is not cured
prior to the expiration of the applicable cure period. To the extent the
security interest of CPS is perfected, the Trust will have a prior claim over
subsequent purchasers of such Financed Vehicle and holders of subsequently
perfected security interests. However, as against liens for repairs of a
Financed Vehicle or for taxes unpaid by an Obligor under a Receivable, or
through fraud, forgery, negligence or error, CPS, and therefore the Trust, could
lose the priority of its security interest or its security interest in a
Financed Vehicle. Neither CPS nor the Servicer will have any obligation to
purchase a Receivable as to which a lien for repairs of a Financed Vehicle or
for taxes unpaid by an Obligor under a Receivable result in losing the priority
of the security interest in such Financed Vehicle after the Closing Date. See
"Certain Legal Aspects of the Receivables--Security Interests in Financed
Vehicles". Federal and state consumer protection laws impose requirements upon
creditors in connection with extensions of credit and collections of retail
installment loans and certain of these laws make an assignee of such a loan
liable to the obligor thereon for any violation by the lender. Pursuant to the
applicable Purchase Agreement, CPS will be obligated to repurchase any
Receivable materially and adversely affected by the failure to comply with such
requirements. See "Certain Legal Aspects of the Receivables".
Each Seller has taken or will take steps in structuring the
transactions contemplated hereby that are intended to ensure that the voluntary
or involuntary application for relief by CPS under the United States Bankruptcy
Code or similar state laws ("Insolvency Laws") will not result in consolidation
of the assets and liabilities of the Seller with those of CPS. These steps
include the creation of each Seller as a separate, limited-purpose subsidiary
pursuant to articles of incorporation containing certain limitations (including
restrictions on the nature of the Seller's business and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any Insolvency
Law without the prior unanimous affirmative vote of all of its directors).
However, there can be no assurance that the activities of a Seller would not
result in a court concluding that the assets and liabilities of such Seller
should be consolidated with those of CPS in a proceeding under any Insolvency
Law. If a court were to reach such a conclusion, then delays in distributions on
the related Certificates could occur or reductions in the amounts of such
distributions could result. See "The Seller and the Servicer".
CPS will warrant to the Seller in each Purchase Agreement that the
sale of the Receivables by it to the Seller is a valid sale of such Receivables
to such Seller. In addition, CPS and each Seller will treat the transactions
described herein as a sale of the Receivables to the Seller, and each Seller has
taken and will take all actions that are required to perfect the Seller's
ownership interest in the Receivables. Notwithstanding the foregoing, if CPS
were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself were to take the
position that the sale of Receivables to the Seller should be recharacterized as
a pledge of such Receivables to secure a borrowing of such Seller, then delays
in payments of collections of Receivables to the Seller could occur or, should
the court rule in favor of any such trustee, debtor or creditor, reductions in
the amount of such payments could result. If the transfer of Receivables to the
Seller is recharacterized as a pledge, a tax or government lien on the property
of CPS arising before the transfer of a Receivable to the Seller may have
priority over the Seller's interest in such Receivable. If the transactions
contemplated herein are treated as a sale, the Receivables would not be part of
CPS's bankruptcy estate and would not be available to CPS's creditors.
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The U.S. Court of Appeals for the Tenth Circuit issued its opinion in
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May
27, 1993) in which it concluded (noting that its position is in contrast to that
taken by another court) that accounts receivable sold by the debtor prior to the
filing for bankruptcy remain property of the debtor's bankruptcy estate.
Although the Receivables are likely to be viewed as "chattel paper", as defined
under the Uniform Commercial Code, rather than as accounts, the rationale behind
the Octagon holding is equally applicable to chattel paper. The circumstances
under which the Octagon ruling would apply are not fully known, and the extent
to which the Octagon decision will be followed in other courts or outside of the
Tenth Circuit is not certain. If the holding in the Octagon case were applied in
a CPS bankruptcy, however, even if the transfers of Receivables to the Seller
and to the Trust were treated as sales, the Receivables would be part of CPS's
bankruptcy estate and would be subject to claims of certain creditors and delays
and reductions in payments to the Certificateholders could result. CPS will
warrant in the Purchase Agreement that the sale of the Receivables to the Seller
is a valid sale of the Receivables to the Seller, and the Seller will warrant in
the Pooling and Servicing Agreement that the sale of the Receivables to the
Trust is a valid sale of the Receivables to the Trust.
Restrictions on Recoveries. Unless specific limitations are described
on the related Prospectus Supplement with respect to specific Receivables, all
Receivables will provide that the obligations of the Obligors thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Obligor may have against CPS or any other person or entity whatsoever.
CPS will warrant that no claims or defenses have been asserted or threatened
with respect to the Receivables and that all requirements of applicable law with
respect to the Receivables have been satisfied.
In the event that CPS or the Trustee must rely on repossession and
disposition of Financed Vehicles to recover scheduled payments due on Defaulted
Receivables (as defined in the related Pooling and Servicing Agreement), the
Trust may not realize the full amount due on a Receivable (or may not realize
the full amount on a timely basis). Other factors that may affect the ability of
the Trust to realize the full amount due on a Receivable include whether
amendments to certificates of title relating to the Financed Vehicles had been
filed, depreciation, obsolescence, damage or loss of any financed Vehicle, and
the application of Federal and state bankruptcy and insolvency laws. As a
result, the Certificateholders may be subject to delays in receiving payments
and suffer loss of their investment in the Certificates.
Insurance on Financed Vehicles. Each Receivable generally requires
the Obligor to maintain insurance covering physical damage to the financed
Vehicle in an amount not less than the unpaid principal balance of such
Receivable pursuant to which CPS is named as a loss payee. Since the Obligors
select their own insurers to provide the requisite coverage, the specific terms
and conditions of their policies vary.
In addition, although each Receivable generally gives CPS the right
to force place insurance coverage in the event the required physical damage
insurance on a Vehicle is not maintained by an Obligor, neither CPS nor the
Servicer is obligated to place such coverage. In the event insurance coverage is
not maintained by Obligors and coverage is not force placed, then insurance
recoveries may be limited in the event of losses or casualties to Financed
Vehicles included in the Trust Assets, as a result of which Certificateholders
could suffer a loss on their investment.
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Delinquencies. There can be no assurance that the historical levels
of delinquencies and losses experienced by CPS on its respective loan and
vehicle portfolio will be indicative of the performance of the Contracts
included in the Trust or that such levels will continue in the future.
Delinquencies and losses could increase significantly for various reasons,
including changes in the federal income tax laws, changes in the local, regional
or national economies or due to other events.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one class of
Certificates of a Series may be subordinated in priority of payment to interest
and principal due on other classes of Certificates of a related Series.
Moreover, each Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the related Receivables and,
to the extent provided in the related Prospectus Supplement, the related reserve
account, spread account, and any other Credit Enhancement. The Certificates
represent obligations solely of the related Trust or debt secured by the related
Trust Assets, and will not represent a recourse obligation to other assets of
CPS or the Seller. No Certificates of any Series will be insured or guaranteed
by CPS, the Seller, the Servicer, or the applicable Trustee. Consequently,
holders of the Certificates of any Series must rely for repayment primarily upon
payments on the Receivables and, if and to the extent available, any Credit
Enhancement, all as specified in the related Prospectus Supplement.
Book-Entry Registration. Issuance of the Certificates in book-entry
form may reduce the liquidity of such Certificates in the secondary trading
market since investors may be unwilling to purchase Certificates for which they
cannot obtain definitive physical securities representing such
Certificateholders' interests, except in certain circumstances described in the
related Prospectus Supplement.
Since transactions in Certificates will, in most cases, be effected
only through DTC, direct or indirect participants in DTC's book-entry system
("Direct Participants" or "Indirect Participants") or certain banks, the ability
of a Certificateholder to pledge a Security to persons or entities that do not
participate in the DTC system, or otherwise to take actions in respect to such
Certificates, may be limited due to lack of a physical security representing the
Certificates.
Certificateholders may experience some delay in their receipt of
distributions of interest on and principal of the Certificates since
distributions may be required to be forwarded by the Trustee to DTC and, in such
case, DTC will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Certificateholders either directly or indirectly through
Indirect Participants. See "Description of the Certificates--Book-Entry
Registration".
Security Rating. The rating of Certificates credit enhanced by a
letter of credit, financial guaranty insurance policy, reserve fund, credit or
liquidity facilities, cash deposits or other forms of credit enhancement
(collectively "Credit Enhancement") will depend primarily on the
creditworthiness of the issuer of such external Credit Enhancement device (a
"Credit Enhancer"). Any reduction in the rating assigned to the claims-paying
ability of the related Credit Enhancer to honor its obligations pursuant to any
such Credit Enhancement below the rating initially given to the Certificates
would likely result in a reduction in the rating of the Certificates.
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Maturity and Prepayment Considerations. All of the Receivables are
prepayable at any time. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors, including the
fact that an Obligor generally may not sell or transfer the Financed Vehicle
securing a receivable without the consent of CPS. (For this purpose the term
"prepayments" includes prepayments in full, certain partial prepayments related
to refunds of extended service contract costs and unearned insurance premiums,
liquidations due to default, as well as receipts of proceeds from physical
damage, credit life and credit accident and health insurance policies and
certain other Receivables repurchased for administrative reasons.) The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, CPS is
obligated to repurchase Receivables as a result of breaches of representations
and warranties, and under certain circumstances the Servicer is obligated to
purchase Receivables pursuant to the Pooling and Servicing Agreement as a result
of breaches of certain covenants. Subject to certain conditions, the Servicer
also has the right to purchase the Receivables when the aggregate principal
balance thereof is 10% or less of the aggregate principal balance thereof on the
Cutoff Date. Any reinvestment risks resulting from a faster or slower incidence
of prepayment of Receivables will be borne entirely by the Certificateholders.
The rate of prepayments of Receivables cannot be predicted and is
influenced by a wide variety of economic, social, and other factors, including
prevailing interest rates, the availability of alternate financing and local and
regional economic conditions. Therefore, no assurance can be given as to the
level of prepayments that a Trust will experience.
Certificateholders should consider, in the case of Certificates
purchased at a discount, the risk that a slower than anticipated rate of
prepayments on the Receivables could result in an actual yield that is less than
the anticipated yield and, in the case of any Certificates purchased at a
premium, the risk that a faster than anticipated rate of prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield.
Limitations on Interest Payments and Foreclosures. Generally, under
the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended
(the "Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Receivable (including an Obligor
who is a member of the National Guard or is in reserve status at the time of the
origination of the Receivable and is later called to active duty) may not be
charged interest (including fees and charges) above an annual rate of 6% during
the period of such Obligor's active duty status, unless a court orders otherwise
upon application of the lender. It is possible that such action could have an
effect, for an indeterminate period of time, on the ability of the Servicer to
collect full amounts of interest on certain of the Receivables. In addition, the
Relief Act imposes limitations that would impair the ability of the Servicer to
foreclose on an affected Receivable during the Obligor's period of active duty
status. Thus, in the event that such a Receivable goes into default, there may
be delays and losses occasioned by the inability of the Servicer to realize upon
the Financed Vehicle in a timely fashion.
Financial Condition of CPS. CPS is generally not obligated to make
any payments in respect of the Certificates or the Receivables of a specific
Trust. If CPS were to cease acting as Servicer, delays in processing payments on
the Receivables and information in respect thereof could occur and result in
delays in payments to the Certificateholders.
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In certain circumstances, CPS will be required to acquire Receivables
from the related Trust with respect to which such representations and warranties
have been breached. In the event that CPS is incapable of complying with its
repurchase obligations and no other party is obligated to perform or satisfy
such obligations, Certificateholders of the applicable Trust may be subject to
delays in receiving payments and suffer loss of their investment in the
Certificates.
The related Prospectus Supplement will set forth certain information
regarding CPS. In addition, CPS is subject to the information requirements of
the Exchange Act and, in accordance therewith, file reports and other
information with the Commission. For further information regarding CPS reference
is made to such reports and other information which are available as described
under "Available Information".
FORMATION OF THE TRUST
With respect to each Series of Certificates, the Seller will
establish a separate Trust pursuant to a Pooling and Servicing Agreement for the
transactions described herein and in the related Prospectus Supplement. The
Seller will establish each Trust by selling and assigning the Trust Assets, as
described below, to the applicable Trustee in exchange for Certificates issued
by such Trust. Prior to such sale and assignment, the Trust will have no assets
or obligations or any operating history. The Trust will not engage in any
business. The Trust will hold the Receivables, issue the Certificates and
distribute payments on the Certificates.
The Servicer will initially service the Receivables comprising the
Trust Assets pursuant to the related Pooling and Servicing Agreement and will be
compensated for acting as the Servicer. See "Description of the Pooling and
Servicing Agreements--Servicing Compensation". The Trustee will be appointed
custodian for the Receivables and the certificates of title relating to the
Financed Vehicles, and the Receivables and such certificates of title will be
delivered to and held in physical custody by the Trustee. However, the
Receivables will not be marked or stamped to indicate that they have been sold
to the Trust, and the certificates of title of the Financed Vehicles will not be
endorsed or otherwise amended to identify the Trustee as the new secured party.
See "Certain Legal Aspects of the Receivables".
No Trust will acquire any assets other than the Trust Assets, and it
is not anticipated that any Trust will have any need for additional capital
resources. Because a Trust will have no operating history upon its establishment
and will not engage in any business other than acquiring and holding the Trust
Assets, issuing the Certificates and distributing payments on the Certificates,
no historical or pro forma financial statements or ratios of earnings to fixed
charges with respect to any Trust have been included herein.
THE TRUST ASSETS
Each Certificate issued by a Trust will represent a fractional
undivided interest in such Trust, other than interest received by the Trust in
excess of the applicable Pass-Through Rate for such Certificate, as specified in
the applicable Prospectus Supplement. To the extent specified in the Prospectus
Supplement for a Trust, the Trust Assets of a Trust will include a pool (a
"Receivables Pool") of retail installment sale contracts between dealers (the
"Dealers") in new and used automobiles, light trucks, vans and minivans and
retail purchasers (the "Obligors") and, with respect
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to Rule of 78's Receivables, certain monies due thereunder after the applicable
Cutoff Date, and, with respect to Simple Interest Receivables, certain monies
received thereunder after the applicable Cutoff Date. Pursuant to agreements
between the Dealers and CPS ("Dealer Agreements"), the Receivables will be
purchased by CPS. As further described in the related Prospectus Supplement, the
Trust Assets of a Trust will also include (i) such amounts as from time to time
may be held in one or more trust accounts established and maintained by the
Trustee pursuant to the Agreement; (ii) the rights of the Seller under the
Purchase Agreement; (iii) security interests in the Financed Vehicles; (iv) the
rights of the Seller to receive any proceeds with respect to the Receivables
from claims on physical damage, credit life and credit accident and health
insurance policies covering the Financed Vehicles or the Obligors, as the case
may be; (v) the rights of the Seller to refunds for the costs of extended
service contracts and to refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies covering the Financed
Vehicles or Obligors, as the case may be; and (vi) any and all proceeds of the
foregoing. If so specified in the related Prospectus Supplement, the Trust
Assets also will include the Credit Enhancement provided for the benefit of the
Certificateholders of such Trust. Any Payahead Account will be maintained with
the applicable Trustee for the benefit of the Obligors, but will not be part of
the Trust.
If so provided in the related Prospectus Supplement, the property of
a Trust may also include a Pre-Funded Amount, which the Seller will deposit to
the Pre-Funding Account on the Closing Date and which will be used by the Trust
to purchase Subsequent Receivables from the Seller during the related Funding
Period. Any Subsequent Receivables so conveyed to a Trust will also be assets of
such Trust.
If the protection provided to Certificateholders, if any, by any such
Credit Enhancement is insufficient, such Certificateholders will have to look to
payments by or on behalf of Obligors on the related Receivables and the proceeds
from the repossession and sale of Financed Vehicles that secure defaulted
Receivables for distributions of principal and interest on the Certificates. In
such event, certain factors, such as the applicable Trust's not having perfected
security interests in all of the Financed Vehicles, may limit the ability of a
Trust to realize on the collateral securing the related Receivables, or may
limit the amount realized to less than the amount due under the related
Receivables. Certificateholders may thus be subject to delays in payment on, or
may incur losses on their investment in, such Certificates as a result of
defaults or delinquencies by Obligors and depreciation in the value of the
related Financed Vehicles. See "Description of the Pooling and Servicing
Agreements--Credit and Cash Flow Enhancement" and "Certain Legal Aspects of the
Receivables".
The Receivables comprising the Trust Assets will, as specifically
described in the related Prospectus Supplement, be either (i) originated by CPS,
(ii) originated by various manufacturers (or their captive finance companies)
and acquired by CPS, (iii) originated by various Dealers and acquired by CPS or
(iv) acquired by CPS from other originators or owners of Receivables. Such
Receivables will generally have been originated by CPS or acquired by CPS in
accordance with CPS's specified underwriting criteria. The underwriting criteria
applicable to the Receivables included in any Trust will be described in all
material respects in the related Prospectus Supplement.
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The Receivables included in the Trust Assets will be selected from
those Receivables held by CPS based on the criteria specified in the applicable
Pooling and Servicing Agreement and described herein or in the related
Prospectus Supplement.
ACQUISITION OF RECEIVABLES BY THE SELLER
On or prior to each Closing Date, CPS will sell and assign to the
Seller, without recourse, except as provided in the Purchase Agreement, its
entire interest in the applicable Receivables, together with its security
interests in the Financed Vehicles, pursuant to a purchase agreement between CPS
and the Seller (the "Purchase Agreement").
In each Purchase Agreement, CPS will represent and warrant to the
Seller, among other things, that (i) the information provided with respect to
the applicable Receivables is correct in all material respects; (ii) at the date
of issuance of the Certificates, physical damage insurance covering each
Financed Vehicle is in effect in accordance with CPS's normal requirements;
(iii) at the date of issuance of the applicable Certificates, the related
Receivables are free and clear of all security interests, liens, charges, and
encumbrances and no offsets, defenses, or counterclaims against Dealers have
been asserted or threatened; (iv) at the date of issuance of the Certificates,
each of the Receivables is or will be secured by a first-priority perfected
security interest in the Financed Vehicle in favor of CPS; and (v) each
Receivable, at the time it was originated, complied and, at the date of issuance
of the Certificates, complies in all material respects with applicable federal
and state laws, including, without limitation, consumer credit, truth in
lending, equal credit opportunity and disclosure laws. As of the last day of the
second (or, if CPS elects, the first) month following the discovery by or notice
to the Seller and CPS of a breach of any representation or warranty that
materially and adversely affects a Receivable, unless the breach is cured, CPS
will purchase such Receivable from the Trust for the Purchase Amount. The
"Purchase Amount" equals the unpaid principal balance owed by the Obligor plus
interest thereon at the respective APR to the last day of the month of
repurchase. The repurchase obligation will constitute the sole remedy available
to the Certificateholders, the Certificate Insurer or the Trustee for any such
uncured breach.
THE RECEIVABLES
Receivables Pools
Information with respect to the Receivables in the related
Receivables Pool will be set forth in the related Prospectus Supplement,
including, to the extent appropriate, the composition of such Receivables and
the distribution of such Receivables by geographic concentration, payment
frequency and current principal balance as of the applicable Cut-off Date.
If so provided in the related Prospectus Supplement, the Seller will
be obligated pursuant to the Pooling and Servicing Agreement to sell Subsequent
Receivables to the Trust, and the Trust will be obligated to purchase such
Subsequent Receivables, subject only to the satisfaction of certain conditions
set forth in the Pooling and Servicing Agreement and described in the related
Prospectus Supplement. If the principal amount of the eligible Subsequent
Receivables acquired by the Seller from the CPS during a Funding Period is less
than the Pre-Funded Amount, the Seller may have insufficient Subsequent
Receivables to transfer to a Trust and holders of one or more classes of
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the related Series of Certificates may receive a prepayment or early
distribution of principal at the end of the Funding Period as described above
under "Risk Factors--Pre-Funding Accounts".
Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a "Subsequent
Transfer Date"), of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria specified in
the related Pooling and Servicing Agreement; (ii) the Seller shall not have
selected such Subsequent Receivables in a manner that is adverse to the
interests of holders of the related Certificates; (iii) as of the respective
Cutoff Dates for such Subsequent Receivables, all of the Receivables in the
Trust, including the Subsequent Receivables to be conveyed to the Trust as of
such date, must satisfy the parameters described under "The Receivables Pools"
herein and "The Receivables Pool" in the related Prospectus Supplement; and (iv)
the Seller must execute and deliver to such Trust a written assignment conveying
such Subsequent Receivables to such Trust. In addition, as and to the extent
specified in the related Prospectus Supplement, the conveyance of Subsequent
Receivables to a Trust is subject to the satisfaction of the condition
subsequent, among others, which must be satisfied within the applicable time
period specified in the related Prospectus Supplement, that the Seller deliver
certain legal opinions to the related Trustee with respect to the validity of
the conveyance of the Subsequent Receivables to the Trust. If any such
conditions precedent or conditions subsequent are not met with respect to any
Subsequent Receivables within the time period specified in the related
Prospectus Supplement, CPS or the Seller, as specified in the related Prospectus
Supplement, will be required to repurchase such Subsequent Receivables from the
related Trust, at a purchase price equal to the related Repurchase Amounts
therefor.
Except as described herein and in the related Prospectus Supplement,
there will be no other required characteristics of Subsequent Receivables.
Therefore, the characteristics of the entire Receivables Pool included in any
Trust may vary significantly as Subsequent Receivables are conveyed to such
Trust from time to time during the Funding Period or Revolving Period.
The Receivables
As specified in the related Prospectus Supplement, the Receivables
may consist of any combination of Rule of 78s Receivables, Actuarial Receivables
or Simple Interest Receivables. Generally, "Rule of 78s Receivables" provide for
fixed level monthly payments which will amortize the full amount of the
Receivable over its term. The Rule of 78s Receivables provide for allocation of
payments according to the "sum of periodic balances" or "sum of monthly
payments" method (the "Rule of 78s"). Each Rule of 78s Receivable provides for
the payment by the Obligor of a specified total amount of payments, payable in
monthly installments on the related due date, which total represents the
principal amount financed and finance charges in an amount calculated on the
basis of a stated annual percentage rate ("APR") for the term of such
Receivable. The rate at which such amount of finance charges is earned and,
correspondingly, the amount of each fixed monthly payment allocated to reduction
of the outstanding principal balance of the related Receivable are calculated in
accordance with the Rule of 78s. Under the Rule of 78s, the portion of each
payment allocable to interest is higher during the early months of the term of a
Receivable and lower during later months than that under a constant yield method
for allocating payments between interest and principal. Notwithstanding the
foregoing, as specified in the related Prospectus Supplement, all payments
received by the Servicer on or in respect of the Rule of 78s Receivables may be
allocated on an actuarial or simple interest basis.
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Generally, "Actuarial Receivables" provide for monthly payments with
a final fixed value payment which is greater than the scheduled monthly
payments. An Actuarial Receivable provides for amortization of the amount
financed over a series of fixed level payment monthly installments, but also
requires a final fixed value payment due after payment of such monthly
installments which may be satisfied by (i) payment in full in cash of such
amount, (ii) transfer of the Financed Vehicle to CPS, provided certain
conditions are satisfied or (iii) refinancing the fixed value payment in
accordance with certain conditions.
"Simple Interest Receivables" provide for the amortization of the
amount financed under the Receivable over a series of fixed level monthly
payments. However, unlike the monthly payment under Rule of 78s Receivables,
each monthly payment consists of an installment of interest which is calculated
on the basis of the outstanding principal balance of the receivable multiplied
by the stated APR and further multiplied by the period elapsed (as a fraction of
a calendar year) since the preceding payment of interest was made. As payments
are received under a Simple Interest Receivable, the amount received is applied
first to interest accrued to the date of payment and the balance is applied to
reduce the unpaid principal balance. Accordingly, if an Obligor pays a fixed
monthly installment before its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be less than it would have been had the payment been made as scheduled, and the
portion of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
If an Obligor elects to prepay a Rule of 78s Receivable in full, it
is entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the Obligor is required to
pay interest only to the date of prepayment. The amount of a rebate under a Rule
of 78s Receivable calculated in accordance with the Rule of 78s will always be
less than had such rebate been calculated on an actuarial basis and generally
will be less than the remaining scheduled payments of interest that would be due
under a Simple Interest Receivable for which all payments were made on schedule.
Distributions to Certificateholders may not be affected by Rule of 78s rebates
under the Rule of 78s Receivable because, as specified in the related Prospectus
Supplement, such distributions may be determined using the actuarial or simple
interest method.
Delinquencies, Repossessions, And Net Losses
Certain information relating to CPS's delinquency, repossession and
net loss experience with respect to Receivables it has originated or acquired
will be set forth in each Prospectus Supplement. This information may include,
among other things, the experience with respect to all Receivables in CPS's
portfolio during certain specified periods. There can be no assurance that the
delinquency, repossession and net loss experience with respect to any Trust will
be comparable to CPS's prior experience.
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Maturity And Prepayment Considerations
As more fully described in the related Prospectus Supplement, if a
Receivable permits prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Certificates.
The rate of prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
CPS will be obligated to acquire Receivables from the related Trust pursuant to
the applicable Pooling and Servicing Agreement or Purchase Agreement as a result
of breaches of representations and warranties. Any reinvestment risks resulting
from a faster or slower amortization of the related Certificates which results
from prepayments will be borne entirely by the related Certificateholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related Series of
Certificates, together with a description of any applicable prepayment
penalties.
CPS'S AUTOMOBILE CONTRACT PORTFOLIO
General
CPS was incorporated in the State of California on March 8, 1991. CPS
and its subsidiaries engage primarily in the business of purchasing, selling and
servicing retail automobile installment sales contracts ("Contracts") originated
by Dealers located primarily in California, Florida, Pennsylvania, Texas,
Illinois and Nevada. CPS specializes in Contracts with borrowers ("Sub-Prime
Borrowers") who generally would not be expected to qualify for traditional
financing such as that provided by commercial banks or automobile manufacturers'
captive finance companies. Sub-Prime Borrowers generally have limited credit
history, lower than average income or past credit problems.
On May 31, 1991, CPS acquired 100% of the stock of G&A Financial
Services, Inc., a consumer loan servicing company, whose assets consisted
primarily of servicing contracts with respect to loan portfolios owned by third
parties. G&A Financial Services, Inc. has subsequently been dissolved. On
September 1, 1991, CPS was engaged to act as a servicer for loan portfolios
aggregating $16.5 million by two companies who had purchased such portfolios
from the Resolution Trust Corporation. As of December 31, 1994, CPS had
terminated all such third-party servicing arrangements. On October 1, 1991, CPS
began its program of purchasing Contracts from Dealers and selling them to
institutional investors. Through March 31, 1996, CPS had purchased $450.2
million of Contracts from Dealers and sold $391.6 million of Contracts to
institutional investors. CPS continues to service all of the Contracts it has
purchased, including those it has re-sold. CPS has relationships and is party to
Dealer Agreement with over 1,200 dealerships located in 32 states of the United
States. CPS purchases Contracts from Dealers at a discount ranging from 0% to
10% of the total amount financed under the Contracts. In addition, CPS generally
charges Dealers an acquisition fee to defray the direct administrative costs
associated with the processing of contracts that are ultimately purchased by
CPS. A Dealer Agreement does not obligate a Dealer to submit Contracts by CPS,
nor does it obligate CPS to purchase Contracts offered by the Dealers.
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CPS purchases Contracts from Dealers with the intent to resell them.
Prior to the issuances of the Certificates, Contracts have been sold to
institutional investors either as bulk sales or as private placements of
securities collateralized by the Contracts. Purchasers of Contracts receive a
pass-through rate of interest set at the time of the sale, and CPS receives a
base servicing fee for its duties relating to the accounting for and collection
of the Contracts. In addition, CPS is entitled to certain excess servicing fees
that represent collection on the Contracts in excess of those required to pay
principal and interest due to the investor at face value and without recourse
except that the representations and warranties made to CPS by the Dealers are
similarly made to the investors by CPS. CPS has some credit risk with respect to
the excess servicing fees it receives in connection with the sale of contracts
to investors and its continued servicing function since the receipt by CPS of
such excess servicing fees is dependent upon the credit performance of the
Contracts. Additional information with respect to CPS's automobile contract
portfolio, including information regarding CPS's underwriting criteria and
servicing and collection procedures, will be set forth in each Prospectus
Supplement.
The principal executive offices of CPS are located at 2 Ada, Suite
100, Irvine, California 92718. CPS's telephone number is (714) 753-6800.
POOL FACTORS
The "Pool Factor" for each class of Certificates will be a
seven-digit decimal, which the Servicer will compute prior to each distribution
with respect to such class of Certificates, indicating the remaining outstanding
principal balance of such class of Certificates as of the applicable
Distribution Date, as a fraction of the initial outstanding principal balance of
such class of Certificates. Each Pool Factor will be initially 1.0000000, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the applicable class of Certificates. A Certificateholder's portion
of the aggregate outstanding principal balance of the related class of
Certificates is the product of (i) the original aggregate purchase price of such
Certificateholder's Certificates and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement
with respect to each Series of Certificates, the related Certificateholders of
record will receive reports on or about each Distribution Date concerning the
payments received on the Receivables, the Pool Balance (as such term is defined
in the related Prospectus Supplement, the "Pool Balance"), each Pool Factor and
various other items of information. In addition, Certificateholders of record
during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by law.
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the
net proceeds from the sale of the Certificates of a Series will be applied by
the applicable Trust to the purchase of the Receivables from the applicable
Seller and to make the deposit of the Pre-Funded Amount, if any, to the
Pre-Funding Account. The Seller will use the portion of such proceeds paid to it
for general corporate purposes.
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THE SELLER AND CPS
Each Seller will be a wholly-owned subsidiary of CPS. CPS Receivables
Corp. was incorporated in the State of California in June of 1994. CPS
Receivables Corp. was, and each other Seller will be, organized for the limited
purpose of purchasing automobile installment sale contracts from CPS and
transferring such receivables to third parties and any activities incidental to
and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of CPS Receivables Corp. are located at 2 Ada, Suite
100, Irvine, California 92718; telephone (714) 753-6800.
The Seller has taken steps in structuring the transaction
contemplated hereby that are intended to make it unlikely that the voluntary or
involuntary petition for relief by CPS under any Insolvency Law will result in
consolidation of the assets and liabilities of the Seller or the Trust with
those of CPS. These steps include the creation of the Seller as a separate,
limited-purpose subsidiary pursuant to articles of incorporation containing
certain limitations (including restrictions on the nature of the Seller's
business and a restriction on the Seller's ability to commence a voluntary case
or proceeding under any Insolvency Law without the prior unanimous affirmative
vote of all of its directors). However, there can be no assurance that the
activities of the Seller would not result in a court concluding that the assets
and liabilities of the Seller should be consolidated with those of CPS in a
proceeding under any Insolvency Law.
The Seller has received the advice of counsel to the effect that,
subject to certain facts, assumptions and qualifications, in a properly
presented case under current law, in the event that CPS becomes a debtor in a
case under the Bankruptcy Code, a United States Bankruptcy Court would not order
the substantive consolidation of the assets and liabilities of the Seller with
those of CPS. Among other things, it is assumed by counsel that the Seller will
follow certain procedures in the conduct of its affairs, including maintaining
records and books of account separate from those of CPS, refraining from
commingling its assets with those of CPS and refraining from holding itself out
as having agreed to pay, or being liable for, the debts of CPS. The Seller
intends to follow and has represented to such counsel that it will follow these
and other procedures related to maintaining its separate corporate identity.
However, in the event that the Seller did not follow these procedures, and in
certain other circumstances, there can be no assurance that a court would not
conclude that the assets and liabilities of the Seller should be consolidated
with those of CPS. If a court were to reach such a conclusion, or a filing were
made to litigate any of the foregoing issues, delays in distributions on the
Certificates (and possible reductions in the amount of such distributions) could
occur. See "Special Considerations--Certain Legal Aspects".
CPS was incorporated in the State of California on March 8, 1991. On
October 22, 1992, CPS completed a public offering of 1,300,000 shares
(approximately 31% of the shares then outstanding) of its common stock at an
initial price of $5.00 per share. Prior to that time, 100% of the common stock
of CPS was owned by CPS Holdings, Inc., a holding company the majority of the
shares of which are owned by Charles E. Bradley, Sr. On March 6, 1995, CPS
completed a second public offering of 1,000,000 shares (approximately 18.5% of
the shares then outstanding) of its common stock at $14.75 per share. CPS and
its subsidiaries engage primarily in the business of purchasing, selling and
servicing Contracts originated by Dealers located primarily in California,
Florida, Pennsylvania, Texas, Illinois and Nevada. CPS specializes in Contracts
with Sub-Prime Borrowers who generally would not be expected to qualify for
traditional financing such as that
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provided by commercial banks or automobile manufacturers' captive finance
companies. Sub-Prime Borrowers generally have limited credit history, lower than
average income or past credit problems. CPS also provides accounting and
collection services to third party owners of automobile loan portfolios that
were not originated by CPS. CPS's executive offices are located at 2 Ada, Suite
100, Irvine, California 92718; telephone (714) 753-6800.
DESCRIPTION OF THE CERTIFICATES
General
Each Trust will, if so provided in the related Prospectus Supplement,
issue one or more classes of Certificates pursuant to a Pooling and Servicing
Agreement. A form of Pooling and Servicing Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of the related
Certificates and Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a Series purchased by CPS, each class of
Certificates will initially be represented by one or more certificates
registered in the name of the Seller. Certificates will be available for
purchase in the minimum denominations specified in the related Prospectus
Supplement and, unless otherwise specified in the related Prospectus Supplement,
in book-entry form only. The Seller has been informed by DTC that DTC's nominee
will be Cede, unless another nominee is specified in the related Prospectus
Supplement. Accordingly, such nominee is expected to be the holder of record of
the Certificates of any Series that are not purchased by CPS. Unless and until
Definitive Certificates are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no Certificateholder (other than
CPS) will be entitled to receive a physical certificate representing a
Certificate. All references herein and in the related Prospectus Supplement to
actions by Certificateholders refer to actions taken by DTC upon instructions
from the Participants, and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the case may be, as the registered holder of the
Certificates, for distribution to Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
Certificates--Book-Entry Registration" and "--Definitive Certificates". Any
Certificate of a Series owned by CPS will be entitled to equal and proportionate
benefits under the applicable Pooling and Servicing Agreement, except that such
Certificates will be deemed not to be outstanding for the purpose of determining
whether the requisite percentage of Certificateholders has given any request,
demand, authorization, direction, notice, or consent or taken any other action
under the related Pooling and Servicing Agreement.
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of
losses, Pass-Through Rate and amount of or method of determining distributions
with respect to principal and interest on each class of Certificates of a Series
will be described in the related Prospectus Supplement. Distributions of
interest on such Certificates will be made on the dates specified in the related
Prospectus Supplement (the "Distribution Date") and, if so specified in the
related Prospectus
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Supplement, will be made prior to distributions with respect to principal of
such Certificates. To the extent provided in the related Prospectus Supplement,
a Series of Certificates may include one or more classes of Strip Certificates
entitled to (i) principal distributions with disproportionate, nominal or no
interest distributions or (ii) interest distributions with disproportionate,
nominal or no principal distributions. Each class of Certificates may have a
different Pass-Through Rate, which may be a fixed, variable or adjustable
Pass-Through Rate (and which may be zero for certain classes of Strip
Certificates) or any combination of the foregoing. The related Prospectus
Supplement will specify the Pass-Through Rate for each class of Certificates of
a Series or the method for determining such Pass-Through Rate.
In the case of a Series of Certificates that includes two or more
classes of Certificates, the timing, sequential order, priority of payment or
amount of distributions in respect of interest and principal, and any schedule
or formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement.
Distributions in respect of interest on and principal of any class of
Certificates will be made on a pro rata basis among all holders of Certificates
of such class.
CERTAIN INFORMATION REGARDING THE CERTIFICATES
Fixed Rate Certificates
Each class of Certificates (other than certain classes of Strip Notes
or Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Certificates") or at a variable or adjustable rate per annum ("Floating Rate
Certificates"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Certificates will bear interest at the
applicable per annum Pass-Through Rate specified in the applicable Prospectus
Supplement. Unless otherwise set forth in the applicable Prospectus Supplement,
interest on each class of Fixed Rate Certificates will be computed on the basis
of a 360-day year of twelve 30-day months.
Floating Rate Certificates
Each class of Floating Rate Certificates will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Certificates, the
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate one of the
following Base Rates as applicable to a given Floating Rate Certificate: (i)
LIBOR (a "LIBOR Certificate"), (ii) the Commercial Paper Rate (a "Commercial
Paper Rate Certificate"), (iii) the Treasury Rate (a "Treasury Rate
Certificate"), (iv) the Federal Funds Rate (a "Federal Funds Rate Certificate"),
(v) the CD Rate (a "CD Rate Certificate") or (vi) such other Base Rate as is set
forth in such Prospectus Supplement. The "Index Maturity" for any class of
Floating Rate Certificates is the period of maturity of the
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instrument or obligation from which the Base Rate is calculated. "H.15(519)"
means the publication entitled "Statistical Release H.15(519), Selected Interest
Rates", or any successor publication, published by the Board of Governors of the
Federal Reserve System. "Composite Quotations" means the daily statistical
release entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities"
published by the Federal Reserve Bank of New York. "Interest Reset Date" will be
the first day of the applicable Interest Reset Period, or such other day as may
be specified in the related Prospectus Supplement with respect to a class of
Floating Rate Certificates.
As specified in the applicable Prospectus Supplement, Floating Rate
Certificates of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Certificates, the interest rate
applicable to any class of Floating Rate Certificates will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate
Certificates will be issued will appoint, and enter into agreements with, a
calculation agent (each, a "Calculation Agent") to calculate interest rates on
each such class of Floating Rate Certificates issued with respect thereto. The
applicable Prospectus Supplement will set forth the identity of the Calculation
Agent for each such class of Floating Rate Certificates of a given Series, which
may be either the related Trustee or Indenture Trustee with respect to such
Series. All determinations of interest by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on the
holders of Floating Rate Certificates of a given class. All percentages
resulting from any calculation of the rate of interest on a Floating Rate
Certificate will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward.
CD Rate Certificates. Each CD Rate Certificate will bear interest for
each Interest Reset Period at the interest rate calculated with reference to the
CD Rate and the Spread or Spread Multiplier, if any, specified in such Security
and in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period shall be the rate as of
the second business day prior to the Interest Reset Date for such Interest Reset
Period (a "CD Rate Determination Date") for negotiable certificates of deposit
having the Index Maturity designated in the applicable Prospectus Supplement as
published in H.15(519) under the heading "Cds (Secondary Market)". In the event
that such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on such
CD Rate Determination Date for negotiable certificates of deposit of the Index
Maturity designated in the applicable Prospectus Supplement as published in
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the CD Rate for such
Interest Reset Period will be calculated by the Calculation Agent for such CD
Rate Certificate and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date,
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Certificate for
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negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the related Prospectus Supplement in a denomination of $5,000,000; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the CD Rate for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the first to occur of (a) the [tenth] calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the [second] business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset Date.
Commercial Paper Rate Certificates. Each Commercial Paper Rate
Certificate will bear interest for each Interest Reset Period at the interest
rate calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any, specified in such Security and in the applicable
Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset Period will be
determined by the Calculation Agent for such Commercial Paper Rate Certificate
as of the [second] business day prior to the Interest Reset Date for such
Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall
be the Money Market Yield (as defined below) on such Commercial Paper Rate
Determination Date for the rate for commercial paper having the Index Maturity
specified in the applicable Prospectus Supplement, as such rate shall be
published in H.15(519) under the heading "Commercial Paper". In the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Commercial Paper Rate
Determination Date, then the "Commercial Paper Rate" for such Interest Reset
Period shall be the Money Market Yield on such Commercial Paper Rate
Determination Date for the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York
City time, on such Commercial Paper Rate Determination Date of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent for such Commercial Paper Rate Certificate for commercial paper of the
specified Index Maturity placed for an industrial issuer whose bonds are rated
"AA" or the equivalent by a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the "Commercial Paper
Rate" for such Interest Reset Period will be the same as the Commercial Paper
Rate for the immediately preceding Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance with
the following formula:
D x 360
Money Market Yield = ----------------- x 100
360 - (D x M)
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where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period following
the applicable Interest Reset Date.
Federal Funds Rate Certificates. Each Federal Funds Rate Certificate
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the applicable Prospectus
Supplement.
The "Federal Funds Rate" for each Interest Reset Period shall be the
effective rate on the Interest Reset Date for such Interest Reset Period (a
"Federal Funds Rate Determination Date") for Federal Funds as published in H.
15(519) under the heading "Federal Funds (Effective)". In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such Federal Funds Rate Determination
Date, the "Federal Funds Rate" for such Interest Reset Period shall be the rate
on such Federal Funds Rate Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H. 15(519) or Composite Quotations, then the "Federal Funds Rate" for
such Interest Reset Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.15(519) under the
heading "Federal Funds (Effective)"; provided, however, that if such rate is not
made publicly available by the Federal Reserve Bank of New York by 3:00 p.m.,
New York City time, on such Calculation Date, the "Federal Funds Rate" for such
Interest Reset Period will be the same as the Federal Funds Rate in effect for
the immediately preceding Interest Reset Period. In the case of a Federal Funds
Rate Certificate that resets daily, the interest rate on such Security for the
period from and including a Monday to but excluding the succeeding Monday will
be reset by the Calculation Agent for such Certificate on such second Monday
(or, if not a business day, on the next succeeding business day) to a rate equal
to the average of the Federal Funds Rates in effect with respect to each such
day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding business day.
LIBOR Certificates. Each LIBOR Certificate will bear interest for
each Interest Reset Period at the interest rate calculated with reference to
LIBOR and the Spread or Spread Multiplier, if any, specified in such Certificate
and in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, "LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for any LIBOR Certificate as follows:
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(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"),
the Calculation Agent for such LIBOR Certificate will determine the
arithmetic mean of the offered rates for deposits in U.S. dollars for
the period of the Index Maturity specified in the applicable
Prospectus Supplement, commencing on such Interest Reset Date, which
appear on the Reuters Screen LIBO Page at approximately 11:00 a.m.,
London time, on such LIBOR Determination Date. For purposes of
calculating LIBOR, "London Banking Day" means any business day on
which dealings in deposits in United States dollars are transacted in
the London interbank market and "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank offered rates
of major banks). If at least two such offered rates appear on the
Reuters Screen LIBO Page, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of such offered rates as determined by the
Calculation Agent for such LIBOR Certificate.
(ii) If fewer than two offered rates appear on the Reuters
Screen LIBO Page on such LIBOR Determination Date, the Calculation
Agent for such LIBOR Certificate will request the principal London
offices of each of four major banks in the London interbank market
selected by such Calculation Agent to provide such Calculation Agent
with its offered quotations for deposits in U.S. dollars for the
period of the specified Index Maturity, commencing on such Interest
Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination
Date and in a principal amount equal to an amount of not less than
$1,000,000 that is representative of a single transaction in such
market at such time. If at least two such quotations are provided,
"LIBOR" for such Interest Reset Period will be the arithmetic mean of
such quotations. If fewer than two such quotations are provided,
"LIBOR" for such Interest Reset Period will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by
the Calculation Agent for such LIBOR Certificate at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for
loans in U.S. dollars to leading European banks, for the period of
the specified Index Maturity, commencing on such Interest Reset Date,
and in a principal amount equal to an amount of not less than
$1,000,000 that is representative of a single transaction in such
market at such time; provided, however, that if the banks selected as
aforesaid by such Calculation Agent are not quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period
will be the same as LIBOR for the immediately preceding Interest
Reset Period.
Treasury Rate Certificates. Each Treasury Rate Certificate will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
The "Treasury Rate" for each Interest Period will be the rate for the
auction held on the Treasury Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.15(519) under the heading
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"U.S. Government Securities-Treasury bills-auction average (investment)" or, in
the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date (as defined below) pertaining to such Treasury
Rate Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity are
not published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate Certificate
and shall be the yield to maturity (expressed as a bond equivalent on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) of
the arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period.
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Certificate, then such Interest Reset Date shall instead be the
business day immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Treasury Rate Determination Date or, if such a day is not a business day, the
next succeeding business day or (b) the second business day preceding the date
any payment is required to be made for any period following the applicable
Interest Reset Date.
Book-Entry Registration
As may be described in the related Prospectus Supplement,
Certificateholders of a given Series may hold their Certificates through DTC (in
the United States) or CEDEL or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global Certificates in
respect of a given Series. CEDEL and Euroclear will hold omnibus positions on
behalf of the CEDEL Participants (as defined below) and the Euroclear
Participants (as defined below) (collectively, the "Participants"),
respectively, through customers' securities accounts in CEDEL's and Euroclear's
names on the books
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of their respective depositaries (collectively, the "Depositaries") which in
turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
DTC is a limited purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC system also is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depository; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depository to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Certificateholders of a given Series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Certificates of such Series may do so only
through Participants and Indirect Participants. In addition, Certificateholders
of a given Series will receive all distributions of principal and interest
through the Participants who in turn will receive them from DTC. Under a
book-entry format, Certificateholders of a given Series may experience some
delay in their receipt of payments, since such payments will be forwarded by the
applicable Trustee to Cede, as nominee for DTC. DTC will forward such payments
to its Participants, which thereafter will forward them to Indirect Participants
or such
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Certificateholders. It is anticipated that the only "Certificateholder" in
respect of any Series will be Cede, as nominee of DTC. Certificateholders of a
given Series will not be recognized as Certificateholders of such Series, and
such Certificateholders will be permitted to exercise the rights of
Certificateholders of such Series only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating and affecting
DTC and its operations (the "Rules"), DTC is required to make book-entry
transfers of Certificates of a given Series among Participants on whose behalf
it acts with respect to such Certificates and to receive and transmit
distributions of principal of, and interest on, such Certificates. Participants
and Indirect Participants with which the Certificateholders of a given Series
have accounts with respect to such Certificates similarly are required to make
book-entry transfers and receive and transmit such payments on behalf of their
respective Certificateholders of such Series. Accordingly, although such
Certificateholders will not possess Certificates, the Rules provide a mechanism
by which Participants will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Certificateholder of a given Series to pledge Certificates of such Series to
persons or entities that do not participate in the DTC system, or to otherwise
act with respect to such Certificates, may be limited due to the lack of a
physical certificate for such Certificates.
DTC will advise the Trustee in respect of each Series that it will
take any action permitted to be taken by a Certificateholder of the related
Series only at the direction of one or more Participants to whose accounts with
DTC the Certificates of such Series are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 28 currencies,
including United States dollars. The
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Euroclear System includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, under contract with Euroclear Clearance System,
S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the "Euroclear Operator" (as defined below), and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to the Euroclear System is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear Participant,
either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a Series will
not have any liability for any aspect of the records relating to or payments
made or account of beneficial ownership interests of the related Certificates
held by Cede, as nominee for DTC, or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Definitive Notes
Unless otherwise stated in the related Prospectus Supplement, the
Certificates of a Series will be issued in fully registered, certificated form
("Definitive Certificates") to Certificateholders or their nominees, rather than
to DTC or its nominee, only if (i) the Trustee in respect of the related Series
advises in writing that DTC is no longer willing or able to discharge properly
its responsibilities as depository with respect to such Certificates and such
Trustee is unable to locate a qualified successor, (ii) such Trustee, at its
option, elects to terminate the book-entry-system through DTC or (iii) after the
occurrence of an "Event of Default" under the related Indenture or a default by
the Servicer under the related Pooling and Servicing Agreement,
Certificateholders representing at least a majority of the outstanding principal
amount of such Certificates advise the applicable Trustee through DTC in writing
that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in such Certificateholders' best interest.
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Upon the occurrence of any event described in the immediately
preceding paragraph, the applicable Trustee will be required to notify all such
Certificateholders through Participants of the availability of Definitive
Certificates. Upon surrender by DTC of the definitive certificates representing
such Certificates and receipt of instructions for re-registration, the
applicable Trustee will reissue such Certificates as Definitive Certificates to
such Certificateholders.
Distributions of principal of, and interest on, such Definitive
Certificates will thereafter be made by the applicable Trustee in accordance
with the procedures set forth in the related Pooling and Servicing Agreement
directly to holders of Definitive Certificates in whose names the Definitive
Certificates were registered at the close of business on the applicable Record
Date specified for such Certificates in the related Prospectus Supplement. Such
distributions will be made by check mailed to the address of such holder as it
appears on the register maintained by the applicable Trustee. The final payment
on any such Security, however, will be made only upon presentation and surrender
of such Security at the office or agency specified in the notice of final
distribution to the applicable Certificateholders.
Definitive Certificates in respect of a given Series of Certificates
will be transferable and exchangeable at the offices of the applicable Trustee
or of a certificate registrar named in a notice delivered to holders of such
Definitive Certificates. No service charge will be imposed for any registration
of transfer or exchange, but the applicable Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
Reports To Certificateholders
With respect to each Series of Certificates, on or prior to each
Distribution Date for such Series, the Servicer or the related Trustee will
forward or cause to be forwarded to each holder of record of such class of
Certificates a statement or statements with respect to the related Trust Assets
setting forth the information specified in the related Prospectus Supplement.
In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year, the applicable Trustee will
provide to the Certificateholders a statement containing the amounts described
in (ii) and (iii) above for that calendar year and any other information
required by applicable tax laws, for the purpose of the Certificateholders'
preparation of federal income tax returns.
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS
The following summary describes certain terms of each Pooling and
Servicing Agreement pursuant to which a Trust will be created and the related
Certificates in respect of such Trust will be issued. For purposes of this
Prospectus, the term "Pooling and Servicing Agreement" as used with respect to a
Trust means, collectively, and except as otherwise specified, any and all
agreements relating to the establishment of the related Trust, the servicing of
the related Receivables and the issuance of the related Certificates. Forms of
the Pooling and Servicing Agreement have been filed as exhibits to the
Registration Statement of which the Prospectus forms a part. The summary does
not purport to be complete. It is qualified in its entirety by reference to the
provisions of the Pooling and Servicing Agreements.
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Sale and Assignment of Receivables
On or prior to the closing date specified with respect to any given
Series of Certificates (the "Closing Date"), CPS will sell and assign to a
Seller, without recourse, except as otherwise provided in the applicable
Purchase Agreement, its entire interest in the Receivables to be included in
such Trust, together with its security interests in the related Financed
Vehicles. At the time of issuance of the Certificates, such Seller will sell and
assign to the Trust, without recourse, except as provided in the applicable
Pooling and Servicing Agreement, its entire interest in such Receivables,
together with its security interests in the related Financed Vehicles. Each
Receivable will be identified in a schedule appearing as an exhibit to the
applicable Pooling and Servicing Agreement. The Trustee will concurrently with
such sale and assignment, execute, authenticate, and deliver the Certificates to
the applicable Seller in exchange for the Receivables.
In each Purchase Agreement, CPS will represent and warrant to the
applicable Seller, among other things with respect to the Receivables being sold
and assigned therein, that (i) the information provided with respect to the
Receivables is correct in all material respects: (ii) at the date of origination
of each Receivable, physical damage insurance covering the related Financed
Vehicle is in effect in accordance with CPS's normal requirements; (iii) at the
applicable Cutoff Date, the Receivables are free and clear of all security
interests, liens, charges, and encumbrances and no offsets, defenses, or
counterclaims against Dealers have been asserted or threatened; (iv) at the
applicable Cutoff Date, each of the Receivables is or will be secured by a
first-priority perfected security interest in the Financed Vehicle in favor of
CPS; and (v) each Receivable, at the time it was originated, complied in all
material respects with applicable federal and state laws, including, without
limitation, consumer credit, truth in lending, equal credit opportunity and
disclosure laws. As of the last day of the second (or, if CPS elects, the first)
month following the discovery by or notice to the applicable Seller and CPS of a
breach of any representation or warranty that materially and adversely affects a
Receivable, unless the breach is cured, CPS will purchase such Receivable from
the applicable Seller who will purchase from the applicable Trust for the
Purchase Amount. The repurchase obligation will constitute the sole remedy
available to the Certificateholders, the Credit Enhancer, a Seller or a Trustee
for any such uncured breach.
On or prior to a Closing Date, the Contracts will be delivered to the
applicable Trustee as custodian, and such Trustee thereafter will maintain
physical possession of the Receivables except as may be necessary for the
servicing thereof by CPS. The Receivables will not be stamped to show the
ownership thereof by the applicable Trust. However, CPS's accounting records and
computer systems will reflect the sale and assignment of the Receivables to the
applicable Seller, and Uniform Commercial Code ("UCC") financing statements
reflecting such sales and assignments will be filed. See, "The Trust" and "Risk
Factors--Certain Legal Aspects--Security Interests in Financed Vehicles" in the
related Prospectus Supplement and "Certain Legal Aspects of the Receivables"
herein.
Pre-Funding Accounts
If so provided in the related Prospectus Supplement, the Seller will
be obligated pursuant to the Pooling and Servicing Agreement to sell Subsequent
Receivables to the Trust, and the Trust will be obligated to purchase such
Subsequent Receivables, subject only to the satisfaction of certain conditions
set forth in the Pooling and Servicing Agreement and described in the related
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Prospectus Supplement. If the principal amount of the eligible Subsequent
Receivables acquired by the Seller from the CPS during a Funding Period is less
than the Pre-Funded Amount, the Seller may have insufficient Subsequent
Receivables to transfer to a Trust and holders of one or more classes of the
related Series of Certificates may receive a prepayment or early distribution of
principal at the end of the Funding Period. See "Risk Factors--Pre-Funding
Accounts".
Amounts on deposit in a Pre-Funding Account during the Funding Period
will be invested by the Trustee in Eligible Investments and any Investment
Income thereon received during a Collection Period will be included in the
interest distribution amount on the following Distribution Date for the related
Series. See "--Accounts".
Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a "Subsequent
Transfer Date"), of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria specified in
the related Pooling and Servicing Agreement; (ii) the Seller shall not have
selected such Subsequent Receivables in a manner that is adverse to the
interests of holders of the related Certificates; (iii) as of the respective
Cutoff Dates for such Subsequent Receivables, all of the Receivables in the
Trust, including the Subsequent Receivables to be conveyed to the Trust as of
such date, must satisfy the parameters described under "The Receivables Pools"
herein and "The Receivables Pool" in the related Prospectus Supplement; and (iv)
the Seller must execute and deliver to such Trust a written assignment conveying
such Subsequent Receivables to such Trust. In addition, as and to the extent
specified in the related Prospectus Supplement, the conveyance of Subsequent
Receivables to a Trust is subject to the satisfaction of the condition
subsequent, among others, which must be satisfied within the applicable time
period specified in the related Prospectus Supplement, that the Seller deliver
certain legal opinions to the related Trustee with respect to the validity of
the conveyance of the Subsequent Receivables to the Trust. If any such
conditions precedent or conditions subsequent are not met with respect to any
Subsequent Receivables within the time period specified in the related
Prospectus Supplement, CPS or the Seller, as specified in the related Prospectus
Supplement, will be required to repurchase such Subsequent Receivables from the
related Trust, at a purchase price equal to the related Repurchase Amounts
therefor.
Except as described herein and in the related Prospectus Supplement,
there will be no other required characteristics of Subsequent Receivables.
Therefore, the characteristics of the entire Receivables Pool included in any
Trust may vary significantly as Subsequent Receivables are conveyed to such
Trust from time to time during the Funding Period or Revolving Period.
Accounts
With respect to each Series of Certificates issued by a Trust, the
Servicer will establish and maintain with the applicable Trustee one or more
accounts, in the name of such Trustee on behalf of the related
Certificateholders, into which all payments made on or with respect to the
related Receivables will be deposited (the "Collection Account"). The Servicer
will also establish and maintain with such Trustee separate accounts, in the
name of such Trustee on behalf of such Certificateholders, into which amounts
released from the Collection Account and the reserve account or other Credit
Enhancement, if any, for distribution to such Certificateholders will be
deposited and from which distributions to such Certificateholders will be made
(the "Distribution Account").
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Payahead Account. If so provided in the related Prospectus
Supplement, the Servicer will establish for each Series of Securities an
additional account (the "Payahead Account"), in the name of the related Trustee,
into which, to the extent required in the related Pooling and Servicing
Agreement, early payments made by or on behalf of Obligors on Actuarial
Receivables or Rule of 78s Receivables will be deposited until such time as such
payments become due. Until such time as payments are transferred from the
Payahead Account to the Collection Account, they will not constitute collected
interest or collected principal and will not be available for distribution to
Certificateholders.
Pre-Funding Account. If so provided in the related Prospectus
Supplement, the Servicer will establish and maintain a Pre-Funding Account, in
the name of the related Trustee on behalf of the related Certificateholders,
into which the Seller will deposit the Pre-Funded Amount on the related Closing
Date. The Pre-Funded Amount will not exceed 25% of the initial aggregate
principal amount of the Notes and Certificates of the related Series. The
Pre-Funded Amount will be used by the related Trustee to purchase Subsequent
Receivables from the Seller from time to time during the Funding Period. The
amounts on deposit in the Pre-Funding Account during the Funding Period will be
invested by the Trustee in Eligible Investments. Any Investment Income received
on the Eligible Investments during a Collection Period will be included in the
interest distribution amount on the following Distribution Date. The Funding
Period, if any, for a Trust will begin on the related Closing Date and will end
on the date specified in the related Prospectus Supplement, which in no event
will be later than the date that is 90 days after the related Closing Date. Any
amounts remaining in the Pre-Funding Account at the end of the Funding Period
will be distributed to the related Certificateholders in the manner and priority
specified in the related Prospectus Supplement, as a prepayment of principal of
the related Certificates.
Other Accounts. Any other accounts to be established with respect to
a Trust, including any reserve account, will be described in the related
Prospectus Supplement.
Investments. For any Series of Certificates, funds in the Collection
Account, the Distribution Account, any reserve account and other accounts
identified as such in the related Prospectus Supplement (collectively, the
"Trust Accounts") shall be invested as provided in the related Pooling and
Servicing Agreement in Eligible Investments. "Eligible Investments" are
generally limited to investments acceptable to the Rating Agencies as being
consistent with the rating of such Certificates. Subject to certain conditions,
Eligible Investments may include securities issued by CPS, the Servicer or their
respective affiliates or other trusts created by CPS or its affiliates. Except
as described below or in the related Prospectus Supplement, Eligible Investments
are limited to obligations or securities that mature not later than the business
day immediately preceding the related Distribution Date. However, subject to
certain conditions, funds in the reserve account may be invested in securities
that will not mature prior to the date of the next distribution and will not be
sold to meet any shortfalls. Thus, the amount of cash in any reserve account at
any time may be less than the balance of such reserve account. If the amount
required to be withdrawn from any reserve account to cover shortfalls in
collections on the related Receivables exceeds the amount of cash in such
reserve account, a temporary shortfall in the amounts distributed to the related
Certificateholders could result, which could, in turn, increase the average life
of the Certificates of such Series. Except as otherwise specified in the related
Prospectus Supplement, investment earnings on funds deposited in the applicable
Trust Accounts, net of losses and investment expenses (collectively, "Investment
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Earnings"), shall be deposited in the applicable Collection Account on each
Distribution Date and shall be treated as collections of interest on the related
Receivables.
Eligible Deposit Accounts. The Trust Accounts will be maintained as
Eligible Deposit Accounts. "Eligible Deposit Account" means either (a) a
segregated account with an Eligible Institution or (b) a segregated trust
account with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a foreign
bank), having corporate trust powers and acting as trustee for funds deposited
in such account, so long as any of the securities of such depository institution
has a credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade. "Eligible Institution" means, with
respect to a Trust, (a) the corporate trust department of the related Trustee,
or (b) a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), which (i) (A) has either (w) a long-term
unsecured debt rating acceptable to the Rating Agencies or (x) a short-term
unsecured debt rating or certificate of deposit rating acceptable to the Rating
Agencies or (B) the parent corporation of which has either (y) a long-term
unsecured debt rating acceptable to the Rating Agencies or (z) a short-term
unsecured debt rating or certificate of deposit rating acceptable to the Rating
Agencies and (ii) whose deposits are insured by the FDIC.
The Servicer
The Servicer under each Pooling and Servicing Agreement will be named
in the related Prospectus Supplement. The entity serving as Servicer may be CPS
or an affiliate of CPS and may have other business relationships with CPS or
CPS's affiliates. The Servicer with respect to each Series will service the
Receivables contained in the Trust for such Series. Any Servicer may delegate
its servicing responsibilities to one or more subservicers, but will not be
relieved of its liabilities with respect thereto.
The Servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the related Pooling and Servicing Agreement. An uncured
breach of such a representation or warranty that in any respect materially and
adversely affects the interests of the Certificateholders will constitute a
Event of Default (as hereinafter defined) by the Servicer under the related
Pooling and Servicing Agreement.
A Pooling and Servicing Agreement may contain provisions providing
for a standby servicer ("Standby Servicer") to serve as successor servicer in
the event the Servicer is terminated or resigns as Servicer pursuant to the
terms of such Pooling and Servicing Agreement. A Standby Servicer will receive a
fee on each Distribution Date for agreeing to stand by as successor Servicer and
for performing certain other functions. If the Standby Servicer becomes the
Servicer under a Pooling and Servicing Agreement, it will receive compensation
as a Servicer in an amount set forth in such Pooling and Servicing Agreement.
Servicing Procedures
Each Pooling and Servicing Agreement will provide that the Servicer
shall follow its then-employed standards, or such more exacting standards as the
Servicer employs in the future, in
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servicing the Receivables that are part of the Trust. Each Pooling and Servicing
Agreement will provide that the Servicer shall make reasonable efforts to
collect all payments due with respect to the Receivables that are part of the
Trust and, in a manner consistent with such Pooling and Servicing Agreement,
will continue such collection procedures as it follows with respect to
automotive retail installment sale contracts it services for itself and others.
Consistent with its normal procedures, the Servicer may, in its sole discretion,
arrange with the Obligor on a Receivable to extend the payment schedule;
provided, however, that the Servicer may be limited as to the number of times an
extension may be granted and as to the timing of such extensions. No such
arrangement will, for purposes of a Pooling and Servicing Agreement, modify the
original due dates or the amount of the scheduled payments, or extend the final
payment date on any Receivable beyond the last day of the penultimate Collection
Period before the Final Scheduled Distribution Date under such Pooling and
Servicing Agreement. If the Servicer grants an extension with respect to a
Receivable other than in accordance with the aforementioned limitations, the
Servicer will be required to purchase the Receivable. Following any such
purchase of a Receivable by the Servicer, such Receivable will be released from
the Trust and conveyed to the Servicer. The Servicer may sell the Vehicle
securing the respective defaulted Receivable, if any, at a public or private
sale, or take any other action permitted by applicable law. See "Certain Legal
Aspects of the Receivables".
The material aspects of any particular Servicer's collections and
other relevant procedures will be set forth in the related Prospectus
Supplement.
Payments On Receivables
With respect to each Series of Certificates, unless otherwise
specified in the related Prospectus Supplement, the Servicer will notify each
Obligor that payments made by such Obligor after the Cutoff Date with respect to
a Receivable must be mailed directly to the Post Office Box set forth in the
Pooling and Servicing Agreement relating to such Receivable. On each Business
Day, the Lock-Box Processor set forth in the Pooling and Servicing Agreement
relating to such Receivable will transfer any such payments received in the Post
Office Box to the applicable Lock-Box Account. Any payments received by the
Servicer from an Obligor or from a source other than an Obligor must be
deposited in the applicable Lock-Box Account or the applicable Collection
Account upon receipt. The Servicer will, following the receipt of funds in such
Lock-Box Account, direct the Lock-Box Bank to transfer such funds to the
applicable Collection Account. Prior to the applicable Distribution Date, the
applicable Trustee, on the basis of instructions provided by the Servicer, will
transfer funds held in such Collection Account to the applicable Payahead
Account if such payments constitute Payaheads or to the applicable Certificate
Account for distribution to the Certificateholders of the related Series.
Collections on a Rule of 78's Receivable made during a Collection
Period will be applied first, to the scheduled payment on such Rule of 78's
Receivable, and second, to any late fees accrued with respect to such Rule of
78's Receivable. If the collections remaining after application to the scheduled
payment and late fees, if any, are insufficient to prepay the Rule of 78's
Receivable in full, such collections will be transferred to and kept in the
Payahead Account, until such later Collection Period as the collections may be
transferred to the Collection Account and applied either to the scheduled
payment or to prepay such Rule of 78's Receivable in full.
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Servicing Compensation
As may be described in the related Prospectus Supplement with respect
to any Series of Certificates issued by a Trust, the Servicer will be entitled
to receive a servicing fee on each Distribution Date (the "Servicing Fee"),
equal to the product of one-twelfth of the specified percentage per annum and
the Pool Balance (each as set forth in the related Prospectus Supplement) as of
the close of business on the last day of the second preceding Collection Period;
provided, however, that with respect to the first Distribution Date, the
Servicing Fee will equal the product of one-twelfth of the Servicing Fee Rate
and the original Pool Balance. So long as CPS is Servicer, a portion of the
Servicing Fee will be payable to the Standby Servicer, if any (as set forth in
the related Prospectus Supplement), for agreeing to stand by as successor
Servicer and for performing certain other functions. If the Standby Servicer, or
any other entity serving at the time as Standby Servicer, becomes the successor
Servicer, it will receive compensation for acting in such capacity. See "The
Servicer". The Servicer will also collect and retain, as additional servicing
compensation, any late fees, prepayment charges, including, in the case of a
Rule 78's Receivable that is part of the Trust and 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 Receivable computed on an
actuarial basis plus accrued interest to the date of prepayment and the
principal balance of such Receivable computed according to the Rule of 78's, and
other administrative fees or similar charges allowed by applicable law with
respect to the Receivables that are part of the Trust, and will be entitled to
reimbursement from the Trust for certain liabilities. Payments by or on behalf
of Obligors will be allocated to scheduled payments, late fees and other charges
and principal and interest in accordance with the Servicer's normal practices
and procedures. The Servicing Fee will be paid out of collections from the
Receivables, prior to distributions to Certificateholders of the related Series.
The Servicing Fee and additional servicing compensation will
compensate the Servicer for performing the functions of a third party servicer
of automotive receivables as an agent for their beneficial owner, including
collecting and posting all payments, responding to inquiries of Obligors on the
Receivables that are part of the Trust, investigating delinquencies, sending
payment coupons to Obligors, reporting tax information to Obligors, paying costs
of disposition of defaults and policing the collateral. The Servicing Fee also
will compensate the Servicer for administering the Receivables that are part of
the Trust, including accounting for collections and furnishing monthly and
annual statements as required with respect to a Series of Certificates regarding
distributions and generating federal income tax information. The Servicing Fee
also will reimburse the Servicer for certain taxes, accounting fees, outside
auditor fees, data processing costs and other costs incurred in connection with
administering the Receivables that are part of the Trust.
Certain Matters Regarding the Servicer
Each Pooling and Servicing Agreement will provide that the Servicer
may not resign from its obligations and duties as Servicer thereunder except
upon determination that its performance of such duties is no longer permissible
under applicable law and under certain other circumstances. No such resignation
will become effective until a successor servicer has assumed the servicing
obligations and duties under the applicable Pooling and Servicing Agreement. In
the event CPS resigns as Servicer or is terminated as Servicer, the Standby
Servicer, if any, will agree to assume the servicing obligations and duties
under the Pooling and Servicing Agreement.
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Each Pooling and Servicing Agreement will further provide that
neither the Servicer nor any of its directors, officers, employees, and agents
will be under any liability to the Trust or the Certificateholders of the
related Series for taking any action or for refraining from taking any action
pursuant to such Pooling and Servicing Agreement, or for errors in judgment;
provided, however, that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties thereunder. In addition,
each Pooling and Servicing Agreement will provide that the Servicer is under no
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its servicing responsibilities under the applicable Pooling and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability.
Under the circumstance specified in each Pooling and Servicing
Agreement any entity into which the Servicer may be merged or consolidated, or
any entity resulting from any merger or consolidation to which the Servicer is a
party, or any entity succeeding to the business of the Servicer which
corporation or other entity in each of the foregoing cases assumes the
obligations of the Servicer, will be the successor of the Servicer under the
applicable Pooling and Servicing Agreement.
Distributions on Certificates
With respect to each Series of Certificates, beginning on the
Distribution Date specified in the related Prospectus Supplement, distributions
of principal and interest (or, where applicable, of principal or interest only)
on each class of such Certificates entitled thereto will be made by the
applicable Trustee to the holders of Certificates (the "Certificateholders") of
such Series. The timing, calculation, allocation, order, source, priorities of
and requirements for all distributions to each class of Certificateholders of
such Series will be set forth in the related Prospectus Supplement.
With respect to each Series of Certificates, on each Distribution
Date collections on the related Receivables will be withdrawn from the
Collection Account for distribution to Certificateholders to the extent provided
in the related Prospectus Supplement. Credit Enhancement may be available to
cover any shortfalls in the amount available for distribution on such date, to
the extent specified in the related Prospectus Supplement.
Credit And Cash Flow Enhancement
The amounts and types of Credit Enhancement arrangements, if any, and
the provider thereof, if applicable, with respect to each class of Certificates
of a given Series will be set forth in the related Prospectus Supplement. If and
to the extent provided in the related Prospectus Supplement, Credit Enhancement
may be in the form of a Policy, subordination of one or more classes of
Certificates, reserve accounts, spread accounts, over-collateralization, letters
of credit, credit or liquidity facilities, third party payments or other
support, surety bonds, guaranteed cash deposits or such other arrangements as
may be described in the related Prospectus Supplement or any combination of two
or more of the foregoing. If specified in the applicable Prospectus Supplement,
Credit Enhancement for a class of Certificates may cover one or more other
classes of Certificates of the same Series, and Credit Enhancement for a Series
of Certificates may cover one or more other Series of Certificates.
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The presence of Credit Enhancement for the benefit of any class or
Series of Certificates is intended to enhance the likelihood of receipt by the
Certificateholders or such class or Series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Certificateholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the Credit Enhancement for a class or Series of Certificates will
not provide protection against all risks of loss and will not guarantee
repayment of the entire principal balance and interest thereon. If losses occur
which exceed the amount covered by any Credit Enhancement or which are not
covered by any Credit Enhancement, Certificateholders of any class or Series
will bear their allocable share of deficiencies, as described in the related
Prospectus Supplement. In addition, if a form of Credit Enhancement covers more
than one Series of Certificates, Certificateholders of any such Series will be
subject to the risk that such Credit Enhancement will be exhausted by the claims
of Certificateholders of other Series.
Statements To Trustees
Prior to each Distribution Date with respect to each Series of
Certificates, the Servicer will provide to the applicable Trustee and Credit
Enhancer as of the close of business on the last day of the preceding related
Collection Period a statement setting forth substantially the same information
as is required to be provided in the periodic reports provided to
Certificateholders of such Series described under "Description of the
Certificates--Reports to Certificateholders".
Evidence As To Compliance
Each Pooling and Servicing Agreement will provide that a firm of
independent public accountants will furnish to the related Trustee and Credit
Enhancer, annually, a statement as to compliance by the Servicer during the
preceding twelve months (or, in the case of the first such certificate, the
period from the applicable Closing Date) with certain standards relating to the
servicing of the Receivables.
Each Pooling and Servicing Agreement will also provide for delivery
to the related Trustee and Credit Enhancer of a certificate signed by an officer
of the Servicer stating that the Servicer has fulfilled its obligations under
such Pooling and Servicing Agreement in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. The Servicer also will agree to give each Trustee and Credit Enhancer
notice of certain Event of Defaults (as hereinafter defined) under the related
Pooling and Servicing Agreement.
Copies of such statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the applicable Trustee.
Amendment
Unless otherwise provided in the related Prospectus Supplement, each
of the Pooling and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Certificateholders, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of such Pooling and Servicing Agreements or of modifying in any
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manner the rights of such Certificateholders; provided that such action will
not, in the opinion of counsel satisfactory to the applicable Trustee,
materially and adversely affect the interests of any such Certificateholder and
subject to the approval of any Credit Enhancer. As may be described in the
related Prospectus Supplement, the Pooling and Servicing Agreements may also be
amended by CPS, the Servicer, and the applicable Trustee with the consent of the
holders of Certificates evidencing at least a majority of the voting rights of
such then outstanding Certificates for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of such Pooling
and Servicing Agreements or of modifying in any manner the rights of such
Certificateholders; provided, however, that no such amendment may (i) increase
or reduce in any manner the amount or priority of, or accelerate or delay the
timing of, collections of payments on the related Receivables or distributions
that are required to be made for the benefit of such Certificateholders without
the consent of each Certificateholder affected thereby or (ii) reduce the
aforesaid percentage of the Certificates of such Series which are required to
consent to any such amendment without the consent of the Certificateholders of
such Series.
List of Certificateholders
Upon written request of the Servicer, the Trustee of the applicable
Trust will provide to the Servicer within 15 days after receipt of such request
a list of the names and addresses of all Certificateholders of record, with
respect to the Series of Certificates issued by such Trust, as of the most
recent Record Date. Upon compliance by such Certificateholders with certain
provisions of the applicable Pooling and Servicing Agreement, the Trustee will
afford such Certificateholders access during business hours to the current list
of Certificateholders for purposes of communicating with other
Certificateholders with respect to their rights under such Pooling and Servicing
Agreement.
Termination
With respect to each Trust, the obligations of the Servicer, CPS, the
Seller and the applicable Trustee pursuant to the related Pooling and Servicing
Agreement will terminate upon such date as is specified in the related
Prospectus Supplement. As more fully described in the related Prospectus
Supplement, in order to avoid excessive administrative expense, the Servicer, or
its successor, will be permitted, at its option to purchase from the related
Trust, as of the last day of any month as of which the then outstanding Pool
Balance of the related Receivables Pool is less than a specified percentage (set
forth in the related Prospectus Supplement) of the original Pool Balance of such
Receivables Pool, all such remaining Receivables at a price equal to the
aggregate of the Purchase Amounts thereof as of such last day. Exercise of such
right will effect early retirement of the related Certificates. The Trustee will
give written notice of termination to each such Certificateholder of record. The
final distribution to any Certificateholder will be made only upon surrender and
cancellation of such holder's Certificate at the office or agency of the Trustee
specified in the notice of termination. Any funds remaining with the Trustee,
after the Trustee has taken certain measures to locate a Certificateholder and
such measures have failed, will be distributed to The American Red Cross.
The Trustee
The Trustee for each Trust will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the issuance
and sale of the related Certificates is limited
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solely to the express obligations of such Trustee set forth in the related
Pooling and Servicing Agreement and Sale and Servicing Agreement or the related
Pooling and Servicing Agreement, as applicable. A Trustee may resign at any time
(subject to the conditions specified in the applicable Pooling and Servicing
Agreement), in which event the Servicer will be obligated to appoint a successor
trustee. The Servicer may also remove the Trustee if such Trustee ceases to be
eligible to continue as Trustee under the related Pooling and Servicing
Agreement or if the Trustee becomes insolvent. In such circumstances, the
Servicer will be obligated to appoint a successor trustee. Any resignation or
removal of a Trustee and appointment of a successor trustee will not become
effective until acceptance of the appointment by the successor trustee.
The principal offices of each Trustee will be specified in the
applicable Prospectus Supplement.
The Trustee under a Pooling and Servicing Agreement, in its
individual capacity or otherwise, may hold Certificates in its own name or as
pledgee. For the purpose of meeting the legal requirements of certain
jurisdictions, the Servicer and a Trustee acting jointly (or in some instances,
the Trustee acting alone) shall have the power to appoint co-trustees or
separate trustees of all or any part of the related Trust. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee by the related Pooling and Servicing Agreement shall be
conferred or imposed upon the Trustee and such separate trustee or co-trustee
jointly, or, in any jurisdiction in which the Trustee shall be incompetent or
unqualified to perform certain acts, singly upon such separate trustee or
co-trustee who shall exercise and perform such rights, powers, duties, and
obligations solely at the direction of the Trustee.
A Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee in accordance with the terms set forth
in the applicable Pooling and Servicing Agreement. See "The Trustee" in the
Prospectus Supplement." The Servicer may also remove a Trustee if the Trustee
ceases to be eligible to continue as such under the related Pooling and
Servicing Agreement, becomes legally unable to act, or becomes insolvent. In
such circumstances,the Servicer will be obligated to appoint a successor trustee
with the consent of any parties necessary to appoint a successor trustee. Any
resignation or removal of the Trustee and appointment of a successor trustee
will not become effective until acceptance of the appointment by the successor
trustee.
Each Pooling and Servicing Agreement will provide that the applicable
Trustee will be entitled to indemnification by the Servicer for and will be held
harmless against, any loss, liability, fee, disbursement, or expense incurred by
such Trustee not resulting from such Trustee's own willful misfeasance, bad
faith, or negligence (other than by reason of breach of any of its
representations or warranties set forth in the Pooling and Servicing Agreement).
Each Pooling and Servicing Agreement will further provide that the Servicer will
indemnify the applicable Trustee for certain taxes that may be asserted in
connection with the transaction.
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Duties of the Trustee
The Trustee will make no representations as to the validity or
sufficiency of a Pooling and Servicing Agreement, the Certificate relating
thereto (other than the authentication of such Certificates), or any Receivables
in the related Trust or related documents, and is not accountable for the use or
application by any Seller or Servicer of any funds paid to a Seller or Servicer
in respect of such Certificates or such Receivables, or the investment of any
monies received by the Servicer before such monies are deposited into the
applicable Collection Account. The Trustee will not independently verify the
Receivables that are a part of the related Trust. If no Event of Default (as
defined in the applicable Prospectus Supplement) has occurred, the Trustee is
required to perform only those duties specifically required of it under the
applicable Pooling and Servicing Agreement. Generally, those duties are limited
to the receipt of the various certificates, reports or other instruments
required to be furnished to the Trustee under such Pooling and Servicing
Agreement, in which case it is only required to examine them to determine
whether they conform to the requirements of the Pooling and Servicing Agreement.
The Trustee shall not be charged with knowledge of a failure by the Servicer to
perform its duties under the Pooling and Servicing Agreement which failure
constitutes an Event of Default (as defined in the applicable Prospectus
Supplement) unless the Trustee obtains actual knowledge of such failure as
specified in the Pooling and Servicing Agreement.
The Trustee will be under no obligation to exercise any of the rights
or powers vested in it by a Pooling and Servicing Agreement or to make any
investigation of matters arising thereunder or to institute, conduct, or defend
any litigation thereunder or in relation thereto at the request, order or
direction of any of the related Certificateholders, unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses, and liabilities that may be incurred therein or
thereby. No Certificateholder will have any right under a Pooling and Servicing
Agreement to institute any proceeding with respect to such Pooling and Servicing
Agreement, unless certain conditions have been met (as set forth in the
applicable Pooling and Servicing Agreement). See "Duties of the Trustee" in the
Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Security Interest in Vehicles
In states in which retail installment sale contracts such as the
Receivables evidence the credit sale of automobiles, light trucks, vans and
minivans by dealers to obligors, the contracts also constitute personal property
security agreements and include grants of security interests in the vehicles
under the applicable UCC. Perfection of security interests in the financed
automobiles, light trucks, vans and minivans is generally governed by the motor
vehicle registration laws of the state in which the vehicle is located. In all
states in which the Receivables have been originated, a security interest in
automobiles, light trucks, vans and minivans is perfected by obtaining the
certificate of title to the Financed Vehicle or notation of the secured party's
lien on the vehicles' certificate of title (in addition, in Louisiana, a copy of
the installment sale contract must be filed with the appropriate governmental
recording office).
Unless otherwise specified in the related Prospectus Supplement, each
Contract will name the applicable Originator as obligee or assignee and as the
secured party. Unless otherwise
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specified in the related Prospectus Supplement, such Originator will have
represented and warranted that it has taken all actions necessary under the laws
of the state in which the Financed Vehicle is located to perfect CPS's security
interest in the Financed Vehicle, including, where applicable, having a notation
of its lien recorded on such vehicle's certificate of title. Unless otherwise
specified in the related Prospectus Supplement, the Obligors on the Contracts
will not be notified of the sale from CPS, directly or indirectly, to the
Seller, or the sale from the Seller to the Trust, and no action will be taken to
record the transfer of the security interest from CPS, directly or indirectly,
to the Seller or from the Seller to the Trust by amendment of the certificates
of title for the Financed Vehicles or otherwise.
CPS will transfer and assign its security interest in the related
Financed Vehicles directly or indirectly to the Seller, and the Seller will
transfer and assign its security interest in such Financed Vehicles to the
related Trust pursuant to a Pooling and Servicing Agreement. However, because of
the administrative burden and expense, neither CPS nor the Seller will amend the
certificates of title of such Financed Vehicles to identify the related Trust as
the new secured party.
In most states, an assignment such as that under each Pooling and
Servicing Agreement is an effective conveyance of a security interest without
amendment of any lien noted on a vehicle's certificate of title, and the
assignee succeeds thereby to the assignor's rights as secured party. However, by
not identifying such Trust as the secured party on the certificate of title, the
security interest of such Trust in the vehicle could be defeated through fraud
or negligence.
Under the laws of most states, the perfected security interest in a
vehicle will continued for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle or, in the case of a vehicle registered in a
state providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party will receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party will have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration could
defeat perfection. Unless otherwise specified in the related Prospectus
Supplement, under each Pooling and Servicing Agreement, the Servicer will be
obligated to take appropriate steps, at the Servicer's expense, to maintain
perfection of security interests in the Financed Vehicles and will be obligated
to purchase the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected security
interest in a financed vehicle. The Code also grants priority to certain federal
tax liens over the lien of a secured party. The laws of certain states and
federal law permit the confiscation of vehicles by government authorities under
certain circumstances if used in unlawful activities, which may result in the
loss of a secured party's perfected security interest in the confiscated
vehicle.
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Repossession
In the event of default by vehicle purchasers, the holder of the
motor vehicle retail installment sale contract has all the remedies of a secured
party under the UCC, except where specifically limited by other state laws.
Among the UCC remedies, the secured party has the right to perform self-help
repossession unless such act would constitute a breach of the peace. Unless
otherwise specified in the related Prospectus Supplement, self-help is the most
likely method to be used by the Servicer and is accomplished simply by retaking
possession of the financed vehicle. In the event of default by the obligor, some
jurisdictions require that the obligor be notified of the default and be given a
time period within which he may cure the default prior to repossession.
Generally, the right of reinstatement may be exercised on a limited number of
occasions in any one-year period. In cases where the obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order must be obtained from the appropriate state court, and the vehicle
must then be repossessed in accordance with that order.
Notice of Sale; Redemption Rights
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation plus reasonable
expenses for repossessing, holding and preparing the collateral for disposition
and arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the unpaid
balance.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those states
that do not prohibit or limit such judgments. However, the deficiency judgment
would be a personal judgment against the obligor for the shortfall, and a
defaulting obligor can be expected to have very little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses
and all indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a lien with respect
to the vehicle or if no such lienholder exits or there are remaining funds, the
UCC requires the creditor to remit the surplus to the former owner of the
vehicle.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance, including requirements regarding the adequate disclosure of
loan terms (including finance charges and deemed
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finance charges), and limitations on loan terms (including the permitted finance
charge or deemed finance charge), collection practices and creditor remedies.
The application of these laws to particular circumstances is not always certain
and some courts and regulatory authorities have shown a willingness to adopt
novel interpretations of such laws. These laws include the Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair
Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Procedures Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Solders' and Sailors' Civil Relief Act of 1940, state
adoptions of the National Consumer Act and the Uniform Consumer Credit Code, and
state motor vehicle retail installment sales act, retail installment sales acts
and other similar laws. Also, state laws impose finance charge ceilings and
other restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. These requirements impose specific
statutory liabilities upon creditors who fail to comply with their provisions.
In some cases, this liability could affect an assignee's ability to enforce
consumer finance contracts such as the Receivables.
Under the laws of certain states, finance charges with respect to
motor vehicle retail installment contracts may include the additional amount, if
any, that a purchaser pays as part of the purchase price for a vehicle solely
because the purchaser is buying on credit rather than for cash (a "cash sale
differential"). If a dealer charges such a differential, applicable finance
charge ceilings could be exceeded.
To so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated by
the Uniform Consumer Credit Code, other statutes or the common law, has the
effect of subjecting an assignee of a seller of goods in a consumer credit
transaction (and certain related creditors) to all claims and defenses that the
obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor under
the contract and the holder of the contract may also be unable to collect any
balance remaining due thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the
FTC Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable Financed
Vehicle may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the Obligor on the
Receivable. If an Obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of CPS's warranties
under the related Purchase Agreement and would create an obligation of CPS to
repurchase the Receivable unless the breach is cured. See "Description of the
Pooling and Servicing Agreements--Sale and Assignment of Receivables".
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice
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provisions of the UCC and related laws as reasonable or have found that the
repossession and resale by the creditor do not involve sufficient state action
to afford constitutional protection to borrowers.
Under most state vehicle dealer licensing laws, sellers of
automobiles, light trucks, vans and minivans are required to be licensed to sell
vehicles at retail sale. In addition, with respect to used vehicles, the Federal
Trade Commission's Rule on Sale of Used Vehicles requires that all sellers of
used vehicles prepare, complete and display a "Buyer's Guide" which explains the
warranty coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act and the
motor vehicle title laws of most states require that all sellers of used
vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of a Financed Vehicle, the Obligor may be able to assert a defense
against the seller of the Financed Vehicle. If an Obligor on a Receivable were
successful in asserting any such claim or defense, the Servicer would pursue on
behalf of the related Trust any reasonable remedies against the seller or the
manufacturer of the vehicle, subject to certain limitations as to the expense of
any such action to be specified in the related Pooling and Servicing Agreements.
Under each Purchase Agreement, CPS will have represented and
warranted that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against a Trust for
violation of any law and such claim materially and adversely affects such
Trust's interest in a Receivable, such violation would constitute a breach of
the warranties of CPS and would create an obligation of CPS to repurchase the
Receivable unless the breach is cured.
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossession a vehicle and, as part of the rehabilitation plan,
may reduce the amount of the secured indebtedness to the market value of the
vehicle at the time of bankruptcy (as determined by the court), leaving the
creditor as a general unsecured creditor for the remainder of the indebtedness.
A bankruptcy court may also reduce the monthly payments due under a contract or
change the rate of interest and time of repayment of the indebtedness.
CERTAIN TAX CONSIDERATIONS
General
Set forth below is a discussion of certain federal income tax
consequences to original beneficial owners of a Series of Certificates that hold
such Certificates as capital assets under the Internal Revenue Code of 1986, as
amended (the "Code"). This discussion does not purport to deal with all aspects
of U.S. federal income taxation that may be relevant to Certificateholders of a
Series in light of their particular circumstances, nor to certain types of
Certificateholders subject to special treatment under the federal income tax
laws (for example, banks and life insurance companies). This discussion is based
upon present provisions of the Code, the regulations promulgated thereunder and
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judicial and ruling authorities, all of which are subject to change, which
change may be retroactive. Prospective investors are advised to consult their
own tax advisors with regard to the U.S. Federal tax consequences of the
purchase, ownership or disposition of interests in the certificates, as well as
the tax consequences arising under the laws of any state, foreign country or
other taxing jurisdiction. Prospective investors should note that no rulings
have been or will be sought from the Service with respect to any of the federal
income tax consequences discussed below, and no assurance can be given that the
Service will not take contrary positions.
Tax Characterization of the Trust
Mayer, Brown & Platt, special tax counsel to the Seller, will opine
that the Trust relating to a Series of Certificates will be classified as a
grantor trust and not as an association taxable as a corporation for federal
income tax purposes. Accordingly, subject to the discussion below, each
Certificateholder of the related Series will be treated as the owner of a pro
rata undivided interest in the Receivables that are in the Trust and related
other Trust Assets and ordinary income derived therefrom.
Income of Certificateholders
Each Certificateholder of a Series will be considered to own either
(i) an undivided interest in each of the Receivables that are part of the
related Trust and any other related Trust Assets or (ii) an undivided interest
in a single debt obligation held by the related Trust having, in the case of
Class A Certificates, a principal amount equal to the Class A Percentage (as set
forth in the related Prospectus Supplement) multiplied by the total stated
principal amount of the Receivables and an interest rate equal to the Class A
Pass-Through Rate (as set forth in the related Prospectus Supplement) or, in the
case of Class B Certificates, a principal amount equal to the Class B Percentage
(as set forth in the related Prospectus Supplement) multiplied by the total
stated principal amount of the Receivables that are in the related Trust and an
interest rate equal to the Class B Pass-Through Rate (as set forth in the
related Prospectus Supplement). In general (subject to the rules described below
relating to stripped bonds and original issue discount, and assuming
Certificateholders are considered to own an interest in the related Receivables
and other Trust Assets) a Certificateholder will be required to include
applicable Trust interest income as ordinary income in accordance with its usual
method of accounting.
If Certificateholders are considered to own undivided interests in
the related Receivables and other Trust Assets, a Certificateholder will be
considered to have incurred Trust expenses and, accordingly, will be entitled to
deduct, consistent with its method of accounting, its pro rata share of
reasonable servicing fees and other expenses paid or incurred by the applicable
Trust as provided in Section 162 or 212 of the Code. In general, a
Certificateholder who is an individual, estate or trust will be allowed
deductions for such expenses only to the extent that the sum of those expenses
and the holder's other miscellaneous itemized deductions exceeds 2% of such
holder's adjusted gross income. Moreover, a Certificateholder that is not a
corporation cannot deduct such expenses for purposes of the alternative minimum
tax (if applicable). The Servicer will not report to Certificateholders the
amount of income or deductions attributable to interest earned on collections
and certain other amounts (which are includible in gross income, but deduction
of which are subject to the foregoing limitations) and, accordingly, such a
Certificateholder will not have sufficient information from the report to
accurately reflect the Certificateholder's net taxable income.
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The Servicer will report to Certificateholders on the assumption that
they are considered to own an interest in the related Receivables and other
Trust Assets, and the remainder of this discussion assumes such treatment.
Stripped Bond Rules
Because the Receivables will represent stripped bonds, they will be
subject to the original issue discount ("OID") rules of the Code. Under Treasury
Regulations issued under Section 1286 of the Code (the "Section 1286
Regulations"), it appears that the portion of the interest on each stripped
Receivable payable to the related Certificateholders may be treated as
"qualified stated interest". As a result, the amount of OID on a Receivable (or
Receivables) will equal the amount, if any, by which the Certificateholder's
purchase price allocable to the holder's interest in such Receivable is less
than the undivided portion of the remaining principal balance of the Receivable
(or Receivables) allocable to the interest acquired by the Certificateholder.
OID on the Receivables held by the Trust will be calculated on an
aggregate basis and without the use of a prepayment assumption. Although there
is no clear authority, regulations issued under the OID provisions of the Code
suggest that all payments on the stripped Receivables allocable to the Class A
Certificates may be aggregated in determining whether the stripped Receivables
will be treated as having OID. In addition, it is not clear whether use of a
prepayment assumption is required in computing OID. If the Internal Revenue
Service were to require that OID be computed on a Receivable-by-Receivable
basis, or that a prepayment assumption be used, the character and timing of a
Certificateholder's income could be adversely affected. Because, under the
stripped bond rules, each sale of a Certificate results in a recalculation of
OID, a Certificateholder technically will not be subject to the market discount
provisions of the Code with respect to stripped Receivables.
The tax treatment of a Receivable (or Receivables in the aggregate)
will depend upon whether the amount of OID on the Receivable or Receivables is
less than a statutorily defined de minimis amount. In general, under the Section
1273 and the Section 1286 Regulations, the amount of OID on a Receivable will be
de minimis if it is less than 1/4 of one percent for each full year of weighted
average maturity remaining after the purchase date until the maturity of the
Receivable (although it is not clear whether expected prepayments are taken into
account). If the amount of OID is de minimis under this rule, a Receivable (or
Receivables) would not be treated as having OID. The actual amount of discount
on a Receivable would be includible in income as principal payments are received
on the Receivable, in the proportion that each principal payment bears to the
total principal amount of the Receivables.
If the OID on a Receivable (or Receivables) is not treated as being
de minimis, a Certificateholder will be required to include in income any OID as
it accrues on a daily basis, regardless of when cash payments are received,
using a method reflecting a constant yield to maturity on the Receivable (or
Receivables). Accrued OID would increase a Certificateholder's tax basis in the
Certificate (and the applicable Receivables). Distributions of principal and
other items attributable to accrued OID would reduce a Certificateholder's tax
basis. Application of the OID rules, particularly if a prepayment assumption is
required and the Receivables are not aggregated, would be complex and could
significantly affect the timing of inclusion of income on a Certificate.
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<PAGE>
The Trustee intends to account for OID, if any, reportable by holders
of Certificates by reference to the price paid for a Certificate by an initial
purchaser, although the amount of OID will differ for subsequent purchasers.
Such subsequent purchasers should consult their tax advisers regarding the
proper calculation of OID on the interest in Receivables represented by a
Certificate.
Premium
In the event of a purchase of a Receivable (or Receivables) at a
premium (i.e., the portion of the Certificateholder's purchase price allocable
to the holder's undivided interest in the Receivable or Receivables exceeds the
portion of the remaining principal balance allocable to the Certificateholder),
such premium will be amortizable by the Certificateholder as an offset to
interest income (with a corresponding reduction in the Certificateholder's
basis) under a constant yield method over the term of the Receivable (or
Receivables) if an election under Section 171 of the Code is made or was
previously in effect. Any such election will also apply to debt instruments held
by the Certificateholder during the year in which the election is made and all
debt instruments acquired thereafter.
Rule of 78's Receivables
The annual statement regularly furnished to Certificateholders for
U.S. federal income tax purposes will include information based on the actuarial
method of accounting for interest and principal on the Receivables.
Certificateholders should generally be permitted to account for interest on the
Receivables using the actuarial method. However, some of the Receivables provide
that, upon a prepayment in full, the amount payable by the obligor will be
determined under the Rule of 78's. Prospective investors should consult their
tax advisors as to whether they may be required or permitted to use the Rule of
78's method to account for interest on the Rule of 78's Receivables. A
Certificateholder will be furnished information for U.S. federal income tax
purposes enabling the holder to report interest on the Receivables under the
Rule of 78's method of accounting only upon written request to the Trustee, and
payment of the actual costs of producing the information.
If a Rule of 78's Receivable is prepaid, any amount received by the
Trust upon prepayment in excess of the account balance using the actuarial
method would constitute income to a Certificateholder who had reported income
with respect to such Rule of 78's Receivable on the actuarial method, and an
amount equal to such excess will be paid to the Servicer and be deductible only
to the extent described above.
Subordination of Class B Certificate Owners
If the Class B Certificateholders receive distributions of less than
their share of the Trust's receipts of principal and interest (the "Shortfall
Amount") because of the subordination of the Class B Certificates, holders of
Class B Certificates would probably be treated for U.S. federal income tax
purposes as if they had received as distributions their full share of such
receipts, paid over to the Class A Certificateholders an amount equal to such
Shortfall Amount, and retained the right to reimbursement of such amounts to the
extent of future collections. Under this analysis, Class B Certificateholders
would be required to accrue as current income any interest of the Trust that was
a component of the Shortfall Amount, even though such amount was in fact paid to
the Class A Certificateholders; although not entirely clear, it appears that a
loss would only be allowed to the
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<PAGE>
Class B Certificateholders when their right to receive reimbursement of such
Shortfall Amount became worthless (i.e., when it becomes clear that amount will
not be available from any source to reimburse such loss); and reimbursement of
such Shortfall Amount prior to such a claim of worthless would not be taxable
income to the Class B Certificateholders because such amount was previously
included in income. Those results should not significantly affect the inclusion
of income for Class B Certificateholders on the accrual method of accounting,
but could accelerate inclusion of income to Class B Certificateholders on the
cash method of accounting by, in effect, placing them on the accrual method.
Moreover, the character and timing of loss deductions is unclear. Class B
Certificateholders should consult their own tax advisors as to the treatment of
Shortfall Amounts.
Sale of a Certificate
If a Certificate is sold, gain or loss will be recognized equal to
the difference between the amount realized on the sale and the
Certificateholder's adjusted basis in the Receivables and any other assets held
by the Trust. A Certificateholder's adjusted basis will equal the
Certificateholder's cost for the Certificate, increased by any discount
previously included in income, and decreased by any deduction previously allowed
for accrued premium and by the amount of principal payments previously received
on the Receivables. Any gain or loss not attributable to accrued interest will
be capital gain or loss if the Certificate was held as a capital asset.
Foreign Certificateholders
Interest attributable to Receivables which is payable to a foreign
Certificateholder that is not engaged in a trade or business in the United
States will generally not be subject to the 30% U.S. withholding tax, provided
that such Certificateholder fulfills certain certification requirements. Under
such certification requirements, the Certificateholder must certify, under
penalties of perjury, that it is not a "United States person" and that it is the
beneficial owner of the Certificate, and must provide its name and address. For
this purpose, "United States person" means a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust the income of which is includible in gross income for United
States Federal income tax purposes, regardless of its source.
Backup Withholding
Payments made on the Certificates and proceeds from the sale of
Certificates will not be subject to "backup" withholding of 31% unless the
Certificateholder fails to comply with certain reporting procedures and is not
an exempt recipient under applicable provisions of the Code.
The Prospectus Supplement for each Series of Certificates will
summarize, subject to the limitations stated therein, federal income tax
considerations relevant to the purchase, ownership and disposition of such
Certificates.
ERISA CONSIDERATIONS
The Prospectus Supplement for each Series of Certificates will
summarize, subject to the limitations discussed therein, considerations under
ERISA relevant to the purchase of such Certificates by employee benefit plans
and individual retirement accounts.
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<PAGE>
METHODS OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus
Supplement will be offered in Series through one or more of the methods
described below. The Prospectus Supplement prepared for each Series will
describe the method of offering being utilized for that Series and will state
the public offering or purchase price of such Series and the net proceeds to CPS
from such sale.
CPS intends that Certificates will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular Series of
Certificates may be made through a combination of two or more of these methods.
Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting
and public re-offering by underwriters;
2. By placements by CPS with institutional investors through
dealers;
3. By direct placements by CPS with institutional investors;
and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a
Series of Certificates may be offered in whole or in part in exchange for the
Receivables (and other assets, if applicable) that would comprise the Trust
Assets in respect of such Certificates.
If underwriters are used in a sale of any Certificates (other than in
connection with an underwriting on a best efforts basis), such Certificates will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Certificates will be set
forth on the cover of the Prospectus Supplement relating to such Series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Certificates, underwriters may
receive compensation from CPS or from purchasers of the Certificates in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Certificates may be deemed to be underwriters in
connection with such Certificates, and any discounts or commissions received by
them from CPS and any profit on the resale of Certificates by them may be deemed
to be underwriting discounts and commissions under the Securities Act. The
Prospectus Supplement will describe any such compensation paid by CPS.
It is anticipated that the underwriting agreement pertaining to the
sale of any Series of Certificates will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters, jointly or severally (as specified in the applicable underwriting
agreement), will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that CPS will indemnify the several underwriters and, in certain
limited circumstances, the underwriters will indemnify CPS against
-57-
<PAGE>
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any Series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between CPS and purchasers of
Certificates of such Series.
Purchasers of Certificates, including dealers, may, depending on the
facts and circumstances of such purchases, be deemed to be "underwriters" within
the meaning of the Securities Act in connection with reoffers and sales by them
of Certificates. Holders of Certificates should consult with their legal
advisors in this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Certificates of
any Series, including certain federal and state income tax consequences with
respect thereto, will be passed upon by Mayer, Brown & Platt, New York, New
York.
FINANCIAL INFORMATION
Certain specified Trust Assets will secure each Series of
Certificates, no Trust will engage in any business activities or have any assets
or obligations prior to the issuance of the related Series of Certificates.
Accordingly, no financial statements with respect to any Trust Assets will be
included in this Prospectus or in the related Prospectus Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each
Series of Certificates, contains a summary of the material terms of the
applicable exhibits to the Registration Statement and the documents referred to
herein and therein. Copies of such exhibits are on file at the offices of the
Securities and Exchange Commission in Washington, D.C., and may be obtained at
rates prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
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<PAGE>
PROSPECTUS
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT........................................................2
AVAILABLE INFORMATION........................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................2
REPORTS TO CERTIFICATEHOLDERS................................................3
SUMMARY OF TERMS.............................................................4
RISK FACTORS................................................................12
FORMATION OF THE TRUST......................................................19
THE TRUST ASSETS............................................................19
ACQUISITION OF RECEIVABLES BY THE SELLER....................................21
THE RECEIVABLES.............................................................21
CPS'S AUTOMOBILE CONTRACT PORTFOLIO.........................................24
POOL FACTORS................................................................25
USE OF PROCEEDS.............................................................25
THE SELLER AND CPS..........................................................26
DESCRIPTION OF THE CERTIFICATES.............................................27
CERTAIN INFORMATION REGARDING THE CERTIFICATES..............................28
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS.........................37
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....................................48
CERTAIN TAX CONSIDERATIONS..................................................52
ERISA CONSIDERATIONS........................................................56
METHODS OF DISTRIBUTION.....................................................57
LEGAL OPINIONS..............................................................58
-59-
<PAGE>
FINANCIAL INFORMATION.......................................................58
ADDITIONAL INFORMATION......................................................58
UNTIL (90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
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<PAGE>
DEFINED TERMS
-------------
Page
----
"Actuarial Receivables".....................................................23
"Advance" .............................................................9
"APR" ............................................................22
"Available Information".....................................................19
"Base Rate" ............................................................28
"Buyer's Guide" ............................................................52
"Calculation Agent".........................................................29
"Calculation Date"..................................................30, 31, 33
"CD Rate Certificate".......................................................28
"CD Rate Determination Date"................................................29
"CD Rate" ............................................................29
"Cede" ............................................................10
"CEDEL Participants"........................................................35
"Certificate Balance"........................................................4
"Certificateholder".........................................................35
"Certificateholders"........................................................44
"Certificates of Deposit"...................................................29
"Certificates" .............................................................1
"class" .............................................................1
"Closing Date" .........................................................6, 38
"Collection Account"........................................................39
"Commercial Paper Rate Certificate".........................................28
"Commercial Paper Rate Determination Date"..................................30
"Commercial Paper Rate".....................................................30
"Commercial Paper"..........................................................30
"Commission" .............................................................2
"Composite 3:30 p.m. Quotations for U.S. Government Securities".............29
"Composite Quotations"......................................................29
"Contracts" .........................................................1, 24
"Cooperative" ............................................................36
"CPS" .............................................................4
"CPS's Automobile Contract Portfolio"........................................4
"Credit Enhancement"........................................................17
"Credit Enhancer"...........................................................17
"Cutoff Date" .............................................................6
"Dealers" ............................................................19
"Definitive Certificates"...................................................36
"Depositaries" ............................................................34
"Direct Participants".......................................................17
"Distribution Account"......................................................39
"Distribution Date".........................................................27
"DTC" ............................................................10
"Eligible Deposit Account"..................................................41
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<PAGE>
"Eligible Institution"......................................................41
"Eligible Investments"......................................................40
"ERISA" ............................................................11
"Euroclear Operator"........................................................36
"Euroclear Participants"....................................................35
"Event of Default"..........................................................36
"Exchange Act" .............................................................2
"Federal Funds (Effective)".................................................31
"Federal Funds Rate Certificate"............................................28
"Federal Funds Rate Determination Date".....................................31
"Federal Funds Rate"........................................................31
"Federal Funds/Effective Rate"..............................................31
"Financed Vehicles".......................................................1, 6
"Fixed Rate Certificates"...................................................28
"Floating Rate Certificates"................................................28
"FTC Rule" ............................................................51
"Funding Period".............................................................7
"H.15(519)" ............................................................29
"Index Maturity"............................................................28
"Indirect Participants".................................................17, 34
"Initial Receivables"........................................................7
"Insolvency Laws"...........................................................15
"Interest Reset Date".......................................................29
"Interest Reset Period".....................................................28
"Investment Company Act".....................................................9
"Investment Earnings".......................................................40
"Investment Income"..........................................................7
"LIBO" ............................................................32
"LIBOR Certificate".........................................................28
"LIBOR Determination Date"..................................................32
"LIBOR" ........................................................31, 32
"London Banking Day"........................................................32
"Money Market Yield"........................................................30
"Participants" ............................................................33
"PassThrough Rate"........................................................2, 4
"Payahead Account"..........................................................40
"Policy" .............................................................1
"Pool Balance" ............................................................25
"Pool Factor" ............................................................25
"Pooling and Servicing Agreement"........................................4, 37
"PreFunded Amount"...........................................................7
"PreFunding Account".........................................................6
"Precomputed Advance"........................................................8
"Prospectus Supplement"......................................................1
"Purchase Agreement"........................................................21
"Rating Agencies"...........................................................11
"Receivables Pool"..........................................................19
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<PAGE>
"Receivables" ..........................................................1, 6
"Registration Statement".....................................................2
"Relief Act" ............................................................18
"Reuters Screen LIBO Page"..................................................32
"Rule of 78s Receivables"...................................................22
"Rule of 78s" ............................................................22
"Rules" ............................................................35
"Securities Act"..........................................................2, 3
"Seller" .............................................................4
"Series" .............................................................1
"Servicer" ..........................................................1, 4
"Servicing Fee" ............................................................43
"Simple Interest Advance"....................................................9
"Simple Interest Receivables"...............................................23
"Sponsor" .............................................................4
"Spread Multiplier".........................................................28
"Spread" ............................................................28
"Standby Servicer"..........................................................41
"Strip Certificates".........................................................5
"SubPrime Borrowers"........................................................24
"Subsequent Receivables".....................................................6
"Subsequent Transfer Date"..........................................13, 22, 39
"Subservicer" .............................................................4
"Terms and Conditions"......................................................36
"Treasury Rate Certificate".................................................28
"Treasury Rate Determination Date"..........................................33
"Treasury Rate" ........................................................32, 33
"Trust Accounts"............................................................40
"Trust Assets" .............................................................1
"Trust" .............................................................1
"Trustee" .............................................................4
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<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution
Trustee's Fees..........................................................$[ ]
Registration Fee........................................................$[ ]
Printing and Engraving..................................................$[ ]
Legal Fees and Expenses.................................................$[ ]
Blue Sky Fees and Expenses..............................................$[ ]
Accountants' Fees and Expenses..........................................$[ ]
Rating Agency Fees......................................................$[ ]
Credit Enhancement Fee..................................................$[ ]
Miscellaneous Fees......................................................$[ ]
------
Total...................................................................$[ ]
======
Item 15. Indemnification of Directors and Officers
Indemnification. Under the laws which govern the organization of the
registrant, the registrant has the power and in some instances may be required
to provide an agent, including an officer or director, who was or is a party or
is threatened to be made a party to certain proceedings, with indemnification
against certain expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with such person's status as an
agent of Consumer Portfolio Services, Inc., if that person acted in good faith
and in a manner reasonably believed to be in the best interests of Consumer
Portfolio Services, Inc. and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of that person was unlawful.
Article IV of the Articles of Incorporation and Section 2 of Article VI of
the Amended and Restated ByLaws of Consumer Portfolio Services, Inc. provides
that all officers and directors of the corporation shall be indemnified by the
corporation from and against all expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with such person's
status as an agent of Consumer Portfolio Services, Inc., if that person acted in
good faith and in a manner reasonably believed to be in the best interests of
Consumer Portfolio Services, Inc. and, in the case of a criminal proceeding, had
no reasonable cause to believe the conduct of that person was unlawful.
The form of the Underwriting Agreement, to be filed as an exhibit to this
Registration Statement, will provide that Consumer Portfolio Services, Inc. will
indemnify and reimburse the underwriter(s) and each controlling person of the
underwriter with respect to certain expenses and liabilities, including
liabilities under the 1933 Act or other federal or state regulations or under
the common law, which arise out of or are based on certain material
misstatements or omissions in the Registration Statement. In addition, the
Underwriting Agreement will provide that the underwriter(s) will similarly
indemnify and reimburse Consumer Portfolio Services, Inc. with respect to
certain material misstatements or omissions in the Registration Statement which
are based on certain written information furnished by the underwriter(s) for use
in connection with the preparation of the Registration Statement.
Insurance. As permitted under the laws which govern the organization of
the registrant, the registrant's Amended and Restated By-Laws permit the board
of directors to purchase and maintain insurance on behalf of the registrant's
agents, including its officers and directors, against any liability asserted
against them in such capacity or arising out of such agents' status as such,
whether or not the registrant would have the power to indemnify them against
such liability under applicable law.
II-1
<PAGE>
Item 16. Exhibits and Financial Statements
(a) Exhibits
1.1 --Form of Underwriting Agreement.*
4.1 --Form of Pooling and Servicing Agreement, including the form of
Certificates and certain other related agreements as Exhibits thereto.
5.1 --Opinion of Mayer, Brown & Platt with respect to legality.*
8.1 --Opinion of Mayer, Brown & Platt with respect to tax matters.*
10.1 --Form of Purchase Agreement.
23.1 --Consent of Mayer, Brown & Platt (included in its opinions filed as
Exhibit 5.1 and Exhibit 8.1).*
24.1 --Powers of Attorney.
(b) Financial Statements
All financial statements, schedules and historical financial information
have been omitted as they are not applicable.
- --------
* To be filed pursuant to an amendment to this Registration Statement.
II-2
<PAGE>
Item 17. Undertakings
A. Undertaking pursuant to Rule 415
The undersigned registrant hereby undertakes as follows:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(1) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(2) to reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(3) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change of such information in the Registration Statement; provided,
however, that paragraphs (1) and (2) do not apply if the information required to
be included in the post-effective amendment is contained in periodic reports
filed by the Issuer pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking pursuant to Rule 415
(a) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) under the
Securities Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
(b) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
C. Undertaking in respect of indemnification
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
II-3
<PAGE>
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the questions whether such indemnification by it is
against public policy as expressed in such Securities Act and will be governed
by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the capacities
indicated.
CONSUMER PORTFOLIO SERVICES, INC.
as originator of the Trust (Registrant)
By /s/ Charles E. Bradley, Jr.
----------------------------------
Name: Charles E. Bradley, Jr.
Title: President
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed on August __, 1996 by the following
persons in the capacities indicated.
Signatures
Title
-------------------------------------
Charles E. Bradley, Sr.
Director
/s/ Charles E. Bradley, Jr.
-------------------------------------
Charles E. Bradley, Jr.
President and Director
*
-------------------------------------
William B. Roberts
Director
-------------------------------------
John G. Poole
Director
*
-------------------------------------
Thomas L. Chrystie
Director
*
-------------------------------------
Robert A. Simms
Director
/s/ Jeffrey P. Fritz
-------------------------------------
Jeffrey P. Fritz
Chief Financial Officer and Secretary
*By: /s/ Jeffrey P. Fritz
-------------------------------------
Jeffrey P. Fritz
as attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
1.1 --Form of Underwriting Agreement.*
4.1 --Form of Pooling and Servicing Agreement, and certain other related
agreements as Exhibits thereto.
5.1 --Opinion of Mayer, Brown & Platt with respect to legality.*
8.1 --Opinion of Mayer, Brown & Platt with respect to tax matters.*
10.1 --Form of Receivables Purchase Agreement.
23.1 --Consent of Mayer, Brown & Platt (included in its opinions filed
as Exhibit 5.1 and Exhibit 8.1).*
24.1 --Powers of Attorney.
- --------
* To be filed pursuant to an amendment to this Registration Statement.
II-7
EXHIBIT 4.1
<PAGE>
[ ]
Seller
and
Consumer Portfolio Services, Inc.
Servicer
and
[ ]
Trustee [and Standby Servicer]
POOLING AND SERVICING AGREEMENT
Dated as of [ ]
$[ ]
CPS Auto Grantor Trust 199[ ]-[ ]
$[ ], [ ]% Class A Certificates
$[ ], [ ]% Class B Certificates
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of [ _______ ] (the "Agreement")
among [ ________ ], a [ ______ ], as seller (the "Seller"), Consumer Portfolio
Services, Inc., a California corporation ("CPS"), as servicer (the "Servicer"),
and [ ], a [ __________ ], as trustee [and standby servicer] (the "Trustee" [and
"Standby Servicer", respectively]).
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
SECTION 1.1. Definitions. Whenever used in this Agreement, the 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
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,
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 be
amended and supplemented from time to time.
"Amount Financed" with respect to a Receivable means the aggregate
amount originally advanced under the Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
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"Authenticating Agent" has the meaning assigned to such term in Section
6.2B.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located or the State in which the principal place of business
of the [Credit Enhancer] is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" means any one of the certificates executed by the Trustee on
behalf of the Trust and authenticated by the Trustee in substantially the form
set forth in Exhibit A or Exhibit B hereto.
"Certificate Account" means the account designated as such, established and
maintained pursuant to Section 4.1.
"Certificate Balance" as of any day, means the sum of the Class A
Certificate Balance on such day and the Class B Certificate Balance on such day.
"Certificate Register" and "Certificate Registrar" mean, respectively, the
register maintained and the Certificate Registrar appointed pursuant to Section
6.3.
"Certificateholder" or "Holder" means the Person in whose name a
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 Seller or the
Servicer, or any Affiliate of either of them, 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 [ ]% Class A Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Original Pool Balance and, thereafter,
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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
modification of the Certificates or the Agreement which has not been consented
to by the [Credit Enhancer]; provided, however, the Class A Guaranteed
Distribution Amount shall not include, nor shall coverage be provided under [the
Credit Enhancement] 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 [Enhancement 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 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 Closing Date through and including [ ______ ].
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"Class A Pass-Through Rate" means [ ]% per annum.
"Class A Percentage" shall be [ ] percent ([ ]%).
"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 [Enhancement 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.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the sum of
the Class A Percentage of the sum of the following amounts: (i) the principal
portion of all Scheduled Payments (including amounts transferred from the
Payahead Account to the Certificate Account to be applied to the principal
portion of Scheduled Payments) received during the preceding Collection Period
on Rule of 78's Receivables and all payments of principal received on Simple
Interest Receivables during such Collection Period; (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 [Credit Enhancer], 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. In addition, on the Final Scheduled Distribution Date, the
Class A Principal Distributable Amount
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will equal the Class A Certificate Balance as of the Final Scheduled
Distribution Date.
"Class B Certificate" means any one of the [ ]% 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.
"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 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 Closing Date through and including [ ].
"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 [ ]% per annum.
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"Class B Percentage" shall be [ ] percent ([ ]%).
"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.
"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 of all Scheduled Payments received during the
preceding Collection Period on Rule of 78's Receivables 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 [Credit Enhancer], 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 [ ].
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"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 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 Seller 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 Seller.
"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 [ ________ ].
"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.
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["Credit Enhancer" means [ ], a [ ] organized and created
under the laws of [ ], or its successors in interest.
["Credit Enhancement" means [describe Credit Enhancement] issued by the
[Credit Enhancer] for the benefit of the Holders of the Class A Certificates
issued hereunder.]
["Credit Enhancement Account" means the segregated trust account created by
the Servicer under Section 4.1.]
"Cutoff Date" means [ ].
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, who in
turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning specified in Section
4.7(a).
"Deficiency Claim Date" means, with respect to any Distribution Date, the
fourth Business Day preceding such Distribution Date.
"Deficiency Notice" shall have the meaning specified in Section 4.7(a).
"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 [ ].
"Eligible Account" means (i) a segregated trust account that is maintained
with a depository institution acceptable to the [Credit Enhancer] (so long as an
[Enhancement 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 [Enhancement Default] shall not have occurred and be continuing)
acceptable to the [Credit Enhancer].
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"Eligible Investments" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall be rated "A-1+" 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" by9 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 [Credit Enhancer], 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 [Credit
Enhancer], as evidenced by a writing to that effect, as may from time to time be
confirmed in writing to the Trustee by the [Credit Enhancer].
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Any Eligible Investments may be purchased by or through the Trustee or any
of its Affiliates.
"Enhancement Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the [Credit Enhancer] fails to make a payment required under the
[Credit Enhancement] in accordance with its terms;
(ii) the [Credit Enhancer] (A) files any petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York Department of Insurance Code or similar
Federal or State law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment for the
benefit of its creditors or (C) has an order for relief entered against it
under the United States Bankruptcy Code or any other similar Federal or
State law relating to insolvency, bankruptcy, rehabilitation, liquidation
or reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction or other competent court or
regulatory authority enters a final and nonappealable order, judgment or
decree (A) appointing a custodian, trustee, agent or receiver for the
[Credit Enhancer] 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 [Credit Enhancer] (or the taking of possession of all or
any material portion of the property of the [Credit Enhancer]).
"ERISA" shall have the meaning specified in Section 2.6.
"Event of Default" means an event specified in Section 9.1.
"Final Scheduled Distribution Date" shall be the April 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).
["Enhancement Agreement" means the [Credit Enhancement Agreement] among [ ]
and the [Credit Enhancer], dated as of [ ].]
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"[Enhancement Agreement] Event of Default" means an Event of Default as
defined in the [Enhancement Agreement].
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, 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 [lock-box 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 [Credit Enhancer], 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 [Credit Enhancer] 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 [Credit Enhancer] under the
Lock-Box Agreement.
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"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 board, any vice president, the
treasurer, the controller or any assistant treasurer or any assistant controller
of CPS, the Seller, or the Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but need
not be counsel to the Seller or Servicer, which counsel shall be acceptable to
the Trustee and the [Credit Enhancer] and which opinion shall be acceptable to
the Trustee and the [Credit Enhancer] in form and substance.
"Optional Purchase Percentage" means 10%.
"Original Class A Principal Balance" means the product of the Class A
Percentage and the Original Pool Balance.
"Original Class B Principal Balance" means the product of the Class B
Percentage and the Original Pool Balance.
"Original Pool Balance" means $[ ].
"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.
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"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.
"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 [Credit Enhancer],
established and maintained pursuant to Section 4.1.
"Preference Claim" shall have the meaning specified in Section 9.5(b).
"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 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
[ ], by and between the Seller and CPS, as amended,
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modified or supplemented from time to time, relating to the purchase of the
Receivables by the Seller 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 2.6 or Section 2.8.
"Rating Agency" means [ ___________ ] 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 [Credit Enhancer], 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 the tenth day of the calendar month in which a
Distribution Date occurs.
"Recoveries" means, with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor.
["Reimbursement Obligations" means, with respect to each Distribution Date,
any amounts due to the [Credit Enhancer] under the terms hereof or under the
Enhancement Agreement and with respect to which the [Credit Enhancer] has not
been previously paid.]
["Reserve Fund" means, the Reserve Fund established by the Seller pursuant
to the [Reserve Fund Agreement]. The Reserve Fund shall be held by the [Reserve
Fund Collateral Agent] and shall in no event be deemed part of the Trust.]
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["Reserve Fund Agreement" means the Reserve Fund Agreement dated as of
[ ], among [ ] and [the Reserve Fund Collateral Agent].
["Reserve Fund Collateral Agent" means [ ] acting as Reserve Fund
Collateral Agent under the [Reserve Fund Agreement].]
"Residual Certificate" shall have the meaning set forth in Section 6.1
hereof.
"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).
"Seller" means CPS Receivables Corp., as the seller of the Receivables
under this Agreement, and each of its successors pursuant to Section 7.3.
"Servicer" means CPS as the servicer of the Receivables which were
purchased by the Seller, 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 [ ], 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 [Credit Enhancer], as the
same may be amended from time to time.
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"Servicing Rate" shall be [ ]% per annum, payable monthly[, provided,
however, that if [the Standby Servicer] becomes the successor Servicer, the
"Servicing Rate" shall be equal to a percentage per annum determined pursuant to
[the Servicing Assumption Agreement] not to exceed [ ]% 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 the Seller, 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
[ ] and [the Collateral Agent], as amended and restated as of [ ],
as the same may be amended, supplemented or otherwise modified in accordance
with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Group, 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 [ ]% per annum rather than the Servicing Rate.]
["Standby Servicer" means [ ], 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.
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"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
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; and (iv) the Purchase Amount of each Receivable that
became a Purchased Receivable as of the last day of the Collection Period, 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 Credit Enhancement] 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 [ ]% 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 [ ]% and (ii) the Pool Balance as of the close of
the Cutoff Date.
"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.
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"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
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 ss. 301.7701-4(c) or to engage in business unless the
Trustee and the [Credit Enhancer] 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 Seller, CPS 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
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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 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
[Credit Enhancement].
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 CPS Auto Grantor Trust 199[ ]-[ ].
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 Seller, the Seller does hereby
sell, transfer, assign, set over and otherwise convey to the Trustee, in trust
for the benefit of the Certificateholders, without recourse, except as provided
in Sections 2.5, 2.6 and 2.8 (subject to the obligations herein):
(i) all right, title and interest of the Seller 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 Seller 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 Seller in and to the
security interests in the Financed Vehicles granted by Obligors pursuant to
the Receivables and any other interest of the Seller in such Financed
Vehicles, including, without limitation, the certificates of title or, with
respect to such Financed Vehicles in the State of Michigan, all other
evidence of ownership with respect to such Financed Vehicles;
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(iii) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in and to the
Purchase Agreement, including a direct right to cause CPS to purchase
Receivables from the Trust under certain circumstances;
(v) all right, title and interest of the Seller in and to refunds for
the costs of extended service contracts with respect to Financed Vehicles,
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 Credit Enhancement
Account] or the Certificate Account; and
(viii) the proceeds of any and all of the foregoing.
In addition, the Seller shall cause [the Credit Enhancement] to be issued
to and delivered to the Trust for the benefit of the 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 Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. In the event, however, that notwithstanding the intent of CPS,
the Seller 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 [Credit Enhancer] as their interests may appear
herein.
SECTION 2.4. Acceptance by Trustee. The Trustee does hereby accept all
consideration conveyed by the Seller pursuant to Section 2.2, and declares that
the Trustee shall hold such
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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.
SECTION 2.5. Representations and Warranties of Seller. The Seller makes the
following representations and warranties as to the Receivables to the [Credit
Enhancer] and to the Trustee, on which the [Credit Enhancer] relies in executing
and delivering [the Credit Enhancement], and on which the Trustee on behalf of
itself and the Certificateholders relies in accepting the items specified in
Section 2.2 in trust and executing and authenticating the Certificates. Such
representations and warranties speak as of the Closing Date, but shall survive
the sale, transfer, and assignment of the Receivables to the Trustee.
(i) Characteristics of Receivables. (A) Each Receivable (1) has been
originated in the United States of America by a Dealer for the retail sale
of a Financed Vehicle in the ordinary course of such Dealer's business, has
been fully and properly executed by the parties thereto and has been
purchased by CPS in connection with the sale of Financed Vehicles by the
Dealers, (2) has created a valid, subsisting, and enforceable first
priority perfected security interest in favor of CPS in the Financed
Vehicle, which security interest has been assigned by CPS to the Seller,
which in turn has assigned such security interest to the Trustee, (3)
contains customary and enforceable provisions such that the rights and
remedies of the holder or assignee thereof shall be adequate for
realization against the collateral of the benefits of the security, (4)
provides for level monthly payments that fully amortize the Amount Financed
over the original term (except for the last payment, which may be different
from the level payment) and yield interest at the Annual Percentage Rate,
(5) has an Annual Percentage Rate of not less than [ ]%, (6) that is a Rule
of 78's Receivable provides for, in the event that such contract is
prepaid, a prepayment that fully pays the Principal Balance and includes a
full month's interest, in the month of prepayment, at the Annual Percentage
Rate, (7) is a Rule of 78's Receivable or a Simple Interest Receivable, and
(8) was originated by a Dealer and was sold by the Dealer without any fraud
or misrepresentation on the part of such Dealer.
(B) Approximately [ ]% of the aggregate Principal Balance of
the Receivables, constituting [ ]% of the number of contracts, as of the
Cutoff Date, represents financing of used automobiles, light trucks, vans
or minivans; the remainder of the Receivables represent financing of new
automobiles, light trucks, vans or minivans; approximately [ ]% of the
aggregate Principal
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Balance of the Receivables as of the Cutoff Date were originated in the
State of California; approximately [ ]% of the aggregate Principal Balance
of the Receivables as of the Cutoff Date were originated under the CPS
alpha program; approximately [ ]% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated under the CPS delta
program; the remainder of the Receivables were originated under the CPS
standard program; no Receivable shall have a payment that is more than [30]
days overdue as of the Cutoff Date; [ ]% of the Receivables are Rule of
78's Receivables and [ ]% of the Receivables are Simple Interest
Receivables; each Receivable shall have a final scheduled payment due no
later than April 25, 2001; each Receivable has an original term to maturity
of at least 24 months and not more than 60 months and a remaining term to
maturity of not less than 18 months nor greater than 60 months; and each
Receivable was originated on or before the Cutoff Date.
(ii) Schedule of Receivables. The information with respect to the
Receivables set forth in Schedule A to this Agreement is true and correct
in all material respects as of the close of business on the Cutoff Date,
and no selection procedures adverse to the Certificateholders have been
utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable, the sale of the Financed
Vehicle and the sale of any physical damage, credit life and credit
accident and health insurance and any extended service contracts complied
at the time the related Receivable was originated or made and at the
execution of this Agreement complies in all material respects with all
requirements of applicable Federal, State, and local laws, and regulations
thereunder including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940,
the Texas Consumer Credit Code, the California Automobile Sales Finance Act
and State adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms.
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(v) No Government Obligor. None of the Receivables are due from the
United States of America or any State or from any agency, department, or
instrumentality of the United States of America or any State.
(vi) Security Interest in Financed Vehicle. Immediately subsequent to
the sale, assignment and transfer thereof to the Trust, each Receivable
shall be secured by a validly perfected first priority security interest in
the Financed Vehicle in favor of the Trust as secured party, and such
security interest is prior to all other liens upon and security interests
in such Financed Vehicle which now exist or may hereafter arise or be
created (except, as to priority, for any tax liens or mechanics' liens
which may arise after the Closing Date).
(vii) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from
the lien granted by the related Receivable in whole or in part.
(viii) No Waiver. No provision of a Receivable has been waived.
(ix) No Amendments. No Receivable has been amended, except as such
Receivable may have been amended to grant extensions which shall not have
numbered more than (a) one extension of one calendar month in any calendar
year or (b) three such extensions in the aggregate.
(x) No Defenses. As of the Closing Date, no right of rescission,
setoff, counterclaim or defense exists or has been asserted or threatened
with respect to any Receivable. The operation of the terms of any
Receivable or the exercise of any right thereunder will not render such
Receivable unenforceable in whole or in part or subject to any such right
of rescission, setoff, counterclaim, or defense.
(xi) No Liens. As of the Cutoff Date, there are no liens or claims
existing or which have been filed for work, labor, storage or materials
relating to a Financed Vehicle that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted by
the Receivable.
(xii) No Default; Repossession. Except for payment delinquencies
continuing for a period of not more than [thirty] days as of the Cutoff
Date, no default, breach, violation or event permitting acceleration under
the terms of any Receivable has occurred; and no continuing condition
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that with notice or the lapse of time would constitute a default,
breach, violation or event permitting acceleration under the terms of
any Receivable has arisen; and the Seller shall not waive and has not
waived any of the foregoing; and no Financed Vehicle shall have been
repossessed as of the Cutoff Date.
(xiii) Insurance; Other. (A) Each Obligor has obtained insurance
covering the Financed Vehicle as of the execution of the Receivable
insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and
collision coverage, and that each Receivable requires the Obligor to
obtain and maintain such insurance naming CPS and its successors and
assigns as an additional insured, (B) each Receivable that finances
the cost of premiums for credit life and credit accident and health
insurance is covered by an insurance policy or certificate of
insurance naming CPS as policyholder (creditor) under each such
insurance policy and certificate of insurance and (C) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by
an extended service contract.
(xiv) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial
interest in and title to such Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trustee. Immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable
title to each Receivable and was the sole owner thereof, free and
clear of all liens, claims, encumbrances, security interests, and
rights of others, and, immediately upon the transfer thereof, the
Trustee for the benefit of the Certificateholders and the [Credit
Enhancer] shall have good and marketable title to each such Receivable
and will be the sole owner thereof, free and clear of all liens,
encumbrances, security interests, and rights of others, and the
transfer has been perfected under the UCC.
(xv) Lawful Assignment. No Receivable has been originated in, or
is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement or
pursuant to transfers of the Certificates shall be unlawful, void, or
voidable. The Seller has not entered into any agreement
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with any account debtor that prohibits, restricts or conditions the
assignment of any portion of the Receivables.
(xvi) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trustee a first priority perfected ownership interest in the
Receivables have been made.
(xvii) Receivable File; One Original. CPS has delivered to the
Trustee a complete Receivable File with respect to each Receivable.
There is only one original executed copy of each Receivable.
(xviii) Chattel Paper. Each Receivable constitutes "chattel
paper" under the UCC.
(xix) Title Documents. (A) If the Receivable was originated in a
State in which notation of security interest on the title document of
the related Financed Vehicle is required or permitted to perfect such
security interest, the title document of the related Financed Vehicle
for such Receivable shows, or if a new or replacement title document
is being applied for with respect to such Financed Vehicle the title
document (or, with respect to Receivables originated in the State of
Michigan, a copy thereof) will be received within [180] days and will
show, CPS named as the original secured party under the related
Receivable as the holder of a first priority security interest in such
Financed Vehicle, and (B) if the Receivable was originated in a State
in which the filing of a financing statement under the UCC is required
to perfect a security interest in motor vehicles, such filings or
recordings have been duly made and show CPS named as the original
secured party under the related Receivable, and in either case, the
Trustee has the same rights as such secured party has or would have
(if such secured party were still the owner of the Receivable) against
all parties claiming an interest in such Financed Vehicle. With
respect to each Receivable for which the title document has not yet
been returned from the Registrar of Titles, CPS has received written
evidence from the related Dealer that such title document showing CPS
as first lienholder has been applied for.
(xx) Valid and Binding Obligation of Obligor. Each Receivable is
the legal, valid and binding obligation of the Obligor thereunder and
is enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and all
parties to such contract had full legal capacity to execute and
deliver such contract and all other documents related
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thereto and to grant the security interest purported to be granted
thereby.
(xxi) Tax Liens. As of the Cutoff Date, there is no lien against
the related Financed Vehicle for delinquent taxes.
(xxii) Characteristics of Obligors. As of the date of each
Obligor's application for the loan from which the related Receivable
arises, such Obligor (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages
garnished within one year prior to the date of such application,
unless such amounts have been repaid or discharged through bankruptcy,
(b) was not the subject of any Federal, State or other bankruptcy,
insolvency or similar proceeding pending on the date of application
that is not discharged, (c) had not been the subject of more than one
Federal, State or other bankruptcy, insolvency or similar proceeding,
and (d) was domiciled in the United States.
(xxiii) Origination. Each Receivable has an origination date on
or after [ ].
(xxiv) Maturity of Receivables. Each Receivable has an original
term to maturity of not less than [ ] months and not more than 60
months; the weighted average original term to maturity of the
Receivables is [ ] months as of the Cutoff Date; the remaining
term to maturity of each Receivable was [ ] months or less as of the
Cutoff Date; the weighted average remaining term to maturity of the
Receivables was [ ] months as of the Cutoff Date.
(xxv) Scheduled Payments. Each Receivable had an original
principal balance of not less than $[ ] nor more than $[ ],
has an outstanding principal balance as of the Cutoff Date of not less
than $[ ] nor more than $[ ] and has a first Scheduled Payment
due on or prior to [ ].
(xxvi) Origination of Receivables. Based on the billing address
of the Obligors and the Principal Balances as of the Cutoff Date,
approximately [ ]% of the Receivables were originated in [ ].
(xxvii) Post-Office Box. On or prior to the next billing period
after the Cutoff Date, CPS will notify each Obligor to make payments
with respect to its respective Receivables after the Cutoff Date
directly to the Post- Office Box, and will provide each Obligor with a
monthly statement in order to enable such Obligors to make payments
directly to the Post-Office Box.
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(xxviii) Location of Receivable Files. A complete
Receivable File with respect to each Receivable has been or prior to
the Closing Date will be delivered to the Trustee at the location
listed in Schedule B.
(xxix) Casualty. No Financed Vehicle has suffered a Casualty.
(xxx) Principal Balance/Number of Contracts. As of the Cutoff
Date, the total aggregate principal balance of the Receivables was
$[ ]. The Receivables are evidenced by [ ] Contracts.
SECTION 2.6. Repurchase Upon Breach. The Seller, the Servicer, the [Credit
Enhancer] or the Trustee, as the case may be, shall inform the other parties to
this Agreement and the [Credit Enhancer] promptly, in writing, upon the
discovery of any breach of the Seller's representations and warranties made
pursuant to Section 2.5 (without regard to any limitation therein as to the
Seller's knowledge). Unless the breach shall have been cured by the last day of
the second Collection Period following the discovery thereof by the Trustee or
the [Credit Enhancer] or receipt by the Trustee and the [Credit Enhancer] of
notice from the Seller or the Servicer of such breach, CPS shall repurchase any
Receivable if such Receivable is materially and adversely affected by the breach
as of the last day of such second Collection Period (or, at CPS's option, the
last day of the first Collection Period following the discovery) and, in the
event that the breach relates to a characteristic of the Receivables in the
aggregate, and if the Trust is materially and adversely affected by such breach,
unless the breach shall have been cured by such second Collection Period, CPS
shall purchase such aggregate Principal Balance of Receivables, such that
following such purchase such representation shall be true and correct with
respect to the remainder of the Receivables in the aggregate. In consideration
of the purchase of the Receivable, CPS shall remit the Purchase Amount, in the
manner specified in Section 4.5. For purposes of this Section, the Purchase
Amount of a Receivable which is not consistent with the warranty pursuant to
Section 2.5(i)(A)(4) or (A)(5) shall include such additional amount as shall be
necessary to provide the full amount of interest as contemplated therein. The
sole remedy of the Trustee, the Trust, the Certificateholders or the [Credit
Enhancer] with respect to a breach of representations and warranties pursuant to
Section 2.5 shall be to enforce CPS's obligation to purchase such Receivables
pursuant to the Purchase Agreement; provided, however, that CPS shall indemnify
the Trustee, [the Standby Servicer], the [Collateral Agent], the [Credit
Enhancer], the Trust and the Certificateholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of
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counsel, which may be asserted against or incurred by any of them as a result of
third party claims arising out of the events or facts giving rise to such
breach. Upon receipt of the Purchase Amount and written instructions from the
Servicer, the Trustee shall release to CPS or its designee the related
Receivables File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by the Seller and
delivered to the Trustee and necessary to vest in CPS or such designee title to
the Receivable. If it is determined that consummation of the transactions
contemplated by this Agreement and the other transaction documents referenced in
this Agreement, the servicing and operation of the Trust pursuant to this
Agreement and such other documents, or the ownership of a Certificate by a
Holder constitutes a violation of the prohibited transaction rules of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended ("Code") or any successor statutes of
similar impact, together with the regulations thereunder, to which no statutory
exception or administrative exemption applies, such violation shall not be
treated as a breach of the Seller's representations and warranties made pursuant
to Section 2.5 if not otherwise such a breach.
SECTION 2.7. Delivery of Receivable Files. On or prior to the Closing Date,
the Seller 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 Seller 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
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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 Seller,
[the Standby Servicer] and the [Credit Enhancer] promptly, in writing, of the
failure to receive a file with respect to such Receivable (or of the failure of
any of the aforementioned documents to be included in the Receivable File) or
shall return to CPS as the Seller's designee any file unrelated to a Receivable
identified in Schedule A to this Agreement (it being understood that the
Trustee's obligation to review the contents of any Receivable File shall be
limited as set forth in the preceding sentence). Unless such defect with respect
to such Receivable File shall have been cured by the last day of the second
Collection Period following discovery thereof by the Trustee, 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 [Credit
Enhancer]. 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 [Credit Enhancer] 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.
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SECTION 2.9. Access to Receivable Files. The Trustee shall permit the
Servicer, any Certificateholder and the [Credit Enhancer] 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 [Enhancement Default] shall have
occurred and be continuing. In addition, the Trustee shall provide such access
to any Certificateholder at all reasonable 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 [Credit Enhancer], execute such documents and instruments as
are prepared by the Servicer or the [Credit Enhancer] and delivered to the
Trustee, as the Servicer or the [Credit Enhancer] 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
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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.
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer. The Servicer, as agent for the Trust, the
Certificateholders and the [Credit Enhancer] (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 [Credit Enhancer] 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
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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 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 [Credit Enhancer] 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 [Credit Enhancer]. 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
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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 [Credit Enhancer], 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 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.
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(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 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 [Enhancement Agreement] Event of
Default, the [Credit Enhancer] may (so long as an [Enhancement Default] shall
not have occurred and be continuing) instruct the Trustee and the Servicer to
take or cause to be taken, or, if an [Enhancement 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 [Credit Enhancer] 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 [Enhancement Agreement Event of
Default], the [Credit Enhancer] may (unless an [Enhancement 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
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to the [Credit Enhancer], 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 [Credit Enhancer], be necessary or prudent; provided, however,
that if the [Credit Enhancer] requests (unless an [Enhancement Default] shall
have occurred and be continuing) that the title documents be amended prior to
the occurrence of an [Enhancement 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 [Credit
Enhancer].
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 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 [Credit Enhancer] 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 [Credit Enhancer] 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 [Credit Enhancer], 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
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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.
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 Pool Balance as of the close of business on the Cutoff Date. 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 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., [ ] time, on each
Determination Date, the Servicer shall deliver to the Trustee, the [Credit
Enhancer], the Rating Agencies and the Seller 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
[Credit Enhancer] 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 and the [Credit Enhancer], on or before
July 31 of each year beginning [ ], 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 [ ]) 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
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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 [Credit Enhancer]
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.
The Seller shall deliver to the Trustee, the [Credit Enhancer] 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 Seller 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
Seller, to deliver to the Trustee, the Certificateholders and the [Credit
Enhancer] on or before July 31 of each year beginning [ ], a report dated as
of March 31 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 [ ]), addressed to the Board of Directors of the
Servicer and to the Trustee and the [Credit Enhancer], 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
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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.
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 [Credit Enhancer] for successive terms of ninety
(90) days each as specified in a writing delivered by the [Credit Enhancer]
prior to the expiration of each current term to the Servicer 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 Credit Enhancer] may extend the Servicer in its
sole discretion (or, at the discretion of [the Credit Enhancer] exercised
pursuant to revocable written standing instructions from time to time to the
Servicer and the Trustee, for any specified number of terms greater than one),
until 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 Credit Enhancer] to the
Trustee and the Servicer. The Servicer hereby agrees that, upon its receipt of
any such Servicer Extension Notice, the Servicer shall become bound, for the
duration of the term covered by such Servicer Extension Notice, to continue as
the Servicer subject to and in accordance with the other provisions of this
Agreement. At such time as the Class A Certificates have been paid in full and
all outstanding Reimbursement Obligations and other amounts owed to
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[the Credit Enhancer] 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
Certificateholders and the [Credit Enhancer] 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 permit such
Certificateholder to review such materials and (ii) if an [Enhancement 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 [Credit Enhancer] 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
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the Servicer's Certificate and, prior to the fifth calendar day of the following
month, reconcile the discrepancies. The effect, if any, of such reconciliation
shall be reflected in the Servicer's Certificate for such next succeeding
Determination Date. Other than the duties specifically set forth in this
Agreement, [the Standby Servicer] shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer the
performance of the Servicer. [The Standby Servicer] shall have no liability for
any actions taken or omitted by the Servicer. The duties and obligations of [the
Standby Servicer] shall be determined solely by the express provisions of this
Agreement and no implied covenants or obligations shall be read into this
Agreement against [the Standby Servicer].
(b) [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 and the amount on deposit in the Spread Account 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
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pursuant to Section 12.11 and (unless an [Enhancement Agreement Event of
Default] shall have occurred and be continuing or [ ] shall then be the
Servicer) the Holders of Class B Certificates evidencing at least [ ]% 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 [ ]% 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 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 [Credit Enhancer]
(unless an [Enhancement 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
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written notice of any change made at the request of the [Credit Enhancer] 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 [Credit Enhancer].
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 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 [Credit Enhancer] (so long as
an [Enhancement Default] shall not have occurred and be continuing) or Holders
of Certificates evidencing more than [ ]% of the Class A Certificate Balance (if
an [Enhancement 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 [Credit Enhancer]
(so long as an [Enhancement Default] shall not have occurred and be continuing)
or Holders of Certificates evidencing more than [ ]% of the Class A Certificate
Balance (if an [Enhancement 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 Credit Enhancement 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
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in the Trust. The Collection Account, [the Credit Enhancement 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 [Credit Enhancer], 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 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 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 Credit Enhancement 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).
(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:
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With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, in the case of a Rule
of 78's Receivable, first, to the Scheduled Payment of such Rule of 78's
Receivable and, second, to any late fees accrued with respect to such Rule of
78's Receivable and, in the case of a Simple Interest Receivable, to interest
and principal in accordance with the Simple Interest Method. 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 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; [Credit Enhancement 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
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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 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 [ ], 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 $[ ]) 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,
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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 $[ ] 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 (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;
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(viii) to the [Credit Enhancer], 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 expenses (up to a maximum of $[ ])
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)
except to the extent of monies deposited in the Collection Account from [the
Reserve Fund] pursuant to Section 4.7(d) hereof and [the Reserve Fund
Agreement]. 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)
except to the extent of monies deposited in the Collection Account from [the
Reserve Fund] pursuant to Section 4.7(d) hereof and [the Reserve Fund
Agreement]. At such time as the Class A Certificates are paid in full and the
[Credit Enhancer] has received payment in full for all outstanding Reimbursement
Obligations and any other amounts owed to the [Credit Enhancer], the Class B
Certificateholders shall be entitled to exercise all rights granted to the Class
A Certificateholders under this
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Agreement to the extent that the exercise of such rights does not conflict with
the provisions of the Spread Account Agreement. In no event shall the Class A
Certificateholders be entitled to any amounts deposited in the Collection
Account pursuant to Section 4.7(d) hereof and [the Reserve Fund Agreement].
(e) [mechanics for drawing on [the Credit Enhancement]]
(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 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 shall have provided to the Trustee
appropriate instructions prior to the Record Date for such Distribution Date and
such Holder's Certificates in the aggregate evidence an original principal
balance of at least $[1,000,000], or, if not, 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] and [Reserve Fund]. (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 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 [ ] Business Day immediately preceding the
related Distribution Date, the Trustee shall deliver to the [Collateral Agent],
[the Credit Enhancer], 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 [ ], on the [ ]
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.
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(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 [ ] Business Day
immediately preceding the related Distribution Date, the Trustee shall deliver
to the [Collateral Agent] and the Servicer, 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 the Seller 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 the Seller and
paid to the Trustee at the direction of the Seller.
(d) In the event that there are insufficient funds to cure any Class B
Deficiency pursuant to subsection (c) above, the [Collateral Agent] shall
instruct the [Reserve Fund Collateral Agent] to withdraw an amount up to the
remaining Class B Deficiency from [the Reserve Fund] in accordance with the
terms of the [Reserve Fund Agreement] for deposit in the Collection Account and
distribution pursuant to Sections 4.6(c)(vi) and (x), as applicable.]
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 [Credit Enhancer] and to
the Trustee for the Trustee to forward to each Certificateholder of record a
statement (prepared by the Servicer) substantially in 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;
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(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 Credit Enhancement] for such Distribution Date;
(ix) the amount distributable to the [Credit Enhancer] on such
Distribution Date;
(x) the aggregate amount in the Payahead Account, the [Spread Account]
and [the Reserve Fund] and the change in such amount from the preceding
Distribution Date;
(xi) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned finance and other charges,
for which the related Obligors are delinquent in making scheduled 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
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(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) and (vi) 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. Credit Enhancement; Subrogation. (a) The Trustee shall
keep a complete and accurate record of the amount of payments made under [the
Credit Enhancement] 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 Credit Enhancement]. The [Credit Enhancer]
shall have the right to inspect 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
[Credit Enhancer], 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
[Credit Enhancer] all rights to the payment of the Class A Interest
Distributable Amount and Class A Principal Distributable
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Amount which are then due for payment to the extent of all payments made by the
[Credit Enhancer]. The [Credit Enhancer] (for so long as no [Enhancement
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 under [the Credit Enhancement]. The
Trustee and the Class A Certificateholders, by reason of their acquisition and
holding of the Class A Certificates, agree that the [Credit Enhancer] 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 Credit
Enhancement] by the [Credit Enhancer] 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. Reserved.
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 Seller by one of its officers authorized to
do so and delivered to an Authorized Officer of the Trustee, execute on behalf
of the Trust, authenticate and deliver the Certificates to or upon the order of
the Seller in the aggregate principal amount and denominations as set forth in
such written order or request. Each of the Class A Certificates and Class B
Certificates shall be issuable in minimum denominations of $1,000 and integral
multiples thereof; provided , however, that one Class A Certificate and one
Class B Certificate respectively, may be issued in a denomination that
represents the residual amount of the Original Class A Principal Balance and the
original Class B Principal Balance, respectively (each, a "Residual
Certificate"). Upon initial issuance, the Class A Certificates and the Class B
Certificates shall be substantially in the form of Exhibit A and
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Exhibit B, respectively, in an aggregate amount equal to the Original Class A
Principal Balance and the Original Class B Principal Balance, respectively. The
Certificates shall be executed by the Trustee on behalf of the Trust by manual
or facsimile signature of an Authorized Officer of the Trustee under the
Trustee's seal imprinted thereon. 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 Trust, notwithstanding that
such individuals 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 [Credit Enhancer] 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 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 Seller and the [Credit Enhancer]. 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 [Credit Enhancer]'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
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paid by the Trustee. Each Paying Agent and co-paying agent must be acceptable
to the Seller.]
[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 Seller and the [Credit
Enhancer]. 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 Seller. 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 Seller. 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 Seller
or the [Credit Enhancer], 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 Seller and the [Credit Enhancer].
[(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:
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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 Seller, signed by its chairman of
the board, its president, or any vice president, without further corporate
action by the Seller, 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 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) 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.
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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
surrendered for registration of transfer and exchange shall be canceled and
subsequently disposed of by the Trustee in accordance with its customary
procedures.
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 [Credit Enhancer] 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 [Credit Enhancer], at the expense of the Trust, within 15 days after receipt
by the Trustee of a request therefor from the Servicer or the [Credit Enhancer],
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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 [ ]% of the Class A Certificate Balance apply in writing to the
Trustee, and such application states that the applicants desire 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 [Credit
Enhancer] 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 [ ], 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 [ ], 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.
SECTION 6.8. Book-Entry Certificates. The Certificates, upon original
issuance (except for the Residual Certificate), will be issued in the form of
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Seller. The Certificates delivered to the Depository Trust
Company shall initially be registered on the Certificate Register in the name of
CEDE & Co., the nominee of the initial Clearing Agency, and no Certificate Owner
will receive a definitive certificate representing such Certificate Owner's
interest in the Certificates, except as provided in Section 6.10. Unless and
until definitive, fully registered Certificates (the "Definitive Certificates")
have been issued to Certificate Owners pursuant to Section 6.10;
(i) the provisions of this Section 6.8 shall be in full force and
effect;
(ii) the Seller, the Servicer, the Certificate Registrar, and the
Trustee may deal with the Clearing Agency for all purposes (including
the making of distributions on
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the Certificates) as the authorized representative of the
Certificate Owners;
(iii) to the extent that the provisions of this Section 6.8
conflict with any other provisions of this Agreement, the provisions
of this Section 6.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, unless and until Definitive Certificates are
issued pursuant to Section 6.10, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on the
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Class A Principal Balance or
Class B Principal Balance, as the case may be, the Clearing Agency
shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
Certificates and has delivered such instructions to the Trustee.
SECTION 6.9. Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, other
than to the Holder of the Residual Certificate, unless and until Definitive
Certificates shall have been issued to Certificate Owners pursuant to Section
6.10, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of the Certificates to
the Clearing Agency.
SECTION 6.10. Definitive Certificates. If (i) (A) the Seller advises
the Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement and (B)
the Trustee or the Seller is unable to locate a qualified successor, (ii) the
Seller at its option, advises the Trustee in writing that it elects to terminate
the book-entry system through the Clearing Agency, or (iii) after the occurrence
of an Event of Servicing Termination, Certificate Owners representing beneficial
interests aggregating not less than [ ]% of the Clearing Agency through the
Clearing Agency Participants in writing that the
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continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners, than the Trustee shall notify the
Clearing Agency and request that the Clearing Agency notify all Certificate
Owners of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Trustee of the Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trustee shall issue
the Definitive Certificates and deliver such Definitive Certificates in
accordance with the instructions of the Clearing Agency. Neither the Seller, the
Certificate Registrar nor the Trustee shall be liable for any delay in delivery
of such instructions andy may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder. The Trustee shall not
be liable if the Trustee or the Seller is unable to locate a qualified successor
Clearing Agency.
ARTICLE VII
The Seller
SECTION 7.1. Representations of Seller. The Seller makes the following
representations to the [Credit Enhancer] and the Trustee, on which the [Credit
Enhancer] relied in executing and delivering [the Credit Enhancement] 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 Seller has been duly
organized and is validly existing as a [ ] in good standing under
the laws of [ ], with power and authority to execute,
deliver and perform its obligations under this Agreement and 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 and own the Receivables.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and
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approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(iii) Power and Authority. The Seller has the power and authority
to execute and deliver this Agreement and to carry out its terms; the
Seller 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 Seller
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 Seller; and this
Agreement shall constitute a legal, valid and binding obligation of
the Seller enforceable in accordance with its terms.
(v) No Violation. The execution, delivery and performance by the
Seller 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 Seller, or any
indenture, agreement, mortgage, deed of trust, or other instrument to
which the Seller is a party or by which it is bound or 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 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 Seller of any court or of any Federal or
State regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Seller's best knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller 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
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affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or the Certificates, or
(D) relating to the Seller 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 Seller has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(ix) The Seller hereby represents and warrants to the Trustee
that the Seller'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: [ ].
SECTION 7.2. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement and the representations made by
the Seller in this Agreement. The Seller 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 Seller's willful misfeasance,
bad faith, or negligence in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement or (b) the Seller'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
Seller 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 Seller, without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party, or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which person in any of the foregoing
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cases executes an agreement of assumption to perform every obligation of the
Seller under this Agreement, shall be the successor to the Seller hereunder
without the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that (i) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 2.5 shall have been breached and no Event of Default, and 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 Seller shall have delivered to the
[Credit Enhancer] 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 Seller shall have delivered to the [Credit
Enhancer] 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
[Enhancement Agreement Event of Default] and no event that, after notice or
lapse of time, or both, would become an [Enhancement Agreement Event of Default]
shall have happened and be continuing. The Seller 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 Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute,
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 7.5. Seller May Own Certificates. The Seller and any Person
controlling, controlled by, or under common control
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with the Seller 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
Seller 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 Seller 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 [Credit Enhancer] and the Trustee, on which the [Credit
Enhancer] relies in executing and delivering [the Credit Enhancement], 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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(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 [Credit Enhancer], the Certificateholders and the Seller, 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 [Credit Enhancer] and the Seller from and against any taxes that
may at any time be asserted against the Trustee, [the Standby
Servicer], the [Collateral Agent], the Trust, the [Credit Enhancer] or
the Seller, 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 Seller,
the [Credit Enhancer], 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 Seller, 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] 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
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the trusts and duties herein contained, if any, except to the extent
that such cost, expense, loss, claim, damage or liability: (a) shall be
due to the willful misfeasance, bad faith, or negligence (except for
errors in judgment) of the Trustee, [the Standby Servicer] 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] 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 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
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Servicer under this Agreement without further act on the part of 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 [Credit Enhancer] 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
[Credit Enhancer] 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
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any director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie 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 [Credit
Enhancer] 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 Trustee and the [Credit Enhancer] 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 Trustee
and the [Credit Enhancer] 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 [Credit Enhancer] 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 the Servicer, or the Seller, as the
case may be, duly to observe or to perform in any material respect any
other covenants or agreements of the Servicer or the Seller (as the case
may be) set forth in the Certificates 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 the Servicer or the Seller (as the case may be), by
the [Credit Enhancer] or the Trustee, or (2) to the Servicer or the Seller,
(as the case may be), and to the Trustee and the [Credit Enhancer] by the
Holders of Class A Certificates evidencing not less than [ ]% 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 [Credit Enhancer] have been paid in full, by the Holders of Class B
Certificates evidencing not less than [ ]% 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 the Servicer or
the Seller (or, so long as CPS is Servicer, any of the Servicer's
Affiliates) in any bankruptcy, insolvency, readjustment of debt,
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 the Servicer or the Seller (or, so long as
CPS is Servicer, any of the Servicer's Affiliates) to the appointment of a
conservator, trustee, receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings of or relating to the Servicer or the Seller (or, so long as
CPS is Servicer, any of the Servicer's Affiliates) of or relating to
substantially all of its property; or the Servicer or the Seller (or, so
long as CPS is Servicer, any of the Servicer's Affiliates) 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 [Enhancement 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 [Enhancement Default] shall have occurred and be
continuing, the [Credit Enhancer] in its sole and absolute discretion, or (ii)
if an [Enhancement Default] shall have occurred and be continuing, then either
the Trustee or the Holders of Class A Certificates evidencing not less than [ ]%
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 [Credit Enhancer] have been paid in full or (B) an
[Enhancement Default] shall have occurred and be continuing, then either the
Trustee or the Holders of Class B Certificates evidencing not less than [ ]% of
the Class B Certificate Balance, by notice then given in writing to the Servicer
(and to the Trustee if given by the [Credit Enhancer] 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
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authorized and empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and 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. The predecessor
Servicer shall grant the Trustee, [the Standby Servicer] and the [Credit
Enhancer] reasonable access to the predecessor Servicer's premises at the
predecessor Servicer's expense. If requested by the [Credit Enhancer], [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 [Credit Enhancer]).
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
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until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of expiration and non-renewal of the term of the Servicer upon the
expiration of such term, and, in the case of resignation, until the later of (x)
the date [45] days from the delivery to the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of termination of
the Servicer, [ ], 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 [Credit Enhancer] 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 [Enhancement Default] shall
have occurred and be continuing, [the Standby Servicer], the Trustee or Class A
Certificateholders holding Class A Certificates evidencing not less than [ ]% 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 [ ]% 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
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Servicer has ceased to act as Servicer in accordance with this Section 9.2, then
the [Credit Enhancer], in accordance with Section 9.2(c) shall appoint, or
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 [Credit Enhancer] 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 Seller, 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 [Credit Enhancer] 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 [Credit Enhancer]. (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 [Credit
Enhancer], shall comply with the provisions of [the Credit Enhancement] to
obtain payment by the [Credit Enhancer] of such avoided Class A Guaranteed
Distribution Amount payment, and shall, at the time it provides notice to the
[Credit Enhancer], notify Holders of the Class A Certificates by mail that, in
the event that any Class A Certificateholder's payment
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is so recoverable, such Class A Certificateholder will be entitled to payment
pursuant to the terms of [the Credit Enhancement]. Pursuant to the terms of [the
Credit Enhancement], the [Credit Enhancer] will make such payment on behalf of
the Class A Certificateholder to the receiver, conservator, debtor-
in-possession or trustee in bankruptcy named in the order 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 [Credit
Enhancer] will make such payment to the Trustee for distribution to such Class A
Certificateholder upon proof of such payment reasonably satisfactory to the
[Credit Enhancer]).
(b) Upon knowledge of any of the following events, the Trustee shall
promptly notify the [Credit Enhancer] of (i) the commencement of any of the
events or proceedings described in Section 9.1 (iii) or (iv) in respect of the
Seller 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 [Credit Enhancer] may, provided an [Enhancement
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 [Credit Enhancer], but subject to reimbursement as
provided in the [Enhancement Agreement]. In addition, and without limitation of
the foregoing, as set forth in Section 4.9, the [Credit Enhancer] 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
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notice thereof to the Servicer and the [Credit Enhancer]. 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 Servicer, the [Credit Enhancer] or by a 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
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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;
(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 [Credit Enhancer] or,
after an [Enhancement Default], the Holders of Class A Certificates
evidencing not less than [ ]% 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
[Credit Enhancer] have been paid in full or (B) an [Enhancement
Default] shall have occurred and be continuing, the Holders of Class B
Certificates evidencing not less than [ ]% 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 Seller, as the case may be, the
[Credit Enhancer] or, after an [Enhancement Default], the Holders of
Class A Certificates evidencing not less than [ ]% 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 [Credit Enhancer] have been paid in full or
(B) an [Enhancement Default] shall have occurred and be continuing,
the Holders of Class B Certificates evidencing not less than [ ]% 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.
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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 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 2.6 or
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.
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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
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 [Credit Enhancer] pursuant to the provisions
of this Agreement, unless such Certificateholders or the [Credit
Enhancer] 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 [Credit Enhancer] or
Holders of Class A Certificates evidencing not less than [ ]% 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 [Credit Enhancer] have been
paid in full or (B) an
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[Enhancement Default] shall have occurred and be continuing, the
Holders of Class B Certificates evidencing not less that [ ]% 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 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 Seller 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
Seller 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
Seller or the Servicer, on an Officer's Certificate of the Seller 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
Seller or
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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 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 Seller 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
[Credit Enhancer] 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 Seller, 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 Seller 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 Seller hereby
certifies to the Trustee that the Rating Agencies rating the Class A
Certificates are [ ] and that
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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 Seller 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 Seller and the Servicer in banking transactions with the same
rights as it would have if it were not Trustee.
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 Seller, 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 $[ ]
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
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to the Servicer. Upon receiving such notice of resignation, with the prior
written consent of (a) the [Credit Enhancer] and the Holders of Class A
Certificates evidencing not less than [ ]% 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 [Credit Enhancer] have
been paid in full, with the prior written consent of the Holders of Class B
Certificates evidencing not less than [ ]% 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 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 [Credit Enhancer]
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.
SECTION 10.10. Successor Trustee. Any successor Trustee appointed pursuant
to Section 10.9 shall execute, acknowledge, and deliver to the Servicer, the
[Credit Enhancer] 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
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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 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.
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 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.
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 [Credit Enhancer]
(provided an [Enhancement 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,
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and, subject to the other provisions of this Section 10.12, such powers, duties,
obligations, rights, and trusts as the Servicer, the [Credit Enhancer] and the
Trustee may consider necessary or desirable. If the Servicer and the [Credit
Enhancer] 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 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 [Enhancement Default] shall have occurred and
be continuing, the [Credit Enhancer] may, and, in the event an
[Enhancement 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
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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.
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 Seller, the
[Credit Enhancer] 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 Seller or by a trust for which the Seller was
the depositor it will not institute against, or join any other Person in
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instituting against, the Seller 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 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 [Credit Enhancer] to Direct Trustee; Class B
Certificateholder's Right of First Refusal. (a) The [Credit Enhancer], 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 [Credit Enhancer] directs the Trustee to liquidate Receivables
with an aggregate Principal Balance exceeding [ ]% 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 [Credit
Enhancer] 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 [ ]% 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 [Credit Enhancer] 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 [Credit Enhancer]
shall direct the Trustee to accept such bid of the Class B Certificateholders or
their designee.
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(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 [Credit Enhancer] 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 [Credit Enhancer].
ARTICLE XI
Termination
SECTION 11.1. Termination of the Trust. The respective obligations and
responsibilities of the Seller, 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 Credit Enhancement] (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 and the [Credit Enhancer] 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
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Trustee shall give such notice to 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. Notwithstanding the foregoing, if on the
Distribution Date upon which final payment of the Certificates is to be made,
there are only six or less initial Certificateholders of record, the amounts
distributable to such initial Certificateholders pursuant to Section 4.6 will be
paid on the final Distribution Date by wire transfer or check as set forth in
Section 4.6(f), and each such initial Certificateholder shall present and
surrender its Certificates at the office of the Trustee designated in the notice
referred to above within [30 days] after such Distribution Date.
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 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 [Credit Enhancer], if such purchase would result in a claim under
[the Credit Enhancement] or would result in any amount owing to the [Credit
Enhancer] 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 [Credit Enhancer], 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
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by the Servicer, the [Credit Enhancer] 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 Seller, the Servicer, and the Trustee with the consent of the [Credit
Enhancer] 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 [ ]% of the Class A Certificate Balance
and the Holders of Class B Certificates evidencing not less than [ ]% of the
Class B Certificate Balance for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the 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.
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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) The Seller or Servicer or
both shall execute and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner and in such places as
may be required by law fully to preserve, maintain, and protect the interest of
the Certificateholders and the Trustee in the Receivables and the other Trust
Assets and in the proceeds thereof. The Seller or Servicer or both 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 Seller 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 misleading within the meaning of ss. 9-402(7) of the UCC, unless it
shall have given the Trustee and the [Credit Enhancer] 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 Seller and the Servicer shall have an obligation to give
the Trustee and the [Credit Enhancer] at least [60] 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
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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 CPS Auto Grantor
Trust 199[ ]-[ ] 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.
(f) If at any time the Seller or the Servicer shall propose to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or printouts (including any restored from 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 Trustee, [the Standby Servicer] and the
[Credit Enhancer] 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 Trustee, [the Standby
Servicer] or to the [Credit Enhancer], within [five] Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
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(i) The Servicer shall deliver to the Trustee and the [Credit Enhancer]:
(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 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
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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 notice
of default and of the continuance thereof, and unless also the Holders of Class
A Certificates evidencing not less than [ ]% 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
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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 under
[the Credit Enhancement].
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 [Credit Enhancer] and, if any
Class A Certificate shall remain outstanding, the prior written consent of the
Holders of Class A Certificates evidencing not less than[ ]% 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 [Credit
Enhancer] 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 Seller, the Servicer, the Trustee, the [Credit Enhancer], [the rating
agency] under this Agreement shall be in writing, and delivered (a) 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 Seller, to the agent
for service as specified in this Agreement, at the following address:
[ ], or at such other address as shall be designated by the Seller 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 [ ], (d) in the case of [rating agency], at
the following address: [ ], (e) in the case of [rating agency] at
[ ]; and (f) in the case of [Credit Enhancer], at the following
address: [ ]. 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 Rating Agencies
and each Class A Certificateholder of (i) any
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amendments to the [Enhancement Agreement] or [the Credit Enhancement] (upon
receipt of written notice of any such amendments from the Seller or the
Servicer), (ii) any change in the identity of the Paying Agent and (iii) any
failure to make payment under [the Credit Enhancement].
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 Seller or the Servicer without the
prior written consent of the [Credit Enhancer], the Trustee and the Holders of
Certificates evidencing not less than [ ]% of the Pool Balance, the Holders of
Class A Certificates evidencing not less than [ ]% of the Class A Certificate
Balance and the Holders of Class B Certificates evidencing not less than [ ]% 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 Seller, 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 Seller 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 Seller or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Trust or the Seller.
(b) The Servicer shall not, nor cause the Seller to, petition or otherwise
invoke the process of commencing or sustaining a case against the Seller under
any Federal or State bankruptcy, insolvency or similar law or appointing a
receiver,
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liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 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
[Credit Enhancer] 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. [The Credit Enhancer] 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 Credit
Enhancement], has agreed that the [Credit Enhancer] shall have certain rights
hereunder for so long as no [Enhancement Default] shall have occurred and be
continuing. So long as an [Enhancement Default] has occurred and is continuing,
any provision giving the [Credit Enhancer] 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 [Enhancement Default] 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 [ ]% 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 [Credit Enhancer] have been paid in
full, any provision giving the [Credit Enhancer] 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 [ ]% of the
Class B Certificate Balance. [The Credit Enhancer may disclaim any of its rights
and powers under this Agreement (but not its duties and obligations under [the
Credit Enhancement]) upon delivery of a written notice to the Trustee. [The
Credit Enhancer] may give or withhold any consent hereunder in its sole and
absolute discretion.]
SECTION 12.12. Agent for Service. The agent for service for the Seller
shall be [ ]. The Seller hereby designates CT Corporation System, 1633
Broadway, New York, New York 10019 (212) 644-1666 as agent for service of
process in all matters pertaining to the Seller in New York.
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IN WITNESS WHEREOF, the Seller, 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.
[ ],
as Seller
By:__________________________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:__________________________________________
Name:
Title:
[ ]
as Trustee [and Standby Servicer]
By:__________________________________________
Name:
Title:
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
Definitions
1.1. Definitions........................................... 2
1.2. Usage of Terms........................................ 19
1.3. Section References.................................... 19
1.4. Limitation on Trust Fund Activities................... 19
1.5. Calculations.......................................... 19
1.6. Action by or Consent of Certificateholders............ 19
1.7. Material Adverse Effect............................... 20
ARTICLE II
The Trust and Trust Property
2.1. Creation of Trust..................................... 20
2.2. Conveyance of Receivables............................. 20
2.3. Transfer Intended as Sale; Precautionary
Security Interest................................ 21
2.4. Acceptance by Trustee................................. 21
2.5. Representations and Warranties of Seller.............. 22
2.6. Repurchase Upon Breach................................ 28
2.7. Delivery of Receivable Files.......................... 29
2.8. Acceptance of Receivable Files by Trustee............. 29
2.9. Access to Receivable Files............................ 31
ARTICLE III
Administration and Servicing of Receivables
3.1. Duties of Servicer.................................... 32
3.2. Collection and Allocation of Receivable
Payments......................................... 33
3.3. Realization Upon Receivables.......................... 34
3.4. Physical Damage Insurance; Other Insurance............ 34
3.5. Maintenance of Security Interests in
Financed Vehicles................................ 35
3.6. Additional Covenants of Servicer...................... 36
3.7. Purchase of Receivables Upon Breach................... 36
3.8. Servicing Fee......................................... 37
3.9. Servicer's Certificate................................ 37
3.10. Annual Statement as to Compliance: Notice
of Default....................................... 37
3.11. Annual Independent Certified Public
<PAGE>
Section Page
Accountant's Report............................. 38
3.12. Reserved............................................. 39
3.13. Servicer Expenses.................................... 39
3.14. Retention and Termination of Servicer................ 39
3.15. Access to Certain Documentation and
Information Regarding Receivables............... 40
3.16. Verification of Servicer's Certificate............... 40
3.17. Fidelity Bond........................................ 41
3.18. Delegation of Duties................................. 41
ARTICLE IV
Distributions, Spread Account;
Statements to Certificateholders
4.1. Accounts; Post-Office Box............................ 42
4.2. Collections.......................................... 44
4.3. Application of Collections........................... 44
4.4. Payaheads............................................ 45
4.5. Additional Deposits.................................. 45
4.6. Distributions; [Credit Enhancement Claims]........... 45
4.7. Withdrawals from [Spread Account] and
[Reserve Fund].................................. 49
4.8. Statements to Certificateholders; Tax
Returns......................................... 50
4.9. Credit Enhancement; Subrogation...................... 52
4.10. Reliance on Information from the Servicer............ 53
4.11. Reserved............................................. 53
ARTICLE V
Reserved.
ARTICLE VI
The Certificates
6.1. The Certificates..................................... 53
6.2A. Appointment of Paying Agent.......................... 54
6.2B. Authenticating Agent................................. 55
6.2. Authentication of Certificates....................... 56
6.3. Registration of Transfer and Exchange of
Certificates.................................... 56
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
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Section Page
6.7. Maintenance of Office or Agency.................... 58
6.8. Book-Entry Certificates............................ 58
6.9. Notices to Clearing Agency......................... 59
6.10. Definitive Certificates............................ 59
ARTICLE VII
The Seller
7.1. Representations of Seller.......................... 60
7.2. Liability of Seller; Indemnities................... 62
7.3. Merger or Consolidation of, or Assumption
of the Obligations of, Seller................. 62
7.4. Limitation on Liability of Seller and
Others........................................ 63
7.5. Seller May Own Certificates........................ 63
ARTICLE VIII
The Servicer
8.1. Representations of Servicer........................ 64
8.2. Indemnities of Servicer............................ 66
8.3. Merger or Consolidation of, or Assumption
of the Obligations of, Servicer or Standby
Servicer...................................... 67
8.4. Limitation on Liability of Servicer and
Others........................................ 68
8.5. Servicer and Standby Servicer Not to
Resign........................................ 69
ARTICLE IX
Default
9.1. Events of Default.................................. 70
9.2. Appointment of Successor........................... 72
9.3. Reserved........................................... 74
9.4. Notification to Certificateholders................. 74
9.5. Direction of Insolvency Proceedings by
[Credit Enhancer]............................. 74
9.6. Action Upon Certain Failures of the
Servicer...................................... 75
ARTICLE X
The Trustee
10.1. Duties of Trustee.................................. 76
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Section Page
10.2. Trustee's Certificate............................... 78
10.3. Reserved............................................ 78
10.4. Certain Matters Affecting Trustee................... 79
10.5. Trustee Not Liable for Certificates or
Receivables.................................... 80
10.6. Trustee May Own Certificates........................ 82
10.7. Indemnity of Trustee................................ 82
10.8. Eligibility Requirements for Trustee................ 82
10.9. Resignation or Removal of Trustee................... 82
10.10. Successor Trustee................................... 83
10.11. Merger or Consolidation of Trustee.................. 84
10.12. Co-Trustee; Separate Trustee........................ 84
10.13. Representations and Warranties of Trustee........... 86
10.14. No Bankruptcy Petition.............................. 86
10.15. Trustee May Enforce Claims Without
Possession of Certificates..................... 87
10.16. Rights of [Credit Enhancer] to Direct
Trustee; Class B Certificateholder's
Right of First Refusal......................... 87
ARTICLE XI
Termination
11.1. Termination of the Trust............................ 88
11.2. Optional Purchase of All Receivables................ 89
ARTICLE XII
Miscellaneous Provisions
12.1. Amendment........................................... 90
12.2. Protection of Title to Trust........................ 91
12.3. Limitation on Rights of
Certificateholders............................. 94
12.4. Governing Law....................................... 95
12.5. Notices............................................. 95
12.6. Severability of Provisions.......................... 96
12.7. Assignment.......................................... 96
12.8. Certificates Nonassessable and Fully Paid........... 96
12.9. Nonpetition Covenant................................ 96
12.10. Third Party Beneficiaries........................... 97
12.11. [The Credit Enhancer] as Controlling Party.......... 97
12.12. Agent for Service................................... 97
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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
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivables
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Exhibit A to the
Pooling and Servicing
Agreement
FORM OF CLASS A CERTIFICATE SEE REVERSE FOR
CERTAIN
DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED By AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER 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 REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, 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.
CPS AUTO GRANTOR TRUST 199[ ]
[ ] 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 [Seller].
(This Certificate does not represent an interest in or obligation of [Seller],
Consumer Portfolio Services, Inc., the Trustee or any of their respective
affiliates, except to the extent described below.)
NUMBER R-[ ] CUSIP No. [ ]
$[ ] Final Scheduled Distribution Date: [ ]
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a [ ] dollar
nonassessable, fully-paid, fractional undivided ownership interest in the CPS
Auto Grantor Trust 199[ ]-[ ] (the "Trust") formed by Consumer Portfolio
Services, Inc. (the "Servicer"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of [ ] (the "Agreement") among the Seller,
Consumer Portfolio Services, Inc., as servicer (the "Servicer"), and
[ ] as trustee (the "Trustee") [and Standby Servicer], a summary of
<PAGE>
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 "[ ]% Asset Backed Certificates,
Class A" (herein called the "Class A Certificates"). Also issued under the
Agreement are Certificates designated as "[ ]% 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 [ ]%. 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 [ ] (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 Seller in and to the Purchase Agreement, all
right, title and interest of the Seller in and to certain refunds, the
Receivable File related to each Receivable and the proceeds of any or all of the
foregoing; and (ii) [Credit Enhancement] issued for the benefit of the Class A
Certificateholders by [Credit Enhancer] [(the "Credit Enhancement"].
Under the Agreement, there will be distributed on the 15th day of each
month or, if such [ ] day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on [ ], to the person in whose name
this Class A Certificate is registered at the close of business on the [ ]
day of the calendar month in which such Distribution Date occurs
(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.
[Credit Enhancement is provided pursuant to the Enhancement
Agreement.]
Distributions on this Class A Certificate will be made by the Trustee
by check or money order 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 that with respect to
Class A Certificates registered in the name of Cede & Co., the nominee for the
Clearing Agency, distributions will be made in the form of immediately available
funds. Except as otherwise provided in the Agreement and notwithstanding the
<PAGE>
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 in the Borough of Manhattan, The City
of New York. The Record Date otherwise applicable to such distribution shall not
be applicable.
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.
<PAGE>
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.
CPS AUTO GRANTOR TRUST 199[ ]-[ ]
By: [ ]
not in its individual
capacity but solely in its
capacity as Trustee
By:/s/__________________________
Authorized Signatory
Dated: [ ]
<PAGE>
This is one of the Class A Certificates
referred to in the within-mentioned Agreement.
[ ]
not in its individual capacity but
solely in its capacity as Trustee
By:/s/ ___________________________
Authorized Signatory
<PAGE>
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in, the
Seller, 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 [Credit
Enhancement], 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 Seller, and at such other places, if any, designated by the Seller, 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
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer and the Trustee with the consent of the [Credit
Enhancer] and with the consent of the Holders of Certificates evidencing not
less than [ ]% of the Class A Certificate Balance and [ ]% 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; however, one certificate may be issued in the residual amount. 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.
<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.
<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.
<PAGE>
Exhibit B to the
Pooling and Servicing
Agreement
FORM OF CLASS B CERTIFICATE
SEE REVERSE FOR
CERTAIN
DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED By AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER 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 REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, 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.
CPS AUTO GRANTOR TRUST 199[ ]
[ ] 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 [Seller].
(This Certificate does not represent an interest in or obligation of [Seller],
Consumer Portfolio Services, Inc., the Trustee or any of their respective
affiliates, except to the extent described below.)
NUMBER R-[ ] CUSIP No. [ ]
$[ ] Final Scheduled Distribution Date: [ ]
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a [ ] dollar
nonassessable, fully-paid, fractional undivided ownership interest in the CPS
Auto Grantor Trust 199[ ]-[ ] (the "Trust") formed by Consumer Portfolio
Services, Inc. (the "Servicer"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of [ ] (the "Agreement") among the Seller,
Consumer Portfolio Services, Inc., as servicer (the "Servicer"), and
[ ] as trustee (the "Trustee") [and Standby Servicer], a summary
<PAGE>
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 "[ ]% Asset Backed Certificates,
Class B" (herein called the "Class B Certificates"). Also issued under the
Agreement are Certificates designated as "[ ]% Asset Backed Certificates,
Class A" (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 B
Certificates is [ ]%. 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 [ ] (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 Seller in and to the Purchase Agreement, all
right, title and interest of the Seller in and to certain refunds, the
Receivable File related to each Receivable and the proceeds of any or all of the
foregoing; and (ii) [Credit Enhancement] issued for the benefit of the Class A
Certificateholders by [Credit Enhancer] [(the "Credit Enhancement"].
Under the Agreement, there will be distributed on the 15th day of each
month or, if such [ ] day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on [
], to the person in whose name this Class B Certificate is registered
at the close of business on the [ ] day of the calendar month in which such
Distribution Date occurs (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.
Distributions on this Class B Certificate will be made by the Trustee
by check or money order 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 that with respect to
Class B Certificates registered in the name of Cede & Co., the nominee for the
Clearing Agency, distributions will be made in the form
<PAGE>
of immediately available funds. 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 this Class B
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York. The Record Date otherwise
applicable to such distribution shall not be applicable.
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.
<PAGE>
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.
CPS AUTO GRANTOR TRUST 199[ ]-[ ]
By: [ ]
not in its individual capacity
but solely in its capacity as
Trustee
By: ______________________________
Authorized Signatory
Dated: [ ]
<PAGE>
This is one of the Class B Certificates
referred to in the within-mentioned
Agreement.
[ ]
not in its individual capacity but
solely in its capacity as Trustee
By: ___________________________
Authorized Signatory
<PAGE>
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in, the
Seller, 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 [Credit
Enhancement], 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 Seller, and at such other places, if any, designated by the Seller, 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
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer and the Trustee with the consent of the [Credit
Enhancer] and with the consent of the Holders of Certificates evidencing not
less than [ ]% of the Class A Certificate Balance and [ ]% 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 B Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 and integral multiples
thereof; however, one certificate may be issued in the residual amount. 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.
<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.
<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.
<PAGE>
Exhibit C-1 to
Pooling and Servicing
Agreement
Trustee's Certificate
Pursuant to Section 10.2 of
the Pooling and Servicing Agreement
[ ], as trustee (the "Trustee") of the CPS Auto Grantor Trust 199[ ]-[ ]
created pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of [ ], among [ ], as Seller, Consumer Portfolio
Services, Inc., as Servicer, and [ ], as Trustee [and Standby Servicer], does
hereby sell, transfer, assign, and otherwise convey to Consumer Portfolio
Services, Inc., without recourse, representation, or warranty, all of the
Trustee's right, title, and interest in and to all of the Receivables (as
defined in the Pooling and Servicing Agreement) identified in the attached
Servicer's Certificate as "Purchased Receivables," which are to be repurchased
by Consumer Portfolio Services, Inc. pursuant to Section 2.6 and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____, 19__.
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit C-2 to
Pooling and Servicing
Agreement
Trustee's Certificate
Pursuant to Section 10.2 of
the Pooling and Servicing Agreement
[ ], as trustee (the "Trustee") of the CPS Auto Grantor Trust 199[ ]-[ ]
created pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of [ ], among [ ], as Seller, [ ], as Servicer
(the "Servicer"), and [ ], as Trustee [and Standby Servicer], does hereby sell,
transfer, assign, and otherwise convey to the Servicer, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest in
and to all of the Receivables (as defined in the Pooling and Servicing
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which are to be repurchased by the Servicer pursuant to Section
3.7 and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____, 19__.
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit D to
Pooling and Servicing
Agreement
Form of Monthly
Certificateholder Statement
[To be delivered by Servicer at Closing]
<PAGE>
Exhibit E-1 to
Pooling and Servicing
Agreement
Trust Receipt
Pursuant to Section 2.9 of
the Pooling and Servicing Agreement
[ ], as Servicer (the "Servicer") of the CPS Auto Grantor Trust 199[ ]-[ ]
created pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of [ ], among [ ], as Seller, [ ], the Servicer,
and [ ], as Trustee [and Standby Servicer], does hereby acknowledge receipt of
the documents relating to Receivables, each of which documents and the
Receivables they related to are listed on the attached Schedule 1 hereto.
Servicer furthermore agrees to return such documents to the Trustee in
accordance with the terms of the Pooling and Servicing Agreement.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____, 19__.
[ ],
as Servicer
By:
--------------------------------
Name:
Title:
Acknowledged By:
[ ],
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit E-2 to
Pooling and Servicing
Agreement
Form of Servicing
Officer's Certificate
[To be delivered by Servicer at Closing]
EXHIBIT 10.1
<PAGE>
[FORM OF PURCHASE AGREEMENT]
PURCHASE AGREEMENT dated as of this [ ] by and between CONSUMER
PORTFOLIO SERVICES, INC., a California corporation (the "Seller"), having its
principal executive office at 2 Ada, Suite 100, Irvine, California 92718, and
CPS RECEIVABLES CORP. a California corporation (the "Purchaser"), having its
principal executive office at 2 Ada, Suite 100, Irvine, California 92718.
WHEREAS, in the regular course of its business, the Seller purchases and
services through its auto loan programs certain motor vehicle retail installment
sale contracts secured by new and used automobiles, light trucks, vans or
minivans acquired from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant
to which the Receivables (as hereinafter defined), are to be sold by the Seller
to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Pooling and Servicing Agreement (as hereinafter defined) to CPS
Auto Trust 199[ ]-[ ] to be created thereunder, which Trust will issue
certificates representing beneficial ownership interests in the Receivables and
the other property of the Trust (the "Class A Certificates" and the "Class B
Certificates", together, the "Certificates").
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration, and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth in the
Pooling and Servicing Agreement. As used in this Agreement, the following terms
shall, unless the context otherwise requires, have the following meanings (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Agreement" means this Purchase Agreement and all amendments hereof and
supplements hereto.
"Assignment" means the document of assignment attached to this Agreement as
Exhibit A.
"Base Prospectus" means the Prospectus dated [ ], 1996 with respect to
CPS Auto Trusts.
"Closing Date" means [ ], [ ].
<PAGE>
"Cutoff Date" means [ ], [ ].
"Distribution Date" means, for each Collection Period, the 15th day of the
following month or, if such 15th day is not a Business Day, the next succeeding
Business Day.
"Obligor(s)" means the purchaser or co-purchasers of a Financed Vehicle or
any other person who owes or may be liable for payments under a Receivable.
"Offering Documents" means the Prospectus Supplement and related Base
Prospectus and the Private Placement Memorandum.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
dated as of [ ] among CPS Receivables Corp., as seller, Consumer Portfolio
Services, Inc., as originator of the Receivables and servicer, and [ ] as
trustee and standby servicer.
"Private Placement Memorandum" means the Private Placement Memorandum,
dated [ ], relating to the private placement of the Class B Certificates and any
amendment or supplement thereto.
"Prospectus Supplement" means the Prospectus Supplement dated [ ],
[ ], relating to the public offering of the Class A Certificates and any
amendment or supplement thereto.
"Purchaser" means CPS Receivables Corp., a California corporation, its
successors and assigns.
"Receivable" means each retail installment sale contract for a Financed
Vehicle that appears on the Schedule of Receivables.
"Receivables Purchase Price" means $ an amount net of any
underwriting fees as described in the Underwriting Agreements).
"Repurchase Event" shall have the meaning specified in Section 6.2 hereof.
"Schedule of Receivables" means the list of Receivables annexed hereto as
Exhibit B.
"Seller" means Consumer Portfolio Services, Inc., a California corporation,
in its capacity as seller of the Receivables and the other Transferred Property
relating thereto, and its successors and assigns.
"Servicer" means Consumer Portfolio Services, Inc., a California
corporation, in its capacity as Servicer of the Receivables, its successors and
assigns.
2
<PAGE>
"Transferred Property" shall have the meaning specified in Section 2.1(a)
hereof.
"Trust" means the CPS Auto Grantor Trust 199[ ]-[ ] created by the Pooling
and Servicing Agreement.
"UCC" means the Uniform Commercial Code, as in effect from time to time in
the relevant jurisdictions.
"Underwriter" means [ ].
"Underwriting Agreements" means the (a) Underwriting Agreement, dated
[ ] among the Underwriter, the Seller and the Purchaser relating to the Class
A Certificates and (b) the Certificate Purchase Agreement, dated [ ] among
the Underwriter, the Seller and the Purchaser relating to the Class B
Certificates.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1. Purchase and Sale of Receivables. On the Closing Date, subject to the
terms and conditions of this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller, without
recourse (subject to the obligations in this Agreement and the Pooling and
Servicing Agreement), all of the Seller's right, title and interest in, to and
under the Receivables and the other Transferred Property relating thereto. The
conveyance to the Purchaser of the Receivables and other Transferred Property
relating thereto is intended as a sale free and clear of all liens and it is
intended that the Transferred Property and other property of the Purchaser shall
not be part of the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law.
(a) Transfer of Receivables. On the Closing Date and simultaneously with
the transactions to be consummated pursuant to the Pooling and Servicing
Agreement, the Seller shall sell, transfer, assign, grant, set over and
otherwise convey to the Purchaser, without recourse (subject to the obligations
herein and in the Pooling and Servicing Agreement), (i) all right, title and
interest of the Seller in and to the Receivables listed in the Schedule of
Receivables 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 Seller 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 Seller in and to the
security
-3-
<PAGE>
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in the Financed Vehicles,
including, without limitation, the certificates of title or, with respect to
Financed Vehicles in the State of Michigan, such other evidence of ownership
with respect to Financed Vehicles; (iii) all right, title and interest of the
Seller in and to any proceeds from claims on any physical damage, credit life
and credit accident and health insurance policies or certificates relating to
the Financed Vehicles or the Obligors thereunder; (iv) all right, title and
interest of the Seller 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; (v) the Receivable File related to each Receivable; and (vi) the
proceeds of any and all of the foregoing (collectively, the "Transferred
Property").
(b) Receivables Purchase Price. In consideration for the Receivables
and other Transferred Property described in Section 2.1(a), the Purchaser shall,
on the Closing Date, pay to the Seller the Receivables Purchase Price. The
Receivables Purchase Price shall be paid by federal wire transfer (same day)
funds.
2.2. The Closing. The sale and purchase of the Receivables shall take place
at a closing (the "Closing") at the offices of Mayer, Brown & Platt, 1675
Broadway, New York, New York 10019 on the Closing Date, simultaneously with the
closings under: (a) the Pooling and Servicing Agreement pursuant to which (i)
the Purchaser will assign all of its right, title and interest in and to the
Receivables and the other Transferred Property to the Trustee for the benefit of
the Certificateholders and (ii) the Trust will issue and deliver to the
Purchaser in exchange for the Transferred Property and related transferred
property the Certificates and (b) the Underwriting Agreements pursuant to which
the Underwriters shall purchase the Class A Certificates and the Class B
Certificates from the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller as of the date hereof and as of the
Closing Date:
(a) Organization and Good Standing. The Purchaser 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
-4-
<PAGE>
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 and own the Receivables.
(b) Due Qualification. The Purchaser is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) Power and Authority. The Purchaser 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
Purchaser by all necessary corporate action.
(d) Binding Obligation. This Agreement shall constitute a legal, valid
and binding obligation of the Purchaser enforceable in accordance with its
terms.
(e) No Violation. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not conflict
with, result in a 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 Purchaser, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which the Purchaser is a party
or by which it is bound or to which 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 the Pooling and Servicing Agreement); nor violate
any law, order, rule or regulation applicable to the Purchaser of any court or
of any Federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser or its
properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or to the Purchaser's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Purchaser 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 Purchaser of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates; or (D) relating to Purchaser and which might adversely affect the
Federal or State income, excise, franchise or similar tax attributes of the
Certificates.
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(g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Purchaser for the issuance or sale of the Certificates or the
consummation of the other transactions contemplated by this Agreement or the
Pooling and Servicing Agreement, except such as have been duly made or obtained.
3.2. Representations and Warranties of the Seller. (a) The Seller hereby
represents and warrants to the Purchaser as of the date hereof and as of the
Closing Date:
(i) Organization and Good Standing. The Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of California, with power and authority to own its properties and
to conduct its business as such properties 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 Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the origination and
the servicing of the Receivables as required by the Pooling and Servicing
Agreement) shall require such qualifications.
(iii) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser and has duly authorized such sale and assignment
to the Purchaser by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by the
Seller 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 Transferred
Property conveyed to the Purchaser pursuant to Section 2.1, enforceable
against creditors of and purchasers from the Seller; and this Agreement
shall constitute a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms.
(v) No Violation. The execution, delivery and performance by the
Seller 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
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constitute (with or without notice or lapse of time) a default under, the
articles of incorporation, as amended, or by-laws of the Seller, or any
indenture, agreement, mortgage, deed of trust, or other instrument to which
the Seller is a party or by which it is bound or to which 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 such
indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Agreement and the Pooling and Servicing Agreement); nor violate
any law, order, rule or regulation applicable to the Seller of any court or
of any Federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller 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 Seller of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates; or (D) relating to
the Seller 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 or the Pooling and Servicing
Agreement, except such as have been duly made or obtained.
(viii) Financial Condition. The Seller has a positive net worth and is
able to and does pay its liabilities as they mature. The Seller is not in
default under any obligation to pay money to any person except for matters
being disputed in good faith which do not involve an obligation of the
Seller on a promissory note. The Seller will not use the proceeds from the
transactions contemplated by this Agreement to give any preference to any
creditor or class of creditors, and this transaction will not leave the
Seller with remaining assets which are unreasonably small compared to its
ongoing operations.
(ix) Fraudulent Conveyance. The Seller is not selling the Receivables
to the Purchaser with any intent to hinder,
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delay or defraud any of its creditors; the Seller will not be rendered
insolvent as a result of the sale of the Receivables to the Purchaser.
(b) The Seller makes the following representations and warranties as
to the Receivables and the other Transferred Property relating thereto on which
the Purchaser relies in accepting the Receivables and the other Transferred
Property relating thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of the Receivables and the other Transferred Property relating
thereto to the Purchaser and the subsequent assignment and transfer pursuant to
the Pooling and Servicing Agreement:
(i) Origination Date. Each Receivable has an origination date on
or after [ ].
(ii) Principal Balance/Number of Contracts. As of the Cutoff
Date, the total aggregate principal balance of the Receivables was $[
]. The Receivables are evidenced by [ ] Contracts.
(iii) Maturity of Receivables. Each Receivable has an original
term to maturity of not less than 24 months and not more than 60
months; the weighted average original term to maturity of the
Receivables is [ ] months as of the Cutoff Date; the remaining term to
maturity of each Receivable was 60 months or less as of the Cutoff
Date; the weighted average remaining term to maturity of the
Receivables was [ ] months as of the Cutoff Date.
(iv) Characteristics of Receivables. (a) Each Receivable (1) has
been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto and has been purchased by the Seller in connection with the
sale of Financed Vehicles by the Dealers, (2) has created a valid,
subsisting, and enforceable first priority security interest in favor
of the Seller in the Financed Vehicle, which security interest has
been assigned by the Seller to the Purchaser, which in turn has
assigned such security interest to the Trustee pursuant to the Pooling
and Servicing Agreement, (3) contains customary and enforceable
provisions such that the rights and remedies of the holder or assignee
thereof shall be adequate for realization against the collateral of
the benefits of the security, (4) provides for level monthly payments
that fully amortize the Amount Financed over the original term (except
for the last payment, which may be different from the level payment)
and yield interest at the Annual Percentage Rate, (5) has an Annual
Percentage Rate of not less than [ %], (6) that is a Rule of 78's
Receivable provides for, in the event that
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such contract is prepaid, a prepayment that fully pays the Principal
Balance and includes a full month's interest, in the month of prepayment,
at the Annual Percentage Rate, (7) is a Rule of 78's Receivable or a Simple
Interest Receivable, and (8) was originated by a Dealer and was sold by the
Dealer without any fraud or misrepresentation on the part of such Dealer.
(b) Approximately [ %] of the aggregate Principal Balance of the
Receivables, constituting [ %] of the number of contracts, as of the Cutoff
Date, represents financing of used automobiles, light trucks, vans or
minivans; the remainder of the Receivables represent financing of new
automobiles, light trucks, vans or minivans; approximately [ %] of the
aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated in the State of California; approximately [ %] of the aggregate
Principal Balance of the Receivables as of the Cutoff Date were originated
under the CPS alpha program; approximately [ %] of the aggregate Principal
Balance of the Receivables as of the Cutoff Date were originated under the
CPS delta program; the remainder of the Receivables were originated under
the CPS standard program; no Receivable shall have a payment that is more
than 30 days overdue as of the Cutoff Date; [ %] of the Receivables are
Rule of 78's Receivables and [ %] of the Receivables are Simple Interest
Receivables; each Receivable shall have a final scheduled payment due no
later than [ ]; each Receivable has an original term to maturity of at
least 24 months and not more than 60 months and a remaining term to
maturity of not less than [ ] months nor greater than 60 months; and each
Receivable was originated on or before the Cutoff Date.
(v) Scheduled Payments. Each Receivable had an original principal
balance of not less than [$ ] nor more than [$ ] and, has an
outstanding principal balance as of the Cutoff Date of not less than [$ ]
and not more than [$ ] and has a first Scheduled Payment due on or
prior to [ ].
(vi) Characteristics of Obligors. As of the date of each Obligor's
application for the loan from which the related Receivable arises, each
Obligor on any Receivable (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages garnished
within one year prior to the date of such application, unless such amounts
have been repaid or discharged through bankruptcy, (b) was not the subject
of any Federal, State or other bankruptcy, insolvency or similar proceeding
pending on the date of application that is not discharged, (c) had not been
the subject of more than one Federal, State or other bankruptcy, insolvency
or similar proceeding, and (d) was domiciled in the United States.
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(vii) Origination of Receivables. Based on the billing address of the
Obligors and the Principal Balances as of the Cutoff Date, approximately
[ %] of the Receivables were originated in California, approximately [ %]
of the Receivables were originated in Florida, approximately [ %] of the
Receivables were originated in Pennsylvania, approximately [ %] of the
Receivables were originated in Texas and the remaining [ %] of the
Receivables were originated in all other states.
(viii) Post-Office Box. On or prior to the next billing period after
the Cutoff Date, the Seller will notify each Obligor to make payments with
respect to its respective Receivables after the Cutoff Date directly to the
Post- Office Box, and will provide each Obligor with a monthly statement in
order to enable such Obligors to make payments directly to the Post-Office
Box.
(ix) Location of Receivable Files. A complete Receivable File with
respect to each Receivable has been or prior to the Closing Date will be
delivered to the Trustee at the location listed in Schedule B to the
Pooling and Servicing Agreement.
(x) Schedule of Receivables; Selection Procedures. The information
with respect to the Receivables set forth in the Schedule of Receivables is
true and correct in all material respects as of the close of business on
the Cutoff Date, and no selection procedures adverse to the
Certificateholders have been utilized in selecting the Receivables.
(xi) Compliance with Law. Each Receivable, the sale of the Financed
Vehicle and the sale of any physical damage, credit life and credit
accident and health insurance and any extended service contracts complied
at the time the related Receivable was originated or made and at the
execution of this Agreement complies in all material respects with all
requirements of applicable Federal, State and local laws, and regulations
thereunder including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940,
the Texas Consumer Credit Code, the California Automobile Sales Finance
Act, and state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(xii) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment
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obligation in writing of the Obligor, enforceable by the holder thereof in
accordance with its terms.
(xiii) No Government Obligor. None of the Receivables are due from the
United States of America or any State or from any agency, department, or
instrumentality of the United States of America or any State.
(xiv) Security Interest in Financed Vehicle. Immediately prior to the
sale, assignment, and transfer thereof, each Receivable shall be secured by
a validly perfected first security interest in the Financed Vehicle in
favor of the Seller as secured party, and such security interest is prior
to all other liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to
priority, for any tax liens or mechanics' liens which may arise after the
Closing Date).
(xv) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from
the lien granted by the related Receivable in whole or in part.
(xvi) No Waiver. No provision of a Receivable has been waived.
(xvii) No Amendments. No Receivable has been amended, except as such
Receivable may have been amended to grant extensions which shall not have
numbered more than (a) one extension of one calendar month in any calendar
year or (b) three such extensions in the aggregate.
(xviii) No Defenses. As of the Closing Date, no right of rescission,
setoff, counterclaim or defense exists or has been asserted or threatened
with respect to any Receivable. The operation of the terms of any
Receivable or the exercise of any right thereunder will not render such
Receivable unenforceable in whole or in part or subject to any such right
of rescission, setoff, counterclaim, or defense.
(xix) No Liens. As of the Cutoff Date, there are no liens or claims
existing or which have been filed for work, labor, storage or materials
relating to a Financed Vehicle that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted by
the Receivable.
(xx) No Default; Repossession. Except for payment delinquencies
continuing for a period of not more than thirty days as of the Cutoff Date,
no default, breach, violation or event permitting acceleration under the
terms of any Receivable has occurred; and no continuing condition that with
notice or the lapse of time would constitute a default, breach, violation,
or event permitting acceleration under the terms of any Receivable has
arisen; and the Seller shall not waive and has not waived any of the
foregoing; and no Financed Vehicle shall have been repossessed as of the
Cutoff Date.
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(xxi) Insurance; Other. (A) Each Obligor has obtained insurance
covering the Financed Vehicle as of the execution of the Receivable
insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage and that each Receivable requires the Obligor to obtain and
maintain such insurance naming the Seller and its successors and assigns as
an additional insured, (B) each Receivable that finances the cost of
premiums for credit life and credit accident or health insurance is covered
by an insurance policy and certificate of insurance naming the Seller as
policyholder (creditor) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an
extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(xxii) Title. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from
the Seller to the Purchaser and that the beneficial interest in and title
to such Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned, or
pledged by the Seller to any Person other than the Purchaser or any such
pledge has been released on or prior to the Closing Date. Immediately prior
to the transfer and assignment herein contemplated, the Seller had good and
marketable title to each Receivable, and was the sole owner thereof, free
and clear of all liens, claims, encumbrances, security interests, and
rights of others and, immediately upon the transfer thereof, the Purchaser
shall have good and marketable title to each such Receivable, and will be
the sole owner thereof, free and clear of all liens, encumbrances, security
interests, and rights of others, and the transfer has been perfected under
the UCC.
(xxiii) Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer,
and assignment of such Receivable under this Agreement shall be unlawful,
void, or voidable. The Seller has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment of
any portion of the Receivables.
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(xxiv) All Filings Made. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Purchaser a first
priority perfected ownership interest in the Receivables have been made.
(xxv) Receivable File; One Original. The Seller has delivered to the
Trustee a complete Receivable File with respect to each Receivable. There
is only one original executed copy of each Receivable.
(xxvi) Chattel Paper. Each Receivable constitutes "chattel paper"
under the UCC.
(xxvii) Valid and Binding Obligation of Obligor. Each Receivable is
the legal, valid and binding obligation of the Obligor thereunder and is
enforceable in accordance with its terms, except only as such enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally, and all parties to such
contract had full legal capacity to execute and deliver such contract and
all other documents related thereto and to grant the security interest
purported to be granted thereby; the terms of such Receivable have not been
waived or modified in any respect.
(xxviii) Tax Liens. As of the Cutoff Date, there is no lien against
the related Financed Vehicle for delinquent taxes.
(xxix) Title Documents. (A) If the Receivable was originated in a
State in which notation of security interest on the title document of the
related Financed Vehicle is required or permitted to perfect such security
interest, the title document for such Receivable shows, or if a new or
replacement title document is being applied for with respect to such
Financed Vehicle, the title document will be received within 180 days and
will show, the Seller named as the original secured party under the related
Receivable as the holder of a first priority security interest in such
Financed Vehicle and (B) if the Receivable was originated in a State in
which the filing of a financing statement under the UCC is required to
perfect a security interest in motor vehicles, such filings or recordings
have been duly made and show the Seller named as the original secured party
under the related Receivable, and in either case, the Trustee has the same
rights as such secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties claiming an interest
in such Financed Vehicle. With respect to each Receivable for which the
title document of the related Financed Vehicle has not yet been returned
from the Registrar of Titles, the Seller has received written evidence from
the related Dealer that such
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title document showing the Seller as first lienholder has been applied for.
(xxx) Casualty. No Financed Vehicle related to a Receivable has
suffered a Casualty.
(xxxi) Obligation to Dealers or Others. The Purchaser and its
assignees will assume no obligation to Dealers or other originators or
holders of the Receivables (including, but not limited to under dealer
reserves) as a result of its purchase of the Receivables.
(xxxii) Full Amount Advanced. The full amount of each Receivable has
been advanced to each Obligor, and there are no requirements for future
advances thereunder. The Obligor with respect to the Receivable does not
have any option under the Receivable to borrow from any person additional
funds secured by the Financed Vehicle.
(c) The representations and warranties contained in this Agreement
shall not be construed as a warranty or guaranty by the Seller as to the future
payments by any Obligor. The sale of the Receivables pursuant to this Agreement
shall be "without recourse" except for the representations, warranties and
covenants made by the Seller in this Agreement or the Pooling and Servicing
Agreement.
ARTICLE IV
CONDITIONS
4.1. Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to purchase the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing Date
with the same effect as if then made, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on or
prior to the Closing Date, indicate in its computer files that the Receivables
have been sold to the Purchaser pursuant to this Agreement and shall deliver to
the Purchaser the Schedule of Receivables certified by the Chairman, the
President, the Vice President or the Treasurer of the Seller to be true, correct
and complete.
(c) Receivable Files Delivered. The Seller shall, at its own expense,
deliver the Receivable Files to the Trustee at the offices specified in Schedule
B to the Pooling and Servicing Agreement on or prior to the Closing Date.
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(d) Documents to be delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will execute and
deliver the Assignment. The Assignment shall be substantially in the form
of Exhibit A hereto.
(ii) Evidence of UCC-1 Filing. On or prior to the Closing Date,
the Seller shall record and file, at its own expense, a UCC-1 financing
statement in each jurisdiction in which required by applicable law,
executed by the Seller, as seller or debtor, and naming the Purchaser, as
purchaser or secured party, naming the Receivables and the other
Transferred Property conveyed hereafter as collateral, meeting the
requirements of the laws of each such jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and conveyance of such
Receivables to the Purchaser. The Seller shall deliver a file-stamped copy,
or other evidence satisfactory to the Purchaser of such filing, to the
Purchaser on or prior to the Closing Date.
(iii) Evidence of UCC-2 Filing. On or prior to the Closing Date,
the Seller shall cause to be recorded and filed, at its own expense, a
UCC-2 termination statement executed by General Electric Capital
Corporation ("GECC") in each jurisdiction in which required by applicable
law, meeting the requirements of the laws of each such jurisdiction and in
such manner as is necessary to release GECC's interest in the Receivables,
including without limitation, the security interests in the Financed
Vehicles securing the Receivables and any proceeds of such security
interests or the Receivables. The Seller shall deliver a file-stamped copy,
or other evidence satisfactory to the Purchaser of such filing, to the
Purchaser on or prior to the Closing Date.
(iv) Other Documents. On or prior to the Closing Date, the Seller
shall deliver such other documents as the Purchaser may reasonably request.
(e) Other Transactions. The transactions contemplated by the Pooling
and Servicing Agreement and the Underwriting Agreements shall be
consummated on the Closing Date.
4.2. Conditions to Obligation of the Seller. The obligation of the
Seller to sell the Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.
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(b) Receivables Purchase Price. At the Closing Date, the Purchaser
will deliver to the Seller the Receivables Purchase Price as provided in Section
2.1(b). The Seller hereby directs the Purchaser to wire [$ ] the Receivables
Purchase Price to [Bank of America, ABA: 121000358, Account #1458425131,]
Consumer Portfolio Services, Inc. pursuant to wire instructions to be delivered
to the Purchaser on or prior to the Closing Date.
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows; provided, however,
that to the extent that any provision of this ARTICLE V conflicts with any
provision of the Pooling and Servicing Agreement, the Pooling and Servicing
Agreement shall govern:
5.1. Protection of Right, Title and Interest.
(a) Filings. The Seller shall cause all financing statements and
continuation statements and any other necessary documents covering the right,
title and interest of the Purchaser in and to the Receivables and the other
Transferred Property to be promptly filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Purchaser hereunder to the Receivables and the other Transferred Property. The
Seller shall deliver to the Purchaser file stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recordation, registration or filing. The Purchaser
shall cooperate fully with the Seller in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this Section 5.1(a). In the event the Seller fails to
perform its obligations under this subsection, the Purchaser or the Trustee may
do so at the expense of the Seller.
(b) Name and Other Changes. At least 60 days prior to the date the
Seller makes any change in its name, identity or corporate structure which would
make any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the applicable provisions of the
UCC or any title statute, the Seller shall give the Trustee, the [Credit
Enhancer] (so long as a [Credit Enhancer] Default shall not have occurred and be
continuing) and the Purchaser written notice of any such change and no later
than five days after the effective date thereof, shall file appropriate
amendments to all previously filed financing statements or continuation
statements. At least 60 days prior to the date of any relocation of its
principal executive office, the Seller shall give the Trustee, the [Credit
Enhancer] (so long as a [Credit Enhancer] Default shall not have occurred and be
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continuing) and the Purchaser written notice thereof 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 and the Seller shall within five days after the
effective date thereof, file any such amendment or new financing statement. The
Seller shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(c) Accounts and Records. The Seller shall maintain accounts and
records as to each Receivable accurately and in sufficient detail to permit 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).
(d) Maintenance of Computer Systems. The Seller shall maintain its
computer systems so that, from and after the time of sale hereunder of the
Receivables to the Purchaser, the Seller's master computer records (including
any back-up archives) that refer to a Receivable shall indicate clearly the
interest of the Purchaser in such Receivable and that such Receivable is owned
by the Purchaser. Indication of the Purchaser's ownership of a Receivable shall
be deleted from or modified on the Seller's computer systems when, and only
when, the Receivable shall have been paid in full or repurchased.
(e) Sale of Other Receivables. If at any time the Seller shall propose
to sell, grant a security interest in, or otherwise transfer any interest in any
automobile or light-duty truck receivables (other than the Receivables) to any
prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (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 and is owned by the Purchaser unless such
Receivable has been paid in full or repurchased.
(f) Access to Records. The Seller shall permit the Purchaser and its
agents at any time during normal business hours to inspect, audit, and make
copies of and abstracts from the Seller's records regarding any Receivable.
(g) List of Receivables. Upon request, the Seller shall furnish to the
Purchaser, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then owned by the Purchaser, together with a
reconciliation of such list to the Schedule of Receivables.
5.2. Other Liens or Interests. Except for the conveyances hereunder
and pursuant to the Pooling and Servicing Agreement, the Seller will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any
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lien on any interest therein, and the Seller shall defend the right, title,
and interest of the Purchaser in, to and under such Receivables against all
claims of third parties claiming through or under the Seller; provided, however,
sthat the Seller's obligations under this Section 5.2
shall terminate upon the termination of the Trust pursuant to the Pooling and
Servicing Agreement.
5.3. Chief Executive Office. During the term of the Receivables, the
Seller will maintain its chief executive office in one of the United States,
except Louisiana or Vermont.
5.4. Costs and Expenses. The Seller agrees to pay all reasonable costs
and disbursements in connection with the perfection, as against all third
parties, of the Purchaser's right, title and interest in and to the Receivables.
5.5. Delivery of Receivable Files. On or prior to the Closing Date,
the Seller shall deliver the Receivable Files to the Trustee at the location
specified in Schedule B to the Pooling and Servicing Agreement. The Seller shall
have until the last day of the second Collection Period following receipt from
the Trustee of notification, pursuant to Section 2.8 of the Pooling and
Servicing Agreement, that there has been a failure to deliver a file with
respect to a Receivable or that a file is unrelated to the Receivables
identified in Schedule A to the Pooling and Servicing Agreement or that any of
the documents referred to in Section 2.7 of the Pooling and Servicing Agreement
are not contained in a Receivable File, to deliver such file or any of the
aforementioned documents required to be included in such Receivable File to the
Trustee. Unless such defect with respect to such Receivable File shall have been
cured by the last day of the second Collection Period following discovery
thereof by the Trustee, the Seller hereby agrees to repurchase any such
Receivable from the Trust as of such last day. In consideration of the purchase
of the Receivable, the Seller shall remit the Purchase Amount in the manner
specified in Section 4.5 of the Pooling and Servicing Agreement. The sole remedy
hereunder of the Trustee, the Trust or the Certificateholders with respect to a
breach of this Section 5.5, shall be to require the Seller to repurchase the
Receivable pursuant to this Section 5.5. Upon receipt of the Purchase Amount,
the Trustee shall release to the Seller or its designee the related Receivable
File and shall execute and deliver all instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
are necessary to vest in the Seller or such designee title to the Receivable.
5.6. Indemnification. (a) The Seller shall indemnify the Purchaser for
any liability as a result of the failure of a Receivable to be originated in
compliance with all requirements of law and for any breach of any of its
representations and warranties contained herein.
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(b) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims,
and liabilities, arising out of or resulting from the use, ownership, or
operation by the Seller or any Affiliate thereof of a Financed Vehicle.
(c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all taxes, except for taxes on the net income
of the Purchaser, that may at any time be asserted against the Purchaser 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.
(d) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims
and liabilities to the extent that such cost, expense, loss, damage, claim or
liability arose out of, or was imposed upon the Purchaser through, the
negligence, willful misfeasance, or bad faith of the Seller in the performance
of its duties under the Agreement, or by reason of reckless disregard of the
Seller's obligations and duties under the Agreement.
(e) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against all costs, expenses, losses, damages, claims and
liabilities arising out of or incurred in connection with the acceptance or
performance of the Seller's trusts and duties as Servicer under the Pooling and
Servicing Agreement, except to the extent that such cost, expense, loss, damage,
claim or liability shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of the Purchaser.
Indemnification under this Section shall include reasonable fees and
expenses of litigation and shall survive termination of the Trust. These
indemnity obligations shall be in addition to any obligation that the Seller may
otherwise have.
5.7. Sale. The Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a sale
on all relevant books, records, tax returns, financial statements and other
applicable documents.
5.8. Non-Petition. In the event of any breach of a representation and
warranty made by the Purchaser hereunder, the Seller covenants and agrees that
it will not take any action to pursue any remedy that it may have hereunder, in
law, in equity or otherwise, until a year and a day have passed since the date
on which all certificates issued by the Trust or a similar trust formed by the
Purchaser have been paid in full. The Purchaser and the Seller agree that
damages will not be an adequate remedy for such breach and that this covenant
may be specifically
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<PAGE>
enforced by the Purchaser or by the Trustee on behalf of the
Trust.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1. Obligations of Seller. The obligations of the Seller under this
Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
6.2. Repurchase Events. The Seller hereby covenants and agrees with the
Purchaser for the benefit of the Purchaser, the Trustee, the [Credit Enhancer]
and the Certificateholders, that (i) the occurrence of a breach of any of the
Seller's representations and warranties contained in Section 3.2(b) hereof
(without regard to any limitations regarding the Seller's knowledge) and (ii)
the failure of the Seller to timely comply with its obligations pursuant to
Section 5.5 hereof, shall constitute events obligating the Seller to repurchase
the affected Receivables hereunder ("Repurchase Events"), at the Purchase Amount
from the Trust. Unless the breach of any of the Seller's representations and
warranties shall have been cured by the last day of the second Collection Period
following the discovery thereof by or notice to the Purchaser and the Seller of
such breach, the Seller shall repurchase any Receivable if such Receivable is
materially and adversely affected by the breach as of the last day of such
second Collection Period (or, at the Seller's option, the last day of the first
Collection Period following the discovery) and, in the event that the breach
relates to a characteristic of the Receivables in the aggregate, and if the
Trust is materially and adversely affected by such breach, unless the breach
shall have been cured by such second Collection Period, the Seller shall
purchase such aggregate Principal Balance of Receivables, such that following
such purchase such representation shall be true and correct with respect to the
remainder of the Receivables in the aggregate. The provisions of this Section
6.2 are intended to grant the Trustee a direct right against the Seller to
demand performance hereunder, and in connection therewith the Seller waives any
requirement of prior demand against the Purchaser and waives any defaults it
would have against the Purchaser with respect to such repurchase obligation. Any
such purchase shall take place in the manner specified in Section 4.5 of the
Pooling and Servicing Agreement. The sole remedy hereunder of the
Certificateholders, the Trust, the [Credit Enhancer], the Trustee or the
Purchaser against the Seller with respect to any Repurchase Event shall be to
enforce the Seller's obligation to repurchase such Receivables pursuant to this
Agreement; provided, however, that the Seller shall indemnify the Trustee, the
[Credit Enhancer], 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
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<PAGE>
any of them, as a result of third party claims arising out of the events or
facts giving rise to such breach. Upon receipt of the Purchase Amount, the
Purchaser shall cause the Trustee to release the related Receivables File to the
Seller and to execute and deliver all instruments of transfer or assignment,
without recourse, as are necessary to vest in the Seller title to the
Receivable. Notwithstanding the foregoing, if it is determined that consummation
of the transactions contemplated by the Pooling and Servicing Agreement and the
other transaction documents referenced in such Agreement, servicing and
operation of the Trust pursuant to such Agreement and such other documents, or
the ownership of a Certificate by a Holder constitutes a violation of the
prohibited transaction rules of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended
("Code") for which no statutory exception or administrative exemption applies,
such violation shall not be treated as a Repurchase Event.
6.3. Seller's Assignment of Purchased Receivables. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the Purchaser
shall assign, without recourse except as provided herein, representation or
warranty, to the Seller all the Purchaser's right, title and interest in and to
such Receivables, and all security and documents relating thereto.
6.4. Conveyance as Sale of Receivables Not Financing. The parties hereto
intend that the conveyance hereunder be a sale of the Receivables and the other
Transferred Property from the Seller to the Purchaser and not a financing
secured by such assets; and the beneficial interest in and title to the
Receivables and the other Transferred Property shall not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. In the event that any conveyance hereunder is
for any reason not considered a sale, the parties intend that this Agreement
constitute a security agreement under the UCC (as defined in the UCC as in
effect in the State of California) and applicable law, and the Seller hereby
grants to the Purchaser a first priority perfected security interest in, to and
under the Receivables and the other Transferred Property being delivered to the
Purchaser on the Closing Date, and other property conveyed hereunder and all
proceeds of any of the foregoing for the purpose of securing payment and
performance of the Certificates and the repayment of amounts owed to the
Purchaser from the Seller.
6.5. Trust. The Seller acknowledges that the Purchaser will, pursuant to
the Pooling and Servicing Agreement, sell the Receivables to the Trust and
assign its rights under this Agreement to the Trustee for the benefit of the
Certificateholders, and that the representations and warranties contained in
this Agreement and the rights of the Purchaser under this Agreement, including
under Sections 6.2 and 6.3 hereof are intended to benefit such Trust and the
Certificateholders. The
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Seller also acknowledges that the Trustee on behalf of the Certificateholders as
assignee of the Purchaser's rights hereunder maydirectly enforce, without making
any prior demand on the Purchaser, all the rights of the Purchaser hereunder
including the rights under Section 6.2 and 6.3 hereof. The Seller hereby
consents to such sale and assignment.
6.6. Amendment. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Seller and the Purchaser
with the consent of the [Credit Enhancer]; provided, however, that (i) any such
amendment that materially adversely affects the rights of the Class A
Certificateholders under the Pooling and Servicing Agreement must be consented
to by the holders of Class A Certificates representing [66-2/3%] or more of the
Class A Certificate Balance and (ii) any such amendment that materially
adversely affects the rights of the Class B Certificateholders under the Pooling
and Servicing Agreement must be consented to by the holders of Class B
Certificates representing [66-2/3%] or more of the Class B Certificate Balance.
6.7. Accountants' Letters. (a) [Accountants] will review the
characteristics of the Receivables and will compare those characteristics to the
information with respect to the Receivables contained in the Preliminary
Memorandum and the Final Memorandum; (b) The Seller will cooperate with the
Purchaser and [accountants] in making available all information and taking all
steps reasonably necessary to permit such accountants to complete the review set
forth in Section 6.7(a) above and to deliver the letters required of them under
the Underwriting Agreements; and (c) [accountants] will deliver to the Purchaser
a letter, dated the Closing Date, in the form previously agreed to by the Seller
and the Purchaser, with respect to the financial and statistical information
contained in the Offering Documents under the captions "CPS's Automobile
Contract Portfolio" and "The Receivables Pool", certain information relating to
the Receivables on magnetic tape obtained from the Seller and the Purchaser and
with respect to such other information as may be agreed in the form of letter.
6.8. Waivers. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
6.9. Notices. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or telex and addressed or delivered to
it at its address (or in case of telex, at its telex number at such address)
shown in the opening portion of this Agreement or at such other address as may
be designated by it by notice to the other party and, if mailed
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<PAGE>
or sent by telegraph or telex, shall be deemed given when mailed, communicated
to the telegraph office or transmitted by telex.
6.10. Costs and Expenses. The Seller will pay all expenses incident to the
performance of its obligations under this Agreement and the Seller agrees to pay
all reasonable out-of-pocket costs and expenses of the Purchaser, excluding fees
and expenses of counsel, in connection with the perfection as against third
parties of the Purchaser's right, title and interest in and to the Receivables
and security interests in the Financed Vehicles and the enforcement of any
obligation of the Seller hereunder.
6.11. Representations of the Seller and the Purchaser. The respective
agreements, representations, warranties and other statements by the Seller and
the Purchaser set forth in or made pursuant to this Agreement shall remain in
full force and effect and will survive the closing under Section 2.2 hereof.
6.12. Confidential Information. The Purchaser agrees that it will neither
use nor disclose to any person the names and addresses of the Obligors, except
in connection with the enforcement of the Purchaser's rights hereunder, under
the Receivables, under the Pooling and Servicing Agreement or as required by
law.
6.13. Headings and Cross-References. The various headings in this Agreement
are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.
6.14. Third Party Beneficiaries. The parties hereto hereby expressly agree
that each of the Trustee for the benefit of the Certificateholders and the
[Credit Enhancer] shall be third party beneficiaries with respect to this
Agreement, provided, however, that no third party other than the Trustee for the
benefit of the Certificateholders and the [Credit Enhancer] shall be deemed a
third-party beneficiary of this Agreement.
6.15. Governing Law. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
6.16. Counterparts. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
[Rest of page left intentionally blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
CPS RECEIVABLES CORP.
By:
----------------------------------
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.
By:
----------------------------------
Name:
Title:
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<PAGE>
Exhibit A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated
as of [ ] between the undersigned and CPS Receivables Corp. (the "Purchaser")
(the "Purchase Agreement"), the undersigned does hereby sell, transfer, assign
and otherwise convey unto the Purchaser, without recourse (subject to the
obligations in the Purchase Agreement and the Pooling and Servicing Agreement),
(i) all right, title and interest of the Seller in and to the Receivables listed
in the Schedule of Receivables and, with respect to Receivables which are 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
Seller before the Cutoff Date) and, with respect to Receivables which are 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 Seller in and to the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in the Financed Vehicles,
including, without limitation, the certificates of title or, with respect to
Financed Vehicles in the State of Michigan, such other evidence of ownership
with respect to Financed Vehicles; (iii) all right, title and interest of the
Seller in and to any proceeds from claims on any physical damage, credit life
and credit accident and health insurance policies or certificates relating to
the Financed Vehicles related to the Receivables or the Obligors thereunder;
(iv) all right, title and interest of the Seller in and to refunds for the costs
of extended service contracts with respect to Financed Vehicles related to
Seller Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates covering
an Obligor under a Receivable or Financed Vehicle or his or her obligations with
respect to a Financed Vehicle related to a Receivable and any recourse to
Dealers for any of the foregoing; (v) the Receivable File related to each
Receivable; and (vi) the proceeds of any and all of the foregoing. The foregoing
sale does not constitute and is not intended to result in any assumption by the
Purchaser of any obligation of the undersigned to the Obligors, insurers or any
other person in connection with the Receivables, the Receivable Files, any
insurance policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
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<PAGE>
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Purchase Agreement.
THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of [ ].
CONSUMER PORTFOLIO SERVICES, INC.
By:
----------------------------------
Name:
Title:
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<PAGE>
Exhibit B
Schedule of Receivables
[Delivered to the Trustee at Closing]
-1-
EXHIBIT 24.1
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
Power of Attorney
Each of the undersigned persons, in his or her capacity as an
officer or director, or both, of Consumer Portfolio Services, Inc. (the
"Company") hereby appoints Charles E. Bradley, Jr. and Jeffrey P. Fritz, and
each of them, with full power of substitution and resubstitution and with full
power in each to act without the other, his or her attorney-in-fact and agent
for the following purposes:
1. To sign for him or her, in his or her name and in his or her
capacity as an officer or director, or both, of the Company, a Registration
Statement on Form S-3 and any amendments and post-effective amendments
thereto (collectively, the "Registration Statement"), for the registration
under the Securities Act of 1933, as amended (the "Act"), of asset backed
certificates (the "Certificates") representing undivided interests in a
trust, the property of which will include a pool of motor vehicle retail
installment sale contracts and other assets to be transferred by the
Company to such trust;
2. To file or cause to be filed such Registration Statement with the
Securities and Exchange Commission;
3. To take all such other action as any such attorney-in-fact, or his
or her substitute, may deem necessary or desirable in order to effect and
maintain the registration of the Certificates; and
4. To sign for him or her, in his or her name and in his or her
capacity as an officer or director, or both, of the Company, all such
documents and instruments as any such attorney-in-fact, or his or her
substitute, may deem necessary or advisable in connection with the
registration, qualification or exemption of the Certificates under the
securities laws of any state or other jurisdiction.
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<PAGE>
This power of attorney shall be effective as of July 31, 1996
and shall continue in full force and effect until revoked by the undersigned in
a writing filed with the Secretary of the Company.
--------------------------------
Charles E. Bradley, Sr.
/s/ Charles E. Bradley, Jr.
--------------------------------
Charles E. Bradley, Jr.
/s/ William B. Roberts
--------------------------------
William B. Roberts
--------------------------------
John G. Poole
/s/ Thomas L. Chrystie
--------------------------------
Thomas L. Chrystie
/s/ Robert A. Simms
--------------------------------
Robert A. Simms
-3-
