RECEIVABLES FINANCING AGREEMENT

 

THIS RECEIVABLES FINANCING AGREEMENT is made and entered into as of April 1, 2005, among CAR FUNDING, INC., a Nevada corporation (the “ Borrower ”), CAR FINANCIAL SERVICES, INC., a Georgia corporation, in its individual capacity (“ CAR ”) and as the seller (in such capacity, the “ Seller ”), CONSUMER AUTO RECEIVABLES SERVICING, LLC, a Georgia limited liability company, in its individual capacity (“ CAR Servicing ”) and as servicer (in such capacity, the “ Servicer ”) and as custodian (in such capacity, the “ Custodian ”), COMPUCREDIT CORPORATION, a Georgia corporation, in its individual capacity (“ CCRT ”) and as guarantor (in such capacity, the “ Guarantor ”), each NONCOMMITTED LENDER (as hereinafter defined) from time to time party hereto, each COMMITTED LENDER (as hereinafter defined) from time to time party hereto, the AGENTS for the Lender Groups from time to time parties hereto (each such party, together with their respective successors in such capacity, an “ Agent ”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as backup servicer (in such capacity, the “ Backup Servicer ”), DEUTSCHE BANK AG, NEW YORK BRANCH, the New York Branch of a German bank, as administrative agent (together with its successors in such capacity, the “ Administrative Agent ”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as collateral agent (together with its successors in such capacity, the “ Collateral Agent ”).

 

BACKGROUND

 

1.                                        The Borrower desires that the Lenders (as hereinafter defined) extend financing to the Borrower on the terms and conditions set forth herein.

 

2.                                        The Lenders are willing to provide such financing on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows:

 

 

DEFINITIONS

Defined Terms .  Terms used in this Agreement which are defined in Annex I hereto shall have the meanings specified in such Annex I (unless otherwise defined herein).

Other Definitional Provisions .  6.  Unless otherwise specified therein, all terms defined in Annex I shall have the meanings as so defined when used in the Notes or in any other Transaction Document, certificate, report or other document made or delivered pursuant hereto.

Each term defined in the singular form in Annex I or elsewhere in this Agreement shall mean the plural thereof when the plural form of such term is used in this Agreement, the Notes or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto, and each term defined in the plural form in Annex I shall mean the singular thereof when the singular form of such term is used herein or therein.

The words “hereof,” “herein,” “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references herein are references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified.

The following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined:  Accounts, Chattel Paper, Documents, Equipment, General Intangibles, Instruments, Inventory, Investment Property and Proceeds.

For the avoidance of doubt, on each date on which the Aggregate Eligible Receivables Balance or the Borrowing Base is required to be calculated by the Borrower, the Servicer, the Lenders or the Agents hereunder, the eligibility of each of the Transferred Receivables shall be redetermined as of such calculation date and, as a consequence thereof, Contracts that were Eligible Receivables on the related Closing Date may be excluded from the Aggregate Eligible Receivables Balance or the Borrowing Base on the date of calculation.

 

THE FACILITY, ADVANCE PROCEDURES AND NOTE

 

Facility .  On the terms and subject to the conditions set forth in this Agreement, each Noncommitted Lender may, in its sole discretion, make Advances (to the extent of its Available Commitment Amount) to the Borrower on a revolving basis from time to time during the period commencing on the Effective Date and ending on the Facility Termination Date, in each case in such amounts as may be requested by the Borrower pursuant to Section 2.2 .  If on any day there shall be more than one Noncommitted Lender, any Advance requested by the Borrower on such day shall be allocated among the Noncommitted Lenders pro rata on the basis of their respective Noncommitted Percentages and each Noncommitted Lender may, in its sole and absolute discretion, determine whether to make an Advance in its allocated amount.  If a Noncommitted Lender elects not to make a requested Advance, each of the Committed Lenders with respect to such Noncommitted Lender shall make Advances (in an aggregate amount equal to the requested Advance) to the Borrower (to the extent of the unutilized Commitment of each such Committed Lender and pro rata among such Committed Lenders in accordance with their respective Adjusted Commitment Percentages) on a revolving basis from time to time during the period commencing on the Effective Date and ending on the Facility Termination Date.  The lending arrangement made available to the Borrower pursuant to the preceding sentences of this Section 2.1 is herein called the “ Facility ”.  The aggregate principal amount of all Advances from time to time outstanding hereunder shall not exceed the lesser of (a) the Facility Limit and (b) the Borrowing Base.  In addition, under no circumstances shall any Lender make any Advance if after giving effect thereto the aggregate outstanding principal balance of all Advances owing to such Lender would exceed (i) if such Lender is a Noncommitted Lender, its Maximum Loan Amount or (ii) if such Lender is a Committed Lender, its applicable Commitment less its Adjusted Commitment Percentage of the outstanding principal balance of all Advances owing to its Noncommitted Lender.  The Committed Lenders may not reduce their respective Commitments during the term of this Agreement other than as expressly provided under Section 2.5 .  Within the limits of the Facility, the Borrower may borrow, prepay and reborrow under this Section 2.1 .  No additional Advances may be made if the Backup Servicer shall be acting as Servicer.

 

Advance Procedures .  The Borrower may request an Advance hereunder by giving notice to the Administrative Agent of a proposed Advance not later than 1:00 P.M., New York time, two Business Days prior to the proposed date of such Advance.  Each such notice (herein called an “ Advance Request ”) shall be in the form of Exhibit A and shall include the date and amount of such proposed Advance and the Schedule of Receivables setting forth the information required therein with respect to the Receivables, if any, to be acquired by the Borrower on the date such Advance is requested to be made.  No more than three Advance Requests may be made in any calendar week.  Any Advance Request given by the Borrower pursuant to this Section 2.2 shall be irrevocable and binding on the

 

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Borrower.  The Administrative Agent shall promptly forward a copy of each Advance Request received by it to each Agent and each Lender.  The Administrative Agent, in its capacity as such, shall have no obligation to lend funds hereunder.

 

Each Noncommitted Lender shall notify the Agent for its Lender Group by 10:00 a.m., New York City time, on the applicable requested date of Advance whether it has elected to make the Advance requested of it pursuant to the preceding paragraph.  In the event that a Noncommitted Lender shall not have timely provided such notice, such Noncommitted Lender shall be deemed to have elected not to make such Advance.  Such Agent shall notify each Committed Lender for such Noncommitted Lender on or prior to 11:00 a.m., New York City time, on the applicable requested date of Advance if such Noncommitted Lender has not elected to advance its entire Noncommitted Percentage of the Advance requested, which notice shall specify (i) the identity of such Noncommitted Lender, (ii) the portion of the Advance which such Noncommitted Lender has not elected to advance as provided above, and (iii) the respective Adjusted Commitment Percentages of such Committed Lenders on such requested date of Advance (as determined by such Agent in good faith; for purposes of such determination, such Agent shall be entitled to rely conclusively on the most recent information provided by such Noncommitted Lender).  Subject to receiving such notice and to the satisfaction of the applicable conditions set forth in Article VII hereof, each of such Noncommitted Lender’s Committed Lenders shall make an Advance on the applicable requested date of Advance in an amount equal to its Adjusted Commitment Percentage of the portion of the Advance which such Noncommitted Lender has not elected to advance.

 

Funding .  Subject to the satisfaction, in the reasonable determination of the Lenders, of the conditions precedent set forth in Article VII with respect to such Advance, each Lender’s portion of the requested Advance payable pursuant to Section 2.2 of this Agreement shall be made available to the Administrative Agent at or prior to 2:00 p.m., New York City time, on the requested date of Advance, by deposit of immediately available funds to the Administrative Agent’s Account.  Subject to the satisfaction, in the reasonable determination of the Lenders, of the conditions precedent set forth in Article VII with respect to such Advance (as evidenced by the advancing of such funds by the Lenders) and the Administrative Agent’s receipt of such funds, the Administrative Agent shall make the proceeds of such requested Advance available as follows: first , to the extent Borrower is required pursuant to Section 11.6 hereof to fund the Cap Funding Reserve Account and the amount on deposit in the Cap Funding Reserve Account is less than the Cap Funding Reserve Account Requirement (computed after giving effect to the proposed Advance and to the transfer to the Borrower of any Receivables and Dealer Transaction Rights to be transferred to it by the Seller on such date) on the proposed date of the Advance, an amount equal to such deficiency shall be deposited in the Cap Funding Reserve Account; second , to pay any upfront cost of acquiring any Interest Rate Cap; third , to pay any fees and expenses due to the Lenders or the Agents on the date of such Advance; and fourth , all amounts of the proposed Advance in excess of the amounts distributed pursuant to first , second and third above shall be made available to the Borrower by deposit to such account as may be designated by the Borrower (in a written notice received by the Administrative Agent at least one Business Day prior to the date of such Advance) in immediately available funds no later than 3:00 p.m., New York City time, on the date of such Advance.

 

In the event that notwithstanding the fulfillment of the applicable conditions set forth in Article VII hereof with respect to an Advance, a Noncommitted Lender elected to make an Advance but failed to make its portion thereof available to the Administrative Agent when required pursuant to the preceding paragraph, such Noncommitted Lender shall be deemed to have rescinded its election to make such Advance, and neither the Borrower nor any other party shall have any claim against such Noncommitted Lender by reason of its failure to timely make such Advance.  In any such case, the Administrative Agent shall give notice of such failure not later than 2:30 p.m., New York City time, on the requested date of Advance to each Committed Lender for such Noncommitted Lender and to the Agent for its Lender Group, the Borrower and the Servicer, which notice shall specify (i) the identity of such Noncommitted Lender, (ii) the

 

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amount of the Advance which it had elected but failed to make and (iii) the respective Adjusted Commitment Percentages of such Committed Lenders on such date (as determined by the related Agent).  Subject to receiving such notice, each of such Noncommitted Lender’s Committed Lenders shall lend a portion of the requested Advance in an amount equal to its Adjusted Commitment Percentage of the amount described in clause (ii) above at or before 4:00 p.m., New York City time, on such date and otherwise in accordance with this Section 2.3 .  Subject to the Administrative Agent’s receipt of such funds, the Administrative Agent will not later than 5:00 p.m., New York City time, on such date make such funds available by depositing same in the appropriate account in accordance with the provisions of the preceding paragraph.

 

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Notes .  All Advances by the Lenders in a Lender Group shall be further evidenced by a Note, executed by the Borrower, with appropriate insertions, payable to the order of the Agent for such Lender Group.  The Borrower hereby irrevocably authorizes each Agent to make (or cause to be made) appropriate notations on the grid attached to the Notes (or on any continuation of such grid, or at such Agent’s option, in its records), which notations, if made, shall evidence, inter alia , the date of the outstanding principal of the Advances evidenced thereby and each payment of principal thereon; provided , however , that the failure to make any such notations shall not limit or otherwise affect any of the Obligations or any payment thereon.

 

Reductions of Commitments .

 

At any time the Borrower may, upon at least five Business Days’ prior written notice to the Administrative Agent, reduce the Facility Limit in whole or in part.  Each partial reduction shall be in an aggregate amount of $5,000,000 or integral multiples of $5,000,000 in excess thereof (or such other amount requested by the Borrower to which the Administrative Agent consents).  Reductions of the aggregate Commitments pursuant to this subsection 2.5(a) of this Agreement shall be allocated (i) to the Maximum Loan Amount of each Noncommitted Lender, pro rata based on the Noncommitted Percentage represented by such Maximum Loan Amount, and (ii) to the aggregate Commitments of Committed Lenders for each Noncommitted Lender pro rata based on their respective Adjusted Commitment Percentages.  The Administrative Agent shall promptly deliver a copy of any such notice to each Agent and each Lender.  The Borrower shall repay the unpaid principal amount of the Advances to the extent they exceed the Facility Limit after giving effect to such reduction.

 

On the Facility Termination Date, the Commitment of each Lender shall be automatically reduced to zero.

 

The Borrower will give the Collateral Agent written notice of any termination of the Commitments or reduction of the Commitments to zero pursuant to Section 2.5(a) or as a result of the occurrence of the Facility Termination Date within two Business Days of such termination, reduction or occurrence.

 

Repayments and Prepayments .  The Borrower shall repay in full the unpaid principal amount of each Advance on the Scheduled Facility Termination Date.  Prior thereto, the Borrower:

 

may, from time to time on any Business Day, make a prepayment, in whole or in part, of the outstanding principal amount of any Advance; provided, however, that

 

all such voluntary prepayments shall require at least three Business Days’ prior written notice to the Administrative Agent; and all such voluntary partial prepayments shall be in a minimum amount of $5,000,000 and an integral multiple of $1,000,000 in excess thereof or, if less than $5,000,000, the entire outstanding principal amount of any Advances;

 

shall, on any Distribution Date, any date an Advance is made or any date upon which the Collateral Agent distributes Excess Funds from the Collection Account on which the outstanding amount of Advances exceeds the Borrowing Base, make a prepayment of the Advances in an amount equal to such excess;

 

shall, immediately upon any acceleration of the maturity date of any Advance pursuant to Section 14.3, repay all Advances, unless, pursuant to Section 14.3(a), only a portion of all Advances is so accelerated, in which event the Borrower shall repay the accelerated portion of the Advances; and

 

shall, on the date the Borrower receives any net proceeds from any Take-Out Securitization, make a prepayment of the Advances in an amount substantially equal to such net proceeds or, if less, the total outstanding amount of Advances.

 

Each such prepayment shall be subject to the payment of any amounts required by Section 6.2 resulting from a prepayment or payment of an Advance prior to the end of the Fixed Period with respect thereto.

 

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Extension of Facility .  The Borrower may request (in a written notice delivered to the Administrative Agent, on or prior to the 30 ^th calendar day, but not earlier than the 90 ^th calendar day, prior to each Scheduled Facility Termination Date) that the Lenders extend the Scheduled Facility Termination Date for successive periods of 364 days.  The Scheduled Facility Termination Date shall be extended accordingly if the Administrative Agent (acting pursuant to the instructions of all the Lenders, which instructions may be given or withheld in their sole and absolute discretion) notifies the Borrower that the then-current Scheduled Facility Termination Date shall be so extended for a period of 364 days.  If any Lender instructs the Administrative Agent not to extend such date, or fails to give the Administrative Agent any instruction with respect to any such request, the Administrative Agent shall notify the Borrower that the Lenders have declined the request of the Borrower and the Scheduled Facility Termination Date shall not be so extended.  If no such notice is received by the Borrower by the close of business on the 15 ^th calendar day prior to the then-current Scheduled Facility Termination Date, the Lenders shall be deemed to have declined the request of the Borrower.  If the request is declined, the Borrower may request that the Administrative Agent promptly advise the Borrower of the Lenders that agreed to the extension request and may, by the close of business on or before the 10 ^th calendar day prior to the then-current Scheduled Facility Termination Date, request that one or more of the Lenders consenting to the extension request or any Investor acquire and assume all or a ratable part of each non-consenting Lender Commitment.  Upon notice from the Administrative Agent that each non-consenting Lender has assigned its interest in its Advances and its Commitment to another Lender or Investor, on or before the close of business on the 5 ^th calendar day prior to the then-current Scheduled Facility Termination Date, the Lenders shall be deemed to have accepted the request of the Borrower that the Scheduled Facility Termination Date be so extended.  If no such notice is received, or if the Borrower does not timely request that the Administrative Agent solicit replacement of each the non-consenting Lender, the Lenders shall be deemed to have declined the request and the Scheduled Facility Termination Date shall not be so extended.  The Borrower will give the Collateral Agent written notice of any extension of Scheduled Facility Termination Date within two Business Days of such extension.

 

YIELD, FEES, ETC.

 

Yield .  The Borrower hereby promises to pay Yield on the unpaid principal amount of each Advance (or each portion thereof) for the period commencing on the date of such Advance until such Advance is paid in full.  No provision of this Agreement or the Notes shall require the payment or permit the collection of Yield in excess of the maximum permitted by applicable law.

 

Yield Payment Dates .  Yield accrued on Advances shall be payable, without duplication:

 

as to each Advance on the Facility Termination Date;

 

as to any payment or prepayment, on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Advance, but only on the portion of the Advance so paid or prepaid; and

 

as to each Advance, on each Distribution Date; provided that Yield relating to such Advance may also be payable, at the option of the Borrower, on an Interim Distribution Date selected (upon not less than three Business Days’ prior written notice to the Administrative Agent) by the Borrower.

 

Yield Calculation .  (a) Interest shall accrue on the Advances during each Accrual Period at the following rates:

 

Each Noncommitted Lender’s portion of each Advance shall bear interest on each day during each Accrual Period at a rate per annum equal to such Noncommitted Lender’s Commercial Paper Rate for such day, except as otherwise provided in clause (ii) below.

 

If and to the extent that, and only for so long as, a Noncommitted Lender at any time determines in good faith that it is unable to raise or is precluded or prohibited from raising, or that it is not advisable to raise, funds through the issuance of commercial paper notes in the commercial paper market of the United States to finance its making or maintenance of its portion of any Advance or any portion thereof (which determination may be based on any allocation method employed in good faith by such Noncommitted Lender), including by reason of market conditions or by reason of insufficient availability under any of its Support Facilities or the downgrading of any of its Support Parties, upon notice from such Noncommitted

 

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Lender to the Agent for its Lender Group and the Administrative Agent, such Noncommitted Lender’s portion of such Advance shall bear interest at a rate per annum equal to the Alternative Rate, rather than as otherwise determined pursuant to clause (i) above. 

 

Each Committed Lender’s portion of each Advance shall bear interest for each Accrual Period at a rate per annum equal to the Alternative Rate.

 

Notwithstanding clauses (i), (ii) and (iii) above, during the period any principal amount of any Advance is due and payable (whether on the Facility Termination Date, upon acceleration or otherwise) or during the period any other monetary obligation of the Borrower or the Servicer (only if CAR, CAR Servicing or an Affiliate of CAR is the Servicer) arising under this Agreement shall become due and payable, the Borrower or the Servicer (only if CAR, CAR Servicing or an Affiliate of CAR is the Servicer), as the case may be, shall pay (to the extent permitted by law, if in respect of any unpaid amounts representing Yield) Yield (after as well as before judgment) on such amounts, payable on demand, at a rate per annum equal to the Default Rate.

 

If (A) the consolidation of the assets and liabilities of a Noncommitted Lender which is a Structured Lender on the balance sheet of an administrator, manager, credit or liquidity enhancer or similar party with respect to such Lender or any Affiliate of such administrator, manager, credit or liquidity enhancer or similar party (each, an “ SL Affected Party ”) shall be required, or capital shall be required to be maintained with respect thereto under any capital requirements as if such assets were owned by such SL Affected Party, by the Securities and Exchange Commission, any banking regulatory authority or any other domestic or foreign governmental authority having jurisdiction over such SL Affected Party, or (B) the independent auditors for a SL Affected Party shall have advised such SL Affected Party in writing that in their opinion such consolidation is required under GAAP or applicable law, rule or regulations, then, upon notice by such Lender to the Borrower and the related Agent, such Lender’s Advances shall bear interest at a rate per annum equal to the Alternative Rate, rather than as otherwise determined pursuant to clause (a) above.

 

Fees .  The Borrower agrees to pay to the Administrative Agent, on behalf of itself, the Agents, the Support Parties and the Lenders, certain fees in the amounts and on the dates set forth in the letter agreement among the Administrative Agent, the Borrower and CAR, dated as of the date hereof (as the same may be amended, supplemented or otherwise modified, the “ Fee Letter ”).  Fees accrued on each Advance shall be payable, without duplication, on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Advance.

 

Computation of Yield and Fees .  All Yield and Fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such Yield or fee is payable over a year comprised of 360 days (or, in the case of Yield on an Advance bearing Yield on the basis of the Alternate Base Rate, 365 days or, if appropriate, 366 days).  The Agent for each Lender Group shall notify the Administrative Agent, the Borrower and the Servicer of the Yield and Fees accrued one Business Day prior to each Distribution Date and from time to time upon request of the Administrative Agent, the Borrower or Servicer.

 

GUARANTY

 

Guaranty of Payment .  The Guarantor hereby guarantees to the Administrative Agent (on behalf of itself, the Collateral Agent, the Agents and the Lenders) the payment of all payment and performance obligations of the Servicer (so long as the Servicer is CAR, CAR Servicing or an Affiliate thereof) to the Administrative Agent, the Collateral Agent, each Agent, and each of the Lenders under the Sale and Servicing Agreement or this Agreement, whether direct or indirect, absolute or contingent, due or to become due, secured or unsecured, now existing or hereafter arising or acquired (collectively, the “ Guaranteed Obligations ”).  The guaranty provided hereunder is an absolute, unconditional and irrevocable guaranty of the full and punctual payment and performance of the Guaranteed Obligations (and not of their collectibility only) and is in no way conditioned upon any requirement that the Administrative Agent, any Agent or any Lender first attempt to collect or enforce any of the Guaranteed Obligations from or against the Servicer or resort to any security or other means of obtaining their payment or

 

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performance.  Should the Servicer default in the payment or performance of any of the Guaranteed Obligations, the obligations of the Guarantor hereunder with respect to such default shall become immediately due and payable, without demand or notice by the Administrative Agent.  Payments by the Guarantor hereunder may be required by the Administrative Agent (on behalf of itself, the Collateral Agent, the Agents and the Lenders), acting at the direction of the Required Lenders, on any number of occasions.

 

Agreement to Pay Expenses .  The Guarantor agrees, as the principal obligor and not as a guarantor only, to pay to the Administrative Agent, on demand, all reasonable costs and expenses (including court costs and reasonable legal expenses) incurred or expended by the Administrative Agent in connection with enforcement of the obligations of the Guarantor under this Article IV together with interest accrued thereon from the time such amounts become due until payment, at the Default Rate in effect from time to time; !provided that, if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount.

 

Unenforceability of Guaranteed Obligations Against the Servicer .  If for any reason the Servicer has no legal existence or is under no legal obligation to discharge any of the Guaranteed Obligations, or if any of the Guaranteed Obligations have become irrecoverable from the Servicer by operation of law or for any other reason, the guaranty and the primary obligation provided under this Article IV shall nevertheless be binding on the Guarantor to the same extent as if the Guarantor at all times had been the principal obligor on all such Guaranteed Obligations.  In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Servicer, or for any other reason, all such amounts otherwise subject to acceleration under the terms of any agreement evidencing, securing or otherwise executed in connection with any Guaranteed Obligation (including this Agreement) shall be immediately due and payable by the Guarantor.

 

Waiver of Subrogation .  Until the termination hereof and the payment in full of all Guaranteed Obligations and payment in full of the principal of, and interest on, the Advances, the Guarantor (a) shall not exercise any rights against the Servicer arising as a result of payment or performance by the Guarantor under this Article IV , by way of subrogation or otherwise; (b) will not prove any claim in competition with the Administrative Agent, the Collateral Agent, the Agents or the Lenders in respect of any payment or performance hereunder in bankruptcy or insolvency proceedings of any nature; (c) will not claim any set-off or counterclaim against the Servicer in respect of any liability of the Guarantor to such Person; and (d) waives any benefit of and any right to participate in any collateral which may be held by the Administrative Agent, the Collateral Agent, the Agents or the Lenders.

 

Subordination .  The payment of any amounts due with respect to any Indebtedness of the Servicer now or hereafter held by the Guarantor is hereby subordinated to the prior payment in full of the Guaranteed Obligations, provided that so long as no default in the payment of the Guaranteed Obligations has occurred and is continuing and no Facility Termination Event or Unmatured Facility Termination Event has occurred and is continuing, and no undisputed demand for payment of any of the Guaranteed Obligations has been made that remains unsatisfied, the Servicer may make, and the Guarantor may demand and accept, any payments of principal of and interest on such subordinated Indebtedness in the amounts, at the rates and on the dates as specified in such instruments, securities or other writings as shall evidence such subordinated Indebtedness.  The Guarantor agrees that after the occurrence and during the continuation of any default in the payment of the Guaranteed Obligations or a Facility Termination Event or Unmatured Facility Termination Event, the Guarantor will not demand, sue for or otherwise attempt to collect any such Indebtedness of the Servicer to the Guarantor until the Guaranteed Obligations shall have been paid in full.  If, notwithstanding the foregoing sentence, the Guarantor shall in breach of this Section, collect, enforce or receive any amounts in respect of such Indebtedness, such amounts shall be collected, enforced and received by the Guarantor as trustee for the Administrative Agent, the Collateral Agent, the Agents and the Lenders and be paid over to Administrative Agent on account of the Guaranteed Obligations without affecting in any manner the liability of the Guarantor under this Article IV .

 

Waivers by Guarantor .  The Guarantor agrees that the Guaranteed Obligations will be paid strictly in accordance with their respective terms.  To the extent permitted by applicable law, the Guarantor waives presentment, demand, protest, notice of acceptance, notice of Guaranteed Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshaling of assets of the Servicer, and all suretyship defenses generally.  Without limiting the generality of the foregoing, the Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations and agrees that the Guaranteed Obligations shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Administrative Agent, the Collateral Agent, any Agent or any of the Lenders to assert any claim or demand or to enforce any right or remedy against the Servicer; (ii) any extensions or renewals of

 

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any of the Guaranteed Obligations; (iii) any rescissions, waivers, amendments or modifications of any of the terms or provisions of any agreement evidencing, securing or otherwise executed in connection with the Guaranteed Obligations, including, without limitation, the Transaction Documents; (iv) the substitution or release of any entity primarily or secondarily liable for any obligation of the Servicer under this Agreement or the other Transaction Documents; (v) the adequacy of any rights the Agents, the Lenders, the Administrative Agent or the Collateral Agent may have against any collateral or other means of obtaining repayment of the Guaranteed Obligations; (vi) the impairment of any collateral securing the Guaranteed Obligations, including without limitation the failure to perfect or preserve any rights the Administrative Agent, the Collateral Agent, the Agents or the Lenders might have in such collateral or the substitution, exchange, surrender, release, loss or destruction of any such collateral; or (vii) any other act or omission which might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a release or discharge of the Guarantor, all of which may be done without notice to the Guarantor.

 

PAYMENTS; TAXES

 

Making of Payments; Taxes .  7.  Subject to, and in accordance with, the provisions hereof, all payments of principal of, or Yield on, the Advances and of all Fees and other amounts shall be made by the Borrower no later than 2:00 p.m., New York time, on the day when due in lawful money of the United States of America in immediately available funds to the Administrative Agent, at its account (account number –10-598524-0008 (account name – Nantucket Funding Corp., LLC) maintained at the office of Deutsche Bank AG, New York Branch, New York, New York (ABA # 026-003-780), reference:  CAR Funding Inc., with telephone notice (including wire number) to the Administrative Agent (telephone number 212-474-7737)), or such other account as the Administrative Agent shall designate in writing to the Borrower (the “ Administrative Agent’s Account ”).  Payments received by the Administrative Agent after 2:00 p.m., New York time, on any day will be deemed to have been received by the Administrative Agent on its next following Business Day.  The Administrative Agent shall, upon receipt of such payments, promptly remit such payments (in the same type of funds received by the Administrative Agent) to the Agent for each Lender Group pro rata among the Lender Groups on the basis of the respective amounts owing to such Lender Groups of the Obligations to which such payments relate.  Each Agent shall allocate to the Lenders in its Lender Group each payment in respect of the Advances received by such Agent as provided herein.  Payments in reduction of the principal amount of the Advances shall be allocated and applied to Lenders pro rata based on their respective portions of such Advances.  Payments of Yield shall be allocated and applied to Lenders pro rata based upon the respective amounts of interest due and payable to them, determined as provided above in Section 3.3(a) .  Payments of the “Usage Fee” (as defined in the Fee Letter) shall be allocated and paid to Lenders pro rata based upon their respective principal interests in the Advances for the applicable Accrual Period.  Payments of the “Program Fee” (as defined in the Fee Letter) shall be allocated and paid to the Agent for each Lender Group pro rata based on the aggregate Commitments of the Lenders in such Lender Group.  Each Lender in a Lender Group shall be entitled to receive the share of the Program Fee allocated to such Lender Group as may be agreed upon from time to time between such Lender and the Agent for such Lender Group.

 

All payments described in Section 5.1(a)  and all other payments made by or on behalf of the Borrower, the Seller, CAR, the Guarantor or the Servicer (so long as CAR, CAR Servicing or an Affiliate of CAR is the Servicer) to the Administrative Agent for the benefit of itself or any Affected Person or the Lenders or to any Affected Person directly under this Agreement and any other Transaction Document shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Official Body ( excluding (i) taxes imposed on the net income of the Administrative Agent or Affected Person, however denominated, and (ii) franchise taxes imposed on the net income of the Administrative Agent or Affected Person in each case imposed: (1) by the United States or any political subdivision or taxing authority thereof or therein; (2) by any jurisdiction under the laws of which the Administrative Agent or such Affected Person or its applicable lending office is organized or located, managed or controlled or in which its principal office is located or any political subdivision or taxing authority thereof or therein; or (3) by reason of any connection between the jurisdiction imposing such tax and the Administrative Agent, such Affected Person or such lending office other than a connection arising solely from this Agreement or any other Transaction Document or any transaction hereunder or thereunder) (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings, collectively or individually, “ Taxes ”).  If any such Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Affected Person hereunder or under any other Transaction Document, the amounts so payable to the Administrative Agent or such Affected Person shall be increased to the extent necessary to yield to the Administrative Agent or such Affected Person (after payment of all Taxes) all amounts payable hereunder or thereunder at the rates or in the amounts specified in this Agreement and the other Transaction Documents.  The Borrower (or the party required to “gross-up” the applicable payment) shall indemnify the Administrative Agent or such Affected Person for the full amount of any such Taxes on the first Settlement Date

 

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occurring at least 10 Business Days after the date of written demand therefor by the Administrative Agent or Affected Person and delivery to the Borrower (or the party required to “gross-up” the applicable payment) of the written statement setting forth the legal basis for the Taxes, the amount of the Taxes and the calculation thereof; provided that no Person shall be indemnified pursuant to this Section 5.1(b)  to the extent the reason for such indemnification relates to, or arises from, the failure by such Person to comply with the provisions of Section 5.1(c) .

 

Each Affected Person that is not incorporated under the laws of the United States of America or a state thereof or the District of Columbia shall:

 

prior to becoming a party to, or acquiring an interest in, any Transaction Document or Support Facility (if not a party to a Transaction Document), deliver to the Borrower and the Administrative Agent (A) two duly completed copies of Form W-8ECI, Form W-8BEN or Form W-8IMY, or successor applicable forms, as the case may be, and (B) an IRS Form W-9, or successor applicable form, as the case may be; and

deliver to the Borrower and the Administrative Agent two (2) further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower and the Administrative Agent;

 

Each such Affected Person so organized shall certify (a) in the case of a Form W-8ECI, Form W-8BEN or Form W-8IMY, that it is entitled to receive payments under the this Agreement and the other Transaction Documents without deduction or withholding of any United States federal income taxes and (b) in the case of an IRS Form W-9, that it is entitled to a complete exemption from United States backup withholding tax.  Each Person that desires to become an additional party to a Support Facility, shall, prior to the effectiveness of such addition, be required to provide all of the forms and certifications required pursuant to this Section 5.1(c)  unless such Person has previously delivered such forms in its capacity as a party to a Transaction Document and such forms have not expired or become obsolete.  Failure of any Affected Person to comply with this clause (c) shall result in the Borrower having no obligation to gross-up for Taxes pursuant to clause (b) of this Section.

 

Application of Certain Payments .  Each payment of principal of the Advances shall be applied to such Advances as the Borrower shall direct or, in the absence of such direction or during the existence of a Facility Termination Event or after the Facility Termination Date, as the Required Lenders shall determine, in their discretion.

 

Due Date Extension .  If any payment of principal or Yield with respect to any Advance falls due on a day which is not a Business Day, then such due date shall be extended to the next following Business Day, and additional Yield and Fees shall accrue and be payable for the period of such extension at the rate applicable to such Advance.

 

INCREASED COSTS, ETC.

 

Increased Costs .  If due to the introduction of or any change in or in the interpretation of any law or regulation occurring or issued after the date hereof, any Lender or other Investor, any Support Party, or any Person controlling any thereof (each an “ Affected Person ”) determines that compliance with any law or regulation or any guideline or request from any central bank or other Official Body (whether or not having the force of law) shall impose, modify or deem applicable any reserve requirement imposed by the Board of Governors of the Federal Reserve System (but excluding any reserve requirement, if any, included on the determination of Yield), special deposit or similar requirements against assets of, deposits with or for the account of, or credit extended by such Affected Party, and the result of any of the foregoing is to increase the amount of capital required or expected to be maintained by such Affected Person and such Affected Person determines that the amount of such capital is increased by or based upon the existence of its obligations or Commitments hereunder or with respect hereto or to the funding thereof (other than any increase in cost resulting solely from a consolidation event described in Section 3.3(b)

 

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but only if the Borrower is liable for the payment of the increased rate of interest under such Section 3.3(b) ), then , upon demand by such Affected Person (with a copy to the Administrative Agent) (which demand shall be accompanied by a statement setting forth in reasonable detail the basis for the determination that the increase in capital is allocable to the existence of its obligations or Commitments hereunder and, in reasonable detail, the calculations of the amount being claimed), the Borrower agrees to pay to the Administrative Agent, for the account of such Affected Person (as a third-party beneficiary), on the Distribution Date following the date on which such Affected Person provides notice of such event to the Borrower and the Servicer (provided that such notice is accompanied by the statement described above in this Section 6.1 and is delivered on or prior to the fifth Business Day prior to such Distribution Date and otherwise on the Distribution Date following such Distribution Date), subject to and in accordance with the priorities set forth in Section 9.5 , additional amounts sufficient to compensate such Affected Person in the light of such circumstances, to the extent that such Affected Person reasonably determines such increase in capital to be allocable to the existence of any of such obligations, commitments or fundings.  The calculations set forth in such written statement shall, in the absence of manifest error, be rebuttably presumptive evidence of the subject matter thereof.  Any Affected Person claiming any additional amounts payable pursuant to this Section 6.1 agrees to use reasonable efforts (consistent with legal and regulatory restrictions) to designate a different office or branch of such Affected Person as its lending office or take such other actions if the making of such a designation or taking of such other actions would avoid the need for, or reduce the amount of, any such additional amounts and would not, in the reasonable judgment of such Affected Person, be otherwise disadvantageous to such Affected Person.

 

Funding Losses .  The Borrower hereby agrees that upon demand by any Affected Person (which demand shall be accompanied by a statement setting forth in reasonable detail the basis for the calculations of the amount being claimed) it will indemnify such Affected Person against any net loss or expense which such Affected Person or incurs (including, without limitation, any net loss or expense incurred by reason of or resulting from interest to accrue on the related commercial paper after the date of any failed borrowing, payment or prepayment of an Advance or from the termination of related hedging arrangements, the liquidation or reemployment of deposits or other funds acquired by such Affected Person to fund or maintain any Advance to the Borrower), as reasonably determined by such Affected Person, as a result of any failure by the Borrower to borrow an Advance on the date specified therefor in an Advance Request (other than due to a default by a Lender) or as a result of any payment or prepayment (including any mandatory prepayment) of any Advance on a date other than the last day of the Fixed Period for such Advance.  The calculations set forth in such written statement shall, in the absence of manifest error, be rebuttably presumptive evidence of the subject matter thereof.

 

Replacement of Affected Person .  Upon the receipt by the Borrower of a claim for reimbursement or compensation under Section 6.1 hereof by an Affected Person, if payment thereof shall not be waived by such Affected Person, or upon receipt of notice pursuant to Section 3.3(a)(ii) from any Noncommitted Lender or upon receipt by the Borrower of any notice by a Lender pursuant to Section 3.3(b), the Borrower may (a) request such Affected Person or the Lender that has assigned an interest in its Advances to such Affected Person to use reasonable efforts to assist the Borrower in its attempt to obtain a replacement bank, financial institution or Structured Lender, as applicable, satisfactory to the Borrower (in the case of a replacement Lender), to acquire and assume all or a ratable part of such Affected Person’s Commitment, or (b) request one or more of the other Lenders or Investors to acquire and assume all or a part of such Affected Person’s Commitment.  Upon notice from the Borrower, such Affected Person shall, or the Lender that has assigned an interest in its Advances to such Affected Person shall cause such Affected Person to, assign, without recourse, its commitment to make Advances, its outstanding Advances or interests therein and its other rights and obligations (if any) hereunder, or a ratable share thereof, to the replacement bank, financial institution or Structured Lender designated by the Borrower and consented to by the Administrative Agent (such consent not to be unreasonably withheld or delayed) for a purchase price equal to the sum of the principal amount of the Advances or interests therein so assigned, all accrued and unpaid Yield thereon and any other amounts (including Fees and any amounts owing under this Article VI ) to which such Affected Person is entitled hereunder; provided , that the Borrower shall provide such Affected Person with an Officer’s Certificate of CAR stating that such replacement bank, financial institution or Structured Lender has advised the Borrower that it is not subject to, or has agreed not to seek, such increased amount.

 

EFFECTIVENESS; CONDITIONS TO ADVANCES

 

Effectiveness .  This Agreement shall become effective on the first day (the “ Effective Date ”) on which the Administrative Agent, on behalf of the Agents and the Lenders, shall have received the following, each in form and substance satisfactory to each Agent:

 

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Agreement.  This Agreement executed by each party thereto;

 

Notes.  For each Lender Group, a Note duly completed and executed by the Borrower and payable to the Agent for such Lender Group;

 

Fee Letter.  The Fee Letter, duly executed and delivered by the parties thereto, and evidence that all amounts required to be paid on the Effective Date thereunder shall have been paid;

 

Transaction Documents.  Executed counterparts of each of the other Transaction Documents, the Backup Servicer Fee Letter and the Collateral Agent Fee Letter, duly executed by each of the parties thereto;

 

Resolutions.  A copy of the resolutions of the Board of Directors (or similar items) of each of the Borrower, the Servicer and the Seller approving the Transaction Documents to be delivered by it hereunder and the transactions contemplated hereby, certified by its Secretary or Assistant Secretary; 

 

Charters.  The Articles of Incorporation or certificate of organization of each of the Borrower, the Servicer and the Seller certified by the Secretary of State of its jurisdiction of organization; and a certified copy of the Borrower’s, the Servicer’s and the Seller’s by-laws, limited liability company agreement or the equivalent; 

 

Good Standing Certificates.  Good Standing Certificates for each of the Borrower, the Seller, and the Servicer issued by the applicable Official Body of its jurisdiction of organization;

 

Incumbency.  A certificate of the Secretary or Assistant Secretary of each of the Borrower, the Servicer and the Seller certifying the names and true signatures of the officers authorized on its behalf to sign this Agreement and the other Transaction Documents to be delivered by it; 

 

Filings.  Acknowledgment copies of proper Financing Statements, as may be necessary under the UCC of all appropriate jurisdictions or any comparable law to perfect the security interest of the Collateral Agent on behalf of the Secured Parties in all Borrower Collateral in which an interest may be pledged hereunder; 

 

Searches.  Copies of UCC financing statement lien searches certified by a party reasonably acceptable to each Agent), dated a date reasonably near to the date of the initial Advance, listing all effective financing statements which name the Borrower or CAR (under their respective present names and any previous names) as debtor and which are filed in the jurisdictions in which filings were made pursuant to Section 7.1(i), together with copies of such financing statements; 

 

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Opinions.  Legal opinions of counsel for the Collateral Agent and the Backup Servicer in form and substance reasonably satisfactory to the Administrative Agent covering such matters as the Administrative Agent shall reasonably request, and legal opinions of Troutman Sanders LLP, special counsel for the Borrower, CCRT, CAR and CAR Servicing, as to (i) the true sale of the Dealer Transaction Rights conveyed pursuant to the Sale and Servicing Agreement, (ii) UCC creation, perfection and, where appropriate, priority opinions as to the security interest in Dealer Transaction Rights (and assuming such right constitutes a “payment intangible” under the UCC) and in the Borrower Collateral, to the extent a security interest in such Collateral can be perfected by the filing of a financing statement under the UCC as in effect in the State of Georgia or Nevada, as applicable, (iii) enforceability of the Sale and Servicing Agreement against the Borrower, CAR and CAR Servicing, and of this Agreement and the related Transaction Documents against the Borrower, CAR, CAR Servicing and CCRT, (iv) non-consolidation under federal bankruptcy law as to the Borrower, on the one hand, and CCRT, CAR, CARS Acquisition and CAR Servicing, on the other hand and(v) general corporate matters, each in form and substance reasonably satisfactory to the Administrative Agent; 

 

Commercial Paper Ratings.  Evidence reasonably satisfactory to each initial Lender (e.g. ratings letters) that is a Structured Lender that its acquisition of Notes and the making of Advances hereunder will not result in a reduction or withdrawal of the rating of its commercial paper notes by Moody’s, Standard & Poor’s or any other nationally recognized rating agency rating its commercial paper notes;

 

Transition Servicing Agreement.  A transition servicing agreement among Wells Fargo Financial America, Inc., the Predecessors in Interest and CARS Acquisition in form and substance acceptable to the Administrative Agent;

 

Payment of Fees.  Evidence that all fees payable on or prior to the Effective Date pursuant to the Fee Letter have been paid in full; and

 

PATRIOT Act.  All satisfactory information deemed necessary or desirable by the Administrative Agent with respect to the Borrower, CAR, the Servicer and CCRT in order for the Administrative Agent, the Agents and the Lenders to comply fully with their obligations under law, including without limitation, under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, also known as the USA PATRIOT Act, as amended from time to time (including all regulations promulgated thereunder).

 

All Advances .  The making of each Advance (including the initial Advance) is subject to the condition that the Effective Date shall have occurred and to the following further conditions precedent that:

 

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No Facility Termination Event, etc.  Each of the Transaction Documents shall be in full force and effect and (i) no Facility Termination Event or Unmatured Facility Termination Event has occurred and is continuing or will result from the making of such Advance, (ii) the representations and warranties of the Borrower, the Servicer and the Seller contained herein are true and correct in all material respects as of the date of such requested Advance, with the same effect as though made on the date of (and after giving effect to) such Advance (except to the extent (A) such representation and warranties specifically relate to an earlier date or (B) such representations and warranties become untrue by reason of events or conditions otherwise permitted under the Transaction Documents), (iii) after giving effect to such Advance, the aggregate outstanding principal balance of the Advances hereunder will not exceed the lesser of the Facility Limit and the Borrowing Base and (iv) the Backup Servicer shall not have been appointed as successor Servicer; 

 

Advance Request, etc.  The Administrative Agent shall have received the Advance Request for such Advance (including a certification that the conditions described in subsections 7.2(a) through 7.2(h) have been satisfied with respect thereto) in accordance with Section 2.2, together with all items required to be delivered in connection therewith;

 

Facility Termination Date.  The Facility Termination Date shall not have occurred;

 

Minimum Advance Amount.  The amount of such Advance is not less than $1,000,000;

 

Custodial Receipt.  The Administrative Agent and the Collateral Agent shall have received a duly completed and executed Custodial Receipt in respect of each Transferred Receivable identified in the related Schedule of Contracts or Schedule of Subsequent Contracts, as the case may be, if any, delivered since the date of the prior Advance;

 

Borrowing Base Confirmation.  The Administrative Agent shall have received an Officer’s Certificate dated the date of such requested Advance certifying the Borrowing Base in the form attached hereto as Exhibit C (a “Borrowing Base Confirmation”), computed as of the date of such Advance and after giving effect thereto and to the purchase by the Borrower of any Dealer Transaction Rights to be purchased by it under the Sale and Servicing Agreement on such date, demonstrating that the aggregate principal amount of all Advances shall not exceed the Borrowing Base;

 

Interest Rate Caps; Cap Funding Reserve Account.  The Administrative Agent shall have received evidence, in form and substance satisfactory to the Required Lenders, that the Borrower has arranged for the Collateral Agent to enter into Interest Rate Caps to the extent required by, and satisfying the requirements of, Section 11.6; and after giving effect to the Advance, to the transfer of Receivables and Dealer Transaction Rights from the Seller to the Borrower on the date of such Advance and the application of the proceeds thereof in accordance with Section 2.3, the amount on deposit in the Cap Funding Reserve Account is not less than the Cap Funding Reserve Account Requirement, if any; and

 

Net Spread.  Net Spread shall be *** or more after giving effect to the Advance, to the transfer of Dealer Transaction Rights from the Seller to the Borrower on the date of such Advance and the application of the proceeds thereof in accordance with Section 2.3.

 

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No Lender which is a Structured Lender shall make any Advance unless such Lender’s Support Facilities are in full force and effect.  If any such Structured Lender’s Support Facilities are not in full force and effect, the Committed Lenders for such Structured Lender shall make such Advance so long as the conditions to such Advance in this Section 7.2 are satisfied.

 

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ADMINISTRATION AND SERVICING OF RECEIVABLES

 

Duties of the Servicer .  The Servicer shall manage, service, administer and make collections on the Transferred Receivables and perform the other actions required by the Servicer under the terms and provisions of the Sale and Servicing Agreement and this Agreement.

 

Representations and Warranties of the Servicer .  The Servicer (so long as CAR, CAR Servicing or an Affiliate of CAR is the Servicer) represents, warrants and covenants as of the Effective Date and as of the date of each Advance as to itself:

 

Organization and Good Standing.  It has been duly organized and is validly existing as a limited liability company in good standing under the laws of its jurisdiction of organization, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times;

 

Due Qualification.  It is duly qualified to do business as a foreign limited liability company in good standing and has obtained all necessary licenses and approvals in all jurisdictions where the failure to do so would have a Material Adverse Effect with respect to the Servicer;

 

Power and Authority.  It has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder; and the execution, delivery and performance of this Agreement and the Transaction Documents to which it is a party have been duly authorized by the Servicer by all necessary corporate action;

 

Binding Obligation.  This Agreement and the Transaction Documents to which it is a party (in any capacity) have been executed and delivered by the Servicer and constitute its legal, valid and binding obligations enforceable in all material respects in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law;

 

No Violation.  The execution, delivery and performance of this Agreement and the Transaction Documents to which it is a party, the consummation of the transactions contemplated thereby and the fulfillment of the terms thereof do not (A) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, its articles of organization or operating agreement, or any indenture, agreement, mortgage, deed of trust or other instrument to which it is a party or by which it or its properties are bound, (B) 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 other Transaction Documents, or (c) violate any law, order, rule or regulation applicable to it of any Official Body having jurisdiction over it or any of its properties;

 

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No Proceedings.  There are no proceedings or investigations pending or, to its knowledge, threatened against it, before any Official Body having jurisdiction over it or its properties (A) asserting the invalidity of any of the Transaction Documents, (B) seeking to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by the Transaction Documents, (C) seeking any determination or ruling that would have a Material Adverse Effect with respect to the Servicer, (D) that would have a material adverse effect on the Borrower Collateral, or (E) seeking to materially and adversely affect the federal income tax or other federal, state or local tax attributes of the Notes or seeking to impose any excise, franchise, transfer or similar tax upon the Notes or the sale and assignment of the Transferred Receivables or Transferred Dealer Transaction Rights hereunder;

 

No Consents.  No consent, license, approval, authorization or order of, or registration, declaration or filing with, any Official Body or other Person is required to be made in connection with the execution, delivery or performance of this Agreement and the Transaction Documents to which it is a party (in any capacity) or the consummation of the transactions contemplated thereby, except such as have been duly made, effected or obtained or to the extent the failure to obtain any such consent, license, approval, authorization or order, or to make any registration, declaration or filing would not have a Material Adverse Effect with respect to the Servicer;

 

Taxes; ERISA.  The Servicer has filed on a timely basis all tax returns (including, without limitation, foreign, federal, state, local and otherwise) required to be filed, is not liable for taxes payable by any other Person and has paid or made adequate provisions for the payment of all taxes, assessments and other governmental charges due from the Servicer.  No tax lien or similar adverse claim has been filed, and no claim is being asserted, with respect to any such tax, assessment or other governmental charge.  Any taxes, fees and other governmental charges payable by the Servicer in connection with the execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated hereby or thereby have been paid or shall have been paid if and when due.  Each benefit plan, if any, of the Servicer that is a “defined benefit” plan as defined in Section 3(35) of ERISA is in compliance in all material respects with ERISA and there is no Lien of the Pension Benefit Guaranty Corporation on any of the Borrower Collateral;

 

Investment Company Status.  It is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act;

 

Information True and Complete.  All information heretofore or hereafter furnished by or on behalf of the Servicer in writing to the Borrower, any Lender, any Agent or the Administrative Agent in connection with this Agreement or any transaction contemplated hereby is and will be, in each case as of the date furnished or such other date(s) as to be specified in the information furnished, true and complete in all material respects and does not and will not, in each case as of the date furnished or such other date(s) as to be specified in the information furnished, omit to state a material fact necessary to make the statements contained therein not misleading; and

 

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Other Documents.  The representations and warranties made by it in each of the other Transaction Documents to which it is a party are true and correct in all material respects as of the date(s) made.

 

Intentionally Omitted .

 

Servicing Fee; Payment of Certain Expenses by Servicer; Backup Servicer Fee .  On each Distribution Date, the Servicer shall be entitled to receive out of the Collection Account the Servicing Fee – Senior and the Servicing Fee – Subordinate for the related Collection Period pursuant to Section 9.5 . The Servicer shall be required to pay all expenses incurred by it in connection with its activities under this Agreement and the Sale and Servicing Agreement; provided , however , that if the Backup Servicer shall have become the successor Servicer, the Servicer shall be entitled to reimbursement of its expenses as specified in the Backup Servicer Fee Letter and Section 9.5 .  On each Distribution Date, the Backup Servicer shall be entitled to receive out of the Collection Account the Backup Servicer Fee for the related Collection Period pursuant to Section 9.5 .

 

Distribution Date Statement .  No later than 2:00 p.m., New York City time, on each Determination Date, the Servicer shall deliver to the Administrative Agent, the Collateral Agent and the Backup Servicer a Distribution Date Statement executed by a Responsible Officer of the Servicer.  The parties hereto acknowledge that the basis for calculating Yield on the Advances may change between the date the Servicer delivers a Distribution Date Statement and the related Distribution Date and that the amount the Servicer sets forth in a Distribution Date Statement as Yield accrued on the Advances as of the related Distribution Date is its good faith estimate of such Yield; in the event of any change in calculating Yield during such period of time, the parties agree to use reasonable efforts to revise the Distribution Date Statement on or prior to such Distribution Date to reflect such changes, provided that if such revisions are not made by such time, then appropriate corrections shall be made on the next Distribution Date.

 

Annual Statement as to Compliance; Notice of Servicer Default .

 

The Servicer shall deliver to the Administrative Agent and the Collateral Agent on or before April 30 (or 120 days after the end of the Servicer’s fiscal year, if other than December 31) of each year, beginning on April 30, 2006, an officer’s certificate signed by any Responsible Officer of the Servicer, dated as of the preceding December 31 (or other applicable date), stating that (i) a review of the activities of the Servicer during the preceding 12-month period (or such other period as shall have elapsed from the Effective Date to the date of the first such certificate) and of its performance under this Agreement and the Sale and Servicing Agreement has been made under such officer’s supervision, and (ii) to such officer’s knowledge, based on such review, the Servicer substantially has fulfilled all its obligations under this Agreement and the Sale and Servicing Agreement throughout such period, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof.

 

The Servicer shall deliver to Administrative Agent, the Collateral Agent, the Custodian (if other than CAR) and the Backup Servicer, promptly after having obtained knowledge thereof, but in no event later than two Business Days thereafter, written notice in an Officers’ Certificate of any event that, with the giving of notice or lapse of time, would become a Servicer Default, Event of Default or a Facility Termination Event.

 

Quarterly Independent Accountants’ Report .  8.  The Servicer shall cause BDO Siedman LLP or other firm of nationally recognized independent certified public accountants (the “ Independent Accountants ”), who may also render other services to CCRT, CAR, the Servicer or the Seller, to deliver to the Administrative Agent, on or before April 30, July 31, October 31 and January 31 of each year, beginning on July 31, 2005, with respect to the fiscal quarter ended one month previously (or such other period as shall have elapsed from the Effective Date to the date of such certificate), a statement (the “ Accountants’ Report ”) addressed to the Administrative Agent to the effect that (1) the firm is independent of CCRT, CAR, the Seller and the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants, and (2) included therein is a report on the results of the application of agreed upon procedures acceptable to the Required Lenders (such procedures to be substantially similar to those set forth in the Field Examination Report dated August 25, 2004 prepared for

 

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DBNY by Evergreen Collateral Consulting, LLC prior to the occurrence and continuation of a Facility Termination Event) to (A) a randomly selected Distribution Date Statement including the delinquency, default and loss statistics required to be specified therein noting whether any exceptions or errors in the Distribution Date Statements were found and (B) a statistically significant number of randomly selected Contract Files.  If, in its sole discretion, the Administrative Agent at any time agrees that the Servicer need only provide an Accountant’s Report on annual basis, such statement will contain a report on four randomly selected Distribution Date Statements from the preceding year.  Such report shall set forth the agreed-upon procedures performed and will be made available to each of the Administrative Agent,  Collateral Agent, and the Back-Up Servicer upon each such party reaching agreement with the Independent Accountants concerning any potential terms or conditions associated with the report’s release.  In the event that such Independent Accountants require the Administrative Agent to agree to the procedures to be performed by such firm in any of the reports required to be prepared pursuant to this Section 8.7 , the Agents shall direct the Administrative Agent in writing to so agree; it being understood and agreed that the Administrative Agent will deliver such letter of agreement in conclusive reliance upon the written direction of the Agents, and the Administrative Agent has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.  Notwithstanding the foregoing, if WFB shall become the successor Servicer, such report (A) shall relate only to the Contracts and WFB’s servicing of the Contracts, (B) the fees and expenses of WFB associated therewith shall be reimbursable, and (C) the independence of the accountants shall be only with respect to WFB and its Affiliates.

 

The Servicer shall promptly deliver to each Agent a copy of the accountants’ letter delivered in connection with each Take-Out Securitization.

 

Access to Certain Documentation and Information Regarding Contracts. 

 

The Servicer shall permit representatives of the Administrative Agent, each Agent, the Backup Servicer, the Collateral Agent and the Custodian at any time and from time to time, but, so long as no Event of Default has occurred and is continuing, no more than two times per year, during normal business hours as the Administrative Agent, such Agent, the Backup Servicer, the Collateral Agent and the Custodian shall reasonably request, (a) to inspect and make copies of and abstracts from its records relating to the Transferred Receivables and Transferred Dealer Transaction Rights, and (b) to visit its properties in connection with the collection, processing or servicing of the Transferred Receivables and Transferred Dealer Transaction Rights for the purpose of examining such records, and to discuss matters relating to the Transferred Receivables and Transferred Dealer Transaction Rights or such Person’s performance under this Agreement and the other Transaction Documents with any officer or employee of such Person having knowledge of such matters.  In each case, such access shall be afforded without charge.  In connection with any inspection, the Administrative Agent, any Agent, the Backup Servicer, the Collateral Agent and the Custodian may institute procedures to permit it to confirm the Obligor balances in respect of any Transferred Receivables or Transferred Dealer Transaction Rights.  The Servicer agrees to render to the Administrative Agent, each Agent, the Backup Servicer, the Collateral Agent and the Custodian such clerical and other assistance as may be reasonably requested with regard to the foregoing.  Nothing in this Section 8.8 shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors, and the failure of any of them to provide access as a result of such obligation shall not constitute a breach of this Section 8.8.

 

The Servicer shall make arrangements for the prompt and safe transfer of, and the Servicer shall provide to the Backup Servicer, all necessary servicing files and records, including (as deemed necessary by the Backup Servicer at such time):  (A) account documentation, (B) servicing system tapes (in a format reasonably acceptable to the Backup Servicer), (C) account payment history, (D) collections history and (E) the trial balances, in each case reflecting all applicable loan information, as of the following dates: (1) on an annual basis commencing December 31, 2005, (2) following the occurrence and during the continuation of a Facility Termination Event under Section 14.1 , monthly, and (3) on the close of business on the day immediately preceding the day on which the Backup Servicer becomes the successor Servicer.

 

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Certain Duties of Backup Servicer .

 

On or before each Determination Date, the Servicer shall deliver to the Administrative Agent and the Backup Servicer a computer tape or a diskette or any other electronic transmission in a format reasonably acceptable to the Administrative Agent and the Backup Servicer containing the information with respect to the Transferred Receivables and Transferred Dealer Transaction Rights as of the related Accounting Date necessary for preparation of the Distribution Date Statement relating to such Determination Date.

 

Prior to each such Distribution Date, the Backup Servicer shall use such tape or diskette (or other means of electronic transmission reasonably acceptable to the Administrative Agent and the Backup Servicer) and review the related Distribution Date Statement in order to perform the following:

 

confirm that the Distribution Date Statement is complete on its face or note any discrepancies;

 

verify the Aggregate Outstanding Principal Balance of the Transferred Receivables, the Delinquency Ratio, and the Charge-Off Ratio; and

 

review the mathematical accuracy of any information relating to the Collateral on the face of the Distribution Date Statement or note any discrepancies.

 

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In the event of any discrepancy between the information set forth in (ii) or (iii) in clause (b) above as calculated by the Servicer from that determined or calculated by the Backup Servicer, the Backup Servicer shall promptly report such discrepancy to the Servicer and the Administrative Agent.  In the event of a discrepancy as described in the preceding sentence, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancies prior to the related Distribution Date, but in the absence of a reconciliation, distributions on the related Distribution Date shall be made by the Administrative Agent consistent with the information provided by the Servicer and the Servicer and the Backup Servicer shall attempt to reconcile such discrepancies prior to the next Determination Date.  If the Backup Servicer and the Servicer are unable to reconcile discrepancies with respect to such Distribution Date Statement by the next Determination Date, the Servicer shall cause the Independent Accountants, at the Servicer’s expense, to examine the Distribution Date Statement and attempt to reconcile the discrepancies at the earliest possible date.  The effect, if any, of such reconciliation shall be reflected in the Distribution Date Statement for such next succeeding Determination Date.

 

Other than the duties specifically set forth in this Agreement, the Backup Servicer shall have no obligations hereunder, including to supervise, verify, monitor or administer the performance of the Servicer.  The Backup Servicer shall have no liability for any actions taken or omitted by the Servicer, except for the express duties of the Backup Servicer set forth herein.  The Backup Servicer shall have no liability for any obligation of the Servicer or for any error contained in any certificate, notice or data prepared by the Servicer (whether or not verified by the Backup Servicer), such obligations being solely the obligations of the Servicer.

 

Upon appointment of the Backup Servicer as the successor Servicer, its obligations as Backup Servicer shall terminate.

 

Consequences of a Servicer Default .  If a Servicer Default shall occur and be continuing, the Administrative Agent, acting at the direction of the Required Lenders, by written notice given to the Servicer, may terminate all of the rights and obligations of the Servicer pursuant to the terms of the Sale and Servicing Agreement and appoint a successor pursuant to the terms thereof.  In addition, upon the occurrence of a Servicer Default, the Servicer shall, if so requested by the Administrative Agent, acting at the direction of the Required Lenders, deliver to the Backup Servicer its Monthly Records within two Business Days after demand therefor and a computer tape or diskette (or any other means of electronic transmission reasonably acceptable to the Backup Servicer) containing as of the close of business on the date of demand all of the data maintained by the Servicer in computer format in connection with servicing the Transferred Receivables and the Transferred Dealer Transaction Rights.

 

Appointment of Backup Servicer as Successor Servicer .  On and after the termination of the Servicer pursuant to Section 8.10 , the Backup Servicer (or any other successor Servicer appointed by the Administrative Agent) shall be the successor in all respects to the Servicer in its capacity as Servicer under this Agreement and the Sale and Servicing Agreement and the transactions set forth or provided for in this Agreement and the Sale and Servicing Agreement and shall be subject to all the rights, responsibilities, restrictions, duties, liabilities and termination provisions relating thereto placed on the Servicer by the terms and provisions of this Agreement and the Sale and Servicing Agreement.

 

Upon the notice to WFB that it shall be appointed successor Servicer, WFB shall develop a reasonable transition plan and shall be granted a reasonable period of time, which shall not exceed 90 days, to implement such plan and assume the obligations of the Servicer and the servicing of the Transferred Receivables and Transferred Dealer Transaction Rights in accordance with its customary servicing procedures, including a reasonable period of time to hire required personnel, load and configure the necessary information onto its computer systems, establish necessary cash management procedures, locate and contact the Obligors to redirect

 

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payments, and any other transition related item required or reasonably necessary to perform its obligations as Servicer or subservicer.

 

WFB shall service the Transferred Receivables and Transferred Dealer Transaction Rights in its own name from centralized locations using its own personnel and properties and shall have no liability arising from or responsibility for the personnel or properties of any other or predecessor Servicer.  All powers, rights and authorities granted to the Servicer are hereby granted to WFB and each of its Affiliates and agents as are necessary, appropriate or convenient to perform its functions as Servicer or subservicer.  If WFB shall be a subservicer, the Servicer shall deliver to WFB copies of all information delivered to or by it in its capacity as Servicer, and WFB’s obligations and liabilities shall be solely to the Servicer and not to any other party or Person.  Any provision of this Agreement or the Sale and Servicing Agreement requiring WFB to use best efforts shall require only reasonable efforts with respect thereto.

 

After termination of the Servicer pursuant to Section 8.10, if requested by the Collateral Agent, the Backup Servicer or successor Servicer shall terminate each Lockbox Agreement and direct the Obligors to make all payments under the Receivables Collateral directly to the successor Servicer or to a lockbox established by the successor Servicer at the direction of the Collateral Agent, at the prior Servicer’s expense.

 

In the event that WFB is appointed successor Servicer, if (a) WFB is later removed as Servicer other than due to a Servicer Default with respect to WFB that has occurred and is continuing or (b) all or substantially all of the Contracts are sold in connection with an Event of Default, WFB shall be entitled to a termination fee, immediately payable in cash as part of the Servicing Fee – Subordinate, in an amount equal to two times the average monthly fees of WFB over the preceding four Collection Periods.

 

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Indemnification of Backup Servicer .  Without limiting any other rights which the Backup Servicer may have hereunder or under applicable law, the Borrower agrees to indemnify the Backup Servicer, including in its capacity as successor Servicer, and each of its successors, and assigns, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable attorneys’ fees and disbursements awarded against or incurred by any of them arising out of or relating to any Transaction Document or the transactions contemplated thereby or the use of proceeds therefrom by the Borrower, the Seller or CAR, except (a) damages, losses, claims, liabilities, costs and expenses payable to such Person to the extent determined by a court of competent jurisdiction to have resulted from gross negligence or willful misconduct on the part of any such Person or its agent or subcontractor; and (b) any tax upon or measured by the net income on any such Person.

 

Delegation of Duties .  The Servicer, including the Backup Servicer as successor Servicer, may at any time appoint a subservicer or subcontractor to perform all or any portion of its obligations as Servicer hereunder; provided that the Servicer shall be obligated and be liable for the performance of such obligations in accordance with the provisions of this Agreement without diminution of such obligations by virtue of the appointment of such subservicer or subcontractor to the same extent as if the Servicer were alone performing such obligations.

 

ACCOUNTS; PAYMENTS

 

Borrower Accounts .

 

On or prior to the Effective Date, the Servicer shall establish the Collection Account and the Cap Funding Reserve Account each in the name of the Collateral Agent for the benefit of the Secured Parties.  The Collection Account and the Cap Funding Reserve Account shall each be an Eligible Account which is a segregated trust account initially established with the Collateral Agent.  If at any time the Collection Account or the Cap Funding Reserve Account ceases to be an Eligible Account, the Collateral Agent, at the written direction of the Servicer, shall transfer such account to another institution such that such account shall meet the requirements of an Eligible Account.

 

All amounts held in the Collection Account and the Cap Funding Reserve Account (collectively, the “Borrower Accounts”), shall, to the extent permitted by applicable laws, rules and regulations, be invested by the Collateral Agent, as directed by the Servicer (so long as CAR, CAR Servicing or an Affiliate of CAR is the Servicer) in writing (or, if the Servicer fails to provide such direction, amounts in the Collection Account shall be invested in investments described in clause (f) of the definition of Permitted Investments), in Permitted Investments that mature not later than one Business Day prior to the Distribution Date for the Collection Period to which such amounts relate.  Any such written direction shall certify that any such investment is authorized by this Section 9.1.  Investments in Permitted Investments shall be made in the name of the Collateral Agent on behalf of the Secured Parties and, except as specifically required below, such investments shall not be sold or disposed of prior to their maturity.  The taxpayer identification number associated with each Borrower Account shall be that of the Borrower and the Borrower shall report for Federal, state and local income tax purposes, the income, if any, represented by each Borrower Account.  If any amounts are needed for disbursement from the Collection Account or the Cap Funding Reserve Account and sufficient uninvested funds are not available therein to make such disbursement, the Collateral Agent shall, at the written direction of the Servicer, cause to be sold or otherwise converted to cash a sufficient amount of the investments in such account to make such disbursement upon the written direction of the Servicer (so long as CAR, CAR Servicing or an Affiliate of CAR is the Servicer) or, if the Servicer shall fail to give such written direction, DBNY. 

 

Subject to the other provisions hereof, the Collateral Agent shall have sole control over each such investment and the income thereon, and any certificate or other instrument

 

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evidencing any such investment, if any, shall be delivered directly to the Collateral Agent or its agent, together with each document of transfer, if any, necessary to transfer title to such investment to the Collateral Agent in a manner that complies with this Section 9.1 .  All interest, dividends, gains upon sale and other income from, or earnings on, investments of funds in the Collection Account shall be deposited in the Collection Account and distributed pursuant to Section 9.5 .  All interest, dividends, gains upon sale and other income from or earnings on, investments of funds in the Cap Funding Reserve Account shall be deposited in the Collection Account and distributed pursuant to Section 9.5 .  If the Collateral Agent is given instructions by the Servicer to invest funds in any of the Borrower Accounts in investments other than investments of the type described in clause (f)  of the definition of “Permitted Investments,” the Servicer agrees to assist the Administrative Agent in complying with the requirements herein with respect to such investments.

 

Servicer Reimbursements .  The Servicer shall be entitled to be reimbursed from amounts on deposit in, or to be deposited in, the Collection Account with respect to a Collection Period for amounts previously deposited in the Collection Account but later determined by the Servicer to have resulted from mistaken deposits or postings or checks returned for insufficient funds.  The amount to be reimbursed hereunder shall be paid to the Servicer on or prior to the related Distribution Date pursuant to Section 9.5(a)(iv) .  Upon the request of the Administrative Agent or any Agent, the Servicer shall certify any amount to be reimbursed hereunder and shall supply such other information as may be necessary in the opinion of the Administrative Agent to verify the accuracy of such certification.  The Administrative Agent shall not be under any obligation to make the request described in the immediately preceding sentence.

 

Application of Collections .  With respect to each Transferred Receivable or Transferred Dealer Transaction Right, payments by or on behalf of the Obligor shall be applied to interest and principal thereof to reduce the balance thereof in accordance with the terms of such Transferred Receivable or Transferred Dealer Transaction Right and Section 5.02 of the Sale and Servicing Agreement.

 

Additional Deposits .  On or before each Determination Date, the Servicer (so long as CAR, CAR Servicing or an Affiliate of CAR is the Servicer) or the Borrower, as applicable, shall deposit into the Collection Account the aggregate Repurchase Amounts with respect to Repurchased Receivables or Repurchased Dealer Transaction Rights.  All such deposits of Repurchase Amounts shall be made in immediately available funds.  Upon receipt, the Collateral Agent shall remit to the Collection Account any amounts paid by a counterparty under any Interest Rate Cap.

 

Distributions .

 

On each Distribution Date prior to the occurrence and continuation of a Termination Event or an Event of Default, the Collateral Agent shall distribute, at the written direction of the Servicer, from the Collection Account, in accordance with the applicable Distribution Date Statement provided by the Servicer, the Amount Available for such Distribution Date in the following order of priority: 

 

FIRST, from the Amount Available, to the extent not previously paid by CAR or otherwise by or on behalf of the Borrower, to the Backup Servicer, any accrued and unpaid fees and expenses pursuant to the Backup Servicer Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses – Backup Servicer;

 

SECOND, from the remaining Amount Available, to the extent not previously paid by CAR or otherwise by or on behalf of the Borrower, to the Administrative Agent, any accrued and unpaid fees, if any, and expenses (including those of its legal counsel) for the related Collection Period pursuant to the Administrative Agent Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses –Administrative Agent and to the Collateral Agent, any accrued and

 

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unpaid fees and expenses (including those of its legal counsel) for the related Collection Period pursuant to the Collateral Agent Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses –Collateral Agent;

 

THIRD, from the remaining Amount Available, if the Custodian is not CAR or an Affiliate of CAR, to the extent not previously paid by CAR or otherwise by or on behalf of the Borrower, to the Custodian, any accrued and unpaid fees and expenses (including those of its legal counsel) for the related Collection Period pursuant to the Custodian Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses – Custodian;

 

FOURTH, from the remaining Amount Available, to the Servicer, any accrued and unpaid Servicing Fees — Senior, and any transition expenses payable to a successor Servicer pursuant to the Sale and Servicing Agreement to the extent not paid by the predecessor Servicer, provided , that such transition expenses, including travel, boarding fees, mailing costs, obligor letters (welcome and goodbye) and document packaging and shipping, shall not exceed 200,000 in the aggregate and the amounts specified in Section 9.2 to the extent the Servicer has not reimbursed itself in respect of such amounts pursuant to Section 9.6 ;

 

FIFTH, from the remaining Amount Available, to the Administrative Agent, on behalf of the Lenders, an amount equal to Yield on the Advances accrued during the Accrual Period with respect to such Distribution Date (and any Yield with respect to any prior Accrual Period to the extent not paid on a prior Distribution Date), and the Fees payable on such Distribution Date pursuant to the Fee Letter (and any Fees due and not paid on a prior Distribution Date);

 

SIXTH, from the remaining Amount Available, to the Administrative Agent, on behalf of the Lenders, to repay pursuant to Section 2.6(b)  the principal amount of Advances in an amount equal to the excess, if any, of the then outstanding principal amount of all Advances over the Borrowing Base with respect to such Distribution Date;

 

SEVENTH, from the remaining Amount Available, to the Servicer, any accrued and unpaid Servicing Fees — Subordinate;

 

EIGHTH, from the remaining Amount Available, to the Administrative Agent, for the benefit of Affected Persons any Increased Costs and other unpaid amounts then due and owing pursuant to Section 6.1; and

 

NINTH, from the remaining Amount Available, to the Borrower.

 

On each Distribution Date following the occurrence and continuation of a Facility Termination Event or an Event of Default, the Collateral Agent shall distribute from the Collection Account, in accordance with the applicable Distribution Date Statement provided by the Servicer, the Amount Available for such Distribution Date in the following order of priority:

 

FIRST, from the Amount Available, to the extent not previously paid by CAR or otherwise by or on behalf of the Borrower, to the Backup Servicer, any accrued and unpaid fees and expenses pursuant to the Backup Servicer Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses – Backup Servicer;

 

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SECOND, from the remaining Amount Available, to the extent not previously paid by CAR or otherwise by or on behalf of the Borrower, to the Administrative Agent, any accrued and unpaid fees and expenses (including those of its legal counsel) for the related Collection Period pursuant to the Administrative Agent Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses –Administrative Agent and to the Collateral Agent, any accrued and unpaid fees and expenses (including those of its legal counsel) for the related Collection Period pursuant to the Collateral Agent Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses –Collateral Agent;

 

THIRD, from the remaining Amount Available, if the Custodian is not CAR or an Affiliate of CAR, to the extent not previously paid by CAR or otherwise by or on behalf of the Borrower, to the Custodian, any accrued and unpaid fees and expenses (including those of its legal counsel) for the related Collection Period pursuant to the Custodian Fee Letter, which expenses shall not exceed the amount of the Capped Fees/Expenses – Custodian;

 

FOURTH, from the remaining Amount Available, to the Servicer, any accrued and unpaid Servicing Fees — Senior, and any transition expenses payable to a successor Servicer pursuant to the Sale and Servicing Agreement to the extent not paid by the predecessor Servicer, provided , that such transition expenses, including travel, boarding fees, mailing costs, obligor letters (welcome and goodbye) and document packaging and shipping, shall not exceed $200,000 in the aggregate and the amounts specified in Section 9.2 to the extent the Servicer has not reimbursed itself in respect of such amounts pursuant to Section 9.6 ;;

 

FIFTH, from the remaining Amount Available, to the Administrative Agent, on behalf of the Lenders, an amount equal to Yield on the Advances accrued during the Accrual Period with respect to such Distribution Date (and any Yield with respect to any prior Accrual Period to the extent not paid on a prior Distribution Date), and the Fees payable on such Distribution Date pursuant to the Fee Letter (and any Fees due and not paid on a prior Distribution Date)

 

SIXTH, from the remaining Amount Available, to the Administrative Agent on behalf of the Lenders, the principal amount of outstanding Advances until such Advances are paid in full;

 

SEVENTH, from the remaining Amount Available, to the Administrative Agent, for the benefit of Affected Persons any Increased Costs and other unpaid amounts then due and owing pursuant to Section 6.1;

 

EIGHTH, from the remaining Amount Available, to the Servicer, any accrued and unpaid Servicing Fees — Subordinate;

 

NINTH, from the remaining Amount Available, to the Borrower.

 

On each Interim Distribution Date, the Collateral Agent shall, at the written direction of the Servicer (so long as CAR, CAR Servicing or an Affiliate of CAR is the Servicer) delivered at least two Business Days prior to such Interim Distribution Date, withdraw from the Collection Account and distribute the following amounts in the following order of priority: 

 

FIRST, to the Administrative Agent, on behalf of the Lenders, Yield and Fees accrued in respect of the Advances being paid or prepaid on such date; and

 

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SECOND, to the Administrative Agent, on behalf of the Lenders, an amount equal to the Advances being paid or prepaid on such date.

 

On any Business Day, the Borrower may request in writing that the Collateral Agent withdraw Excess Funds from the Collection Account and distribute such amounts to, or as directed by, the Borrower so long as the following conditions have been satisfied: 

 

the Borrower shall have provided the Administrative Agent with one Business Day’s prior written notification of the amount of Excess Funds to be distributed and the date of such distribution and shall have provided the Collateral Agent written notification of the amount of Excess Funds to be distributed and the date of such distribution prior to noon, New York City time, on the date of such distribution;

 

before and after giving effect to such distribution (and after including in the Aggregate Outstanding Principal Balance on such day the Dealer Transaction Rights and related Receivables transferred to the Borrower on such day), no Borrowing Base Deficiency shall exist;

 

the Servicer shall have provided the Administrative Agent with prior written confirmation of the amount of Excess Funds;

 

no Facility Termination Event or Unmatured Facility Termination Event shall have occurred and be continuing; and

 

no Level Two Trigger Event shall have occurred and be continuing, provided that the Servicer may request that the Collateral Agent withdraw Excess Funds from the Collection Account following the occurrence of a Level Two Trigger if the Servicer shall be delivering to the Collateral Agent and the Administrative Agent daily reports on Collections, Delinquent Receivables, Defaulted Receivables, the Aggregate Outstanding Principal Balance, the Borrowing Base and such other information as the Administrative Agent may reasonably request.

 

Net Deposits .  So long as no Servicer Default has occurred and is continuing, the Servicer may make the remittances to be made by it pursuant to Sections 9.3 and 9.4 net of amounts (which amounts may be netted prior to any such remittance for a Collection Period) to be distributed to it pursuant to Section 9.2 , 9.5(a)(iii)  or 9.5(b)(ii) ; provided , however , that the Servicer shall account for all of such amounts in the related Distribution Date Statement as if such amounts were deposited and distributed separately; and provided , further , that if an error is made by the Servicer in calculating the amount to be deposited or retained by it, with the result that an amount less than required is deposited in the Collection Account, the Servicer shall make a payment of the deficiency to the Collection Account immediately upon becoming aware, or receiving notice from the Administrative Agent or Collateral Agent or any Agent, of such error.

 

REPRESENTATIONS AND WARRANTIES

 

In order to induce the other parties hereto to enter into this Agreement and, in the case of the Lenders, to make Advances hereunder, the Borrower hereby represents and warrants to the Administrative Agent, the Backup Servicer and the Investors, as of the Effective Date and the date of each Advance (unless otherwise indicated), as follows:

 

Organization and Good Standing .  It has been duly organized and is validly existing under the laws of the jurisdiction of its organization, with power and authority to own its properties and to conduct its business as such

 

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properties are currently owned and such business is currently conducted.  It had at all relevant times and now has, power, authority and legal right, in the case of the Borrower, to acquire and own the Transferred Receivables, the Transferred Dealer Transaction Rights and the Other Conveyed Property, and to grant to the Collateral Agent a security interest in the Transferred Receivables, the Transferred Dealer Transaction Rights, the Other Conveyed Property and the other Borrower Collateral.

 

Due Qualification .  It is duly qualified to do business and has obtained (or prior to the Initial Closing Date will have obtained) all necessary licenses and approvals in all jurisdictions where the failure to do so would have a Material Adverse Effect with respect to the Borrower.

 

Power and Authority .  It has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to CARS Acquisition out its terms and their terms, respectively; the Borrower has full power and authority to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Borrower Collateral and has duly authorized such grant by all necessary corporate action; and the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party have been duly authorized by each such Person by all necessary corporate or limited liability company action.

 

Security Interest; Binding Obligations .  This Agreement and the Transaction Documents to which it is a party have been duly executed and delivered; this Agreement (together with the filing of any required financing statements) shall create a valid first priority perfected security interest (except, as to priority, for any Permitted Liens that may arise after the Effective Date, to the extent granted priority under applicable law (except to the extent the Collateral Agent has elected not to perfect such Security Interest) in the Borrower Collateral in favor of the Collateral Agent, for the benefit of the Secured Parties, enforceable against the Borrower and creditors of the Borrower and any Affiliate thereof (including CAR), to the extent (as to perfection and priority) that a security interest in said Borrower Collateral may be perfected by the filing of a financing statement under the applicable UCC; and this Agreement and the other Transaction Documents to which it is a party shall constitute legal, valid and binding obligations of each such Person enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law.

 

No Violation .  The consummation of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, and the fulfillment of the terms of this Agreement and the other Transaction Documents to which it is a party, shall not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or bylaws or the equivalent of such Person, or any indenture, agreement, mortgage, deed of trust or other instrument to which such Person is a party or by which it is bound or any of its properties are subject in any material respect, or result in the creation or imposition of any Lien (other than Permitted Liens) 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, or violate any law, order, rule or regulation applicable to such Person of any Official Body having jurisdiction over such Person or any of its properties, or in any way materially adversely affect such Person’s ability to perform its obligations under this Agreement or the other Transaction Documents to which it is a party.

 

No Proceedings .  There are no proceedings or investigations pending or, to the knowledge of such Person, threatened against such Person, before any court or Official Body having jurisdiction over it or its properties (A) asserting the invalidity of this Agreement or any of the other Transaction Documents, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the other Transaction Documents, (C) seeking any determination or ruling that would materially and adversely affect the performance by such Person of its obligations under, or the validity or enforceability of, this Agreement or any of the other Transaction Documents, (D) that would have a material adverse effect on the Transferred Receivables, the Transferred Dealer Transaction Rights or other Borrower Collateral or (E) seeking to materially and adversely affect the federal income tax or other federal, state or local tax attributes of the Notes or seeking to impose any excise, franchise, transfer or similar tax upon the Notes or the sale and assignment of the Transferred Receivables, Transferred Dealer Transaction Rights and the other Borrower Collateral hereunder.

 

No Consents .  It is not required to obtain the consent of any other party or any approval, authorization, consent, license, approval or authorization, or registration or declaration with, any Official Body or other Person in connection with the execution, delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party, except such as have been duly made, effected or obtained.

 

Solvency .  It is solvent and will not become insolvent after giving effect to the transactions contemplated by this Agreement and the Transaction Documents.  The Borrower has no Indebtedness to any Person other than pursuant

 

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 to this Agreement and the other Transaction Documents except such Indebtedness to the Seller as has been subordinated to the Borrower’s obligations under this Agreement.  After giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, it will have an adequate amount of capital to conduct its business in the foreseeable future.

 

Tax Treatment .  For federal income tax purposes, the Borrower or Seller will be treated as the owner of the Transferred Receivables, Transferred Dealer Transaction Rights and Other Conveyed Property, the Borrower or the Seller will be treated as the borrower under this Agreement, and the Advances made under this Agreement will be treated as the Indebtedness of the Borrower or the Seller.  For legal purposes, the Seller and the Borrower will treat the purchase or absolute assignment of the Transferred Receivables, Transferred Dealer Transaction Rights and Other Conveyed Property pursuant to the Sale and Servicing Agreement as a purchase or absolute assignment of the relevant Seller’s full right, title and ownership interest in such Transferred Receivables, Transferred Dealer Transaction Rights and Other Conveyed Property.  For avoidance of doubt, CAR may consolidate the Borrower and/or its properties and other assets for accounting purposes.

 

Compliance With Laws .  It has complied and will comply in all material respects with all applicable laws, rules, regulations, judgments, agreements, decrees and orders with respect to its business and properties and all Borrower Collateral.

 

Taxes .  It has filed on a timely basis all tax returns (including, without limitation, foreign, federal, state, local and otherwise) required to be filed, is not liable for taxes payable by any other Person and has paid or made adequate provisions for the payment of all taxes, assessments and other governmental charges due from such Person.  No tax lien or similar adverse claim has been filed, and no claim is being asserted, with respect to any such tax, assessment or other governmental charge.  Any taxes, fees and other governmental charges payable by such Person in connection with the execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated hereby or thereby including the transfer of each Transferred Receivables, each Transferred Dealer Transaction Right and Other Conveyed Property to such Person have been paid or shall have been paid if and when due at or prior to the Effective Date and the relevant Purchase Date, as the case may be.

 

Certificates .  Each Distribution Date Statement, Advance Request and Borrowing Base Confirmation is accurate in all material respects as of the date thereof.

 

No Liens, Etc.   The Borrower Collateral and each part thereof is owned by the Borrower free and clear of any Adverse Claim or restrictions on transferability and the Borrower has the full right, corporate power and lawful authority to assign, transfer and pledge the same and interests therein, and upon the making of each Advance, the Collateral Agent, for the benefit of the Secured Parties, will have acquired a perfected, first priority and valid security interest (except, as to priority, for any Permitted Liens that may arise to the extent granted priority under applicable law) in such Borrower Collateral, free and clear of any Adverse Claim or restrictions on transferability, to the extent (as to perfection and priority) that a security interest in said Borrower Collateral may be perfected under the applicable UCC.  No effective financing statement or other instrument similar in effect covering all or any part of the Borrower Collateral is on file in any recording office, except such as will be released on the Effective Date or as may have been filed in favor of the Collateral Agent as “Secured Party” pursuant hereto or as necessary or advisable to effect the sales contemplated by the Sale and Servicing Agreement.

 

Purchase and Sale .  After giving effect to the making of the Advances and the application of the proceeds thereof on each Purchase Date, the Borrower Collateral will have been purchased by or contributed to the Borrower on such Purchase Date pursuant to the Sale and Servicing Agreement and all amounts owing to the Seller as consideration therefor will be paid in full (other than amounts due under the Promissory Notes).

 

Information True and Complete .  All information heretofore or hereafter furnished by or on behalf of such Person in writing to any Lender, any Agent or the Administrative Agent in connection with this Agreement or any transaction contemplated hereby is and will be true and complete in all material respects and does not and will not omit to state a material fact necessary to make the statements contained therein not misleading.

 

ERISA Compliance .  It has no benefit plans subject to ERISA.

 

Financial or Other Condition .  There has been no material adverse change in its financial condition, business, or results of operations since the date of organization.

 

Investment Company Status .  It is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

 

Eligible Receivables .  All Transferred Receivables included by the Borrower in the Borrowing Base as of the most recently delivered Distribution Date Statement or Borrowing Base Confirmation are Eligible Receivables.

 

Use of Proceeds .  Neither the Borrower, the Seller nor CAR is engaged in the business of extending credit for the purpose of purchasing or CARS Acquisition margin stock (as defined in Regulation U (12 CFR Part 221) of the

 

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Board of Governors of the Federal Reserve System) and none of the proceeds of the Advances will be used, directly or indirectly, for a purpose that violates Regulation T, Regulation U, Regulation X or any other regulation promulgated by the Board of Governors of the Federal Reserve System from time to time.

 

Separate Existence .  The Borrower is operated as an entity with assets and liabilities distinct from those of CCRT, CAR, the Seller and any other Affiliates of the Borrower, the Seller, CCRT or CAR, and the Borrower hereby acknowledges that the Administrative Agent, each of the Agents and each of the Lenders are entering into the transactions contemplated by this Agreement in reliance upon the Borrower’s identity as a separate legal entity from CCRT, CAR, the Seller and each such Affiliate.  Since its formation, the Borrower has been (and will be) operated in such a manner as to comply with the covenants set forth in Section 11.5 .

 

Investments .  The Borrower does not own or hold, directly or indirectly, any capital stock or equity security of, or any equity interest in, any Person, other than, in the case of the Borrower, the Permitted Investments in the Borrower Accounts.

 

Representation and Warranties True and Complete .  Each of the representations and warranties of such Person contained in this Agreement and the other Transaction Documents is true and complete in all material respects and such Person hereby makes each such representation and warranty to, and for the benefit of, the Administrative Agent and the other Secured Parties as if the same were set forth in full herein.

 

Transaction Documents .  The Sale and Servicing Agreement is the only agreement pursuant to which the Borrower purchases and receives contributions of Transferred Dealer Transaction Rights and Transferred Receivables, and the Transaction Documents delivered to the Administrative Agent represent all material agreements between the Seller, on the one hand, and the Borrower, on the other.  It has furnished to the Administrative Agent and each Agent true, correct and complete copies of each Transaction Document to which it is a party, each of which is in full force and effect.  Neither the Borrower, the Seller nor any Affiliate party thereto is in default of any of its obligations thereunder in any material respect.  All such assets are transferred to the Borrower without recourse to the Seller except as described in the Sale and Servicing Agreement.  The purchases of such assets by the Borrower constitute valid and true sales for consideration (and not merely a pledge of such assets for security purposes) and the contributions of such assets received by the Borrower constitute valid and true transfers for consideration, each enforceable against creditors of the Seller, and no such assets shall constitute property of the Seller.

 

Ownership of the Borrower .  One hundred percent (100%) of the outstanding capital stock of the Borrower is and will be directly owned (both beneficially and of record) by CARS Acquisition.  All such stock is and will be validly issued, and there are no options, warrants or other rights to acquire shares or other equity rights in the Borrower.

 

 

BORROWER COVENANTS

 

From the date hereof until the first day following the Facility Termination Date on which all Obligations shall have been finally and fully paid and performed, the Borrower hereby covenants and agrees with the Investors, the Custodian, the Administrative Agent and the Collateral Agent that:

 

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Protection of Security Interest of the Secured Parties .

 

At or prior to the Effective Date, the Borrower shall have filed or caused to be filed a UCC-1 financing statement, naming the Borrower as debtor, naming the Collateral Agent (for the benefit of the Secured Parties) as secured party and describing the Borrower Collateral, with the office of the Secretary of State of the State of Nevada.  From time to time thereafter, the Borrower shall file such financing statements and cause to be executed and filed such continuation statements, all in such a manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Secured Parties under this Agreement in the Borrower Collateral and in the proceeds thereof to the extent a security interest in such Collateral can be perfected by the filing of a financing statement under the UCC.  The Borrower shall deliver (or cause to be delivered) to the Administrative Agent and the Collateral Agent file-stamped copies of, or filing receipts for, any financing statement, statement of continuation or statement of amendment filed as provided above, as soon as available following such filing.  In the event that the Borrower fails to perform its obligations under this subsection, the Collateral Agent at the direction of the Required Lenders may do so, in each case at the expense of the Borrower.

 

The Borrower shall not change its name, identity or corporate structure in any manner that would, make any financing statement or continuation statement filed by the Borrower (or by the Collateral Agent on behalf of the Borrower) in accordance with paragraph (a) above seriously misleading or change its jurisdiction of organization, unless the Borrower shall have given the Collateral Agent at least 30 days prior written notice thereof, and shall promptly file appropriate amendments to all previously filed financing statements and continuation statements.

 

The Borrower shall maintain its computer systems, if any, so that, from and after the time of the first Advance under this Agreement, the Borrower’s master computer records (including archives) that shall refer to the Borrower Collateral indicate clearly that such Borrower Collateral is subject to first priority security interest in favor of the Collateral Agent, for the benefit of the Secured Parties.  Indication of the Collateral Agent’s (for the benefit of the Secured Parties) security interest shall be deleted from or modified on the Borrower’s computer systems when, and only when, the Borrower Collateral in question shall have been paid in full, the security interest under this Agreement has been released in accordance with its terms, with respect to any Transferred Receivables, upon such Transferred Receivables becoming a Repurchased Receivable or otherwise as expressly permitted by the Sale and Servicing Agreement or by this Agreement.  Notwithstanding the foregoing, until the Servicer shall have in effect a new computer system for maintaining records from that in effect on the Initial Closing Date, the covenant set forth in this clause (c) shall not apply.

 

Without limiting any of the other provisions hereof, if at any time the Borrower shall propose to sell, grant a security interest in, or otherwise transfer any interest in motor vehicle receivables or dealer transaction rights to any prospective lender or other transferee, the Borrower shall give to such prospective lender or other transferee computer tapes, records, or print-outs (including any restored from archives) that, if they shall refer in any manner whatsoever to any Borrower Collateral, shall indicate clearly that such Borrower Collateral is subject to a first priority security interest in favor of the Collateral Agent, for the benefit of the Secured Parties.

 

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The Borrower agrees that at any time and from time to time, at its expense, it shall promptly execute and deliver all further instruments and documents, and take all reasonable further action, that may be necessary or desirable or that the Required Lenders may reasonably request to perfect and protect the assignments and security interests granted or purported to be granted by this Agreement or to enable the Collateral Agent or any of the Secured Parties to exercise and enforce its rights and remedies under this Agreement with respect to any Borrower Collateral.  Without limiting the generality of the foregoing, the Borrower shall execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices as may be necessary or desirable or that the Required Lenders may reasonably request to protect and preserve the assignments and security interests granted by this Agreement.  The Borrower shall in no circumstance be required to obtain a security interest in favor of the Borrower or the Collateral Agent in a Financed Vehicle by causing the Borrower’s or the Collateral Agent’s name to be reflected on the Title Document for such Financed Vehicle.  The Borrower is in compliance with this Agreement and the other Transaction Documents in respect of perfection in the Financed Vehicle so long as the Title Documents for the Financed Vehicle reflects that the Seller, the Dealer, a Predecessor in Interest or an initial lender has a security interest in such Financed Vehicle, and the Seller has a blanket or individual power of attorney from the named lienholder authoring the Seller to do all acts necessary to perfect in the Seller’s name any liens or security interests in such Financed Vehicle.

 

The Borrower and each Secured Party hereby severally authorize the Collateral Agent, upon receipt of written direction from the Required Lenders (if the Borrower has failed to fulfill its duties under Section 11.1(e)), to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Borrower Collateral.

 

It shall furnish to the Administrative Agent and the Collateral Agent from time to time such statements and schedules further identifying and describing the Receivables Collateral and such other reports in connection with the Borrower Collateral as the Required Lenders may reasonably request, all in reasonable detail.

 

Other Liens or Interests .  Except for the security interest granted hereunder, the Borrower will not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on the Borrower Collateral or any interest therein (other than Permitted Liens), and the Borrower shall defend the right, title, and interest of the Collateral Agent (for the benefit of the Secured Parties) and the Investors in and to the Borrower Collateral against all claims of third parties claiming through or under the Borrower.

 

Costs and Expenses .  The Borrower shall pay all of its reasonable costs and disbursements in connection with the performance of its obligations hereunder and under the Transaction Documents.

 

Reporting Requirements .  The Borrower shall furnish, or cause to be furnished, to the Administrative Agent:

 

as soon as available and in any event within 120 days (or next succeeding Business Day if the last day of such period is not a Business Day) after the end of each fiscal year, (i) a copy of CCRT and its consolidated subsidiaries’ audited financial statements, certified without qualification by Independent Accountants acceptable to the Required Lenders, and each other report or statement sent to shareholders or publicly filed by CAR, CCRT, the Seller or the Borrower and (ii) a copy of CARS Acquisition and its consolidated subsidiaries’ unaudited financial statements, certified by its chief financial officer; 

 

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as soon as available and in any event within 45 days (or next succeeding Business Day if the last day of such period is not a Business Day) after the end of each of the first three quarters of each fiscal year of CCRT and CARS Acquisition, a consolidated balance sheet of each of CCRT and its consolidated Subsidiaries and CARS Acquisition and its consolidated Subsidiaries as of the end of such quarter and including the prior comparable period, and consolidated statements of income and retained earnings of each of CCRT and its consolidated Subsidiaries and CARS Acquisition and its consolidated Subsidiaries for such quarter and for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified by the chief financial officer or chief accounting officer of CCRT or CARS Acquisition identifying such documents as being the documents described in this paragraph (b) and stating that the information set forth therein fairly presents the financial condition of CCRT or CARS Acquisition and its consolidated Subsidiaries as of and for the periods then ended, subject to year-end adjustments and confirming compliance with all financial covenants applicable to CCRT or CARS Acquisition in the Transaction Documents;

 

as soon as possible and in any event within five days after the occurrence of a Facility Termination Event or Unmatured Facility Termination Event, an Officer’s Certificate of the Borrower or CAR setting forth complete details of such Facility Termination Event or Unmatured Facility Termination Event and the action which the Borrower has taken, is taking and proposes to take with respect thereto; 

 

promptly, from time to time, such other information, documents, records or reports respecting the Transferred Receivables, Transferred Dealer Transaction Rights, the Other Conveyed Property related thereto or the Financed Vehicles related thereto, the other Borrower Collateral or the results of operations or financial condition, of the Borrower or the Seller as any Agent may, from time to time, reasonably request; and

 

notwithstanding the foregoing, with respect to financial statements and materials and reporting requirements pursuant to this Section by CCRT, the timely filing of such materials with the Securities Exchange Commission’s EDGAR system shall constitute delivery thereof pursuant to this Section 11.4. 

 

Separate Existence .

 

The Borrower shall conduct its business solely in its own name through its duly authorized officers or agents so as not to mislead others as to the identity of the entity with which such persons are concerned, and shall use commercially reasonable efforts to avoid the appearance that it is conducting business on behalf of any Affiliate thereof or that the assets of the Borrower are available to pay the creditors of CCRT, CAR or any Affiliate thereof (other than as expressly provided herein).

 

It shall maintain corporate records and books of account separate from those of CCRT, CAR and any other Affiliate thereof.

 

It shall obtain proper authorization for all corporate action requiring such authorization.

 

Other than organizational expenses and as expressly provided herein or in the other Transaction Documents, it shall pay its own operating expenses and liabilities from its own funds.

 

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It will insure that the annual financial statements of CCRT and the financial statements of CAR shall disclose the effects of the transactions contemplated hereby in accordance with GAAP.

 

The resolutions, agreements and other instruments of the Borrower underlying the transactions described in the Transaction Documents shall be continuously maintained by the Borrower as official records of the Borrower.

 

It shall maintain an arm’s-length relationship with CCRT and CAR and its other Affiliates, and shall not hold itself out as being liable for the debts of CCRT and CAR or any of their respective Affiliates.

 

It shall keep its assets and liabilities separate from those of all other entities other than as permitted by the Transaction Documents.

 

The books and records of the Borrower shall be maintained at the address designated herein for receipt of notices, unless the Borrower shall otherwise advise the parties hereto in writing. 

 

It shall not maintain bank accounts or other depository accounts to which any Affiliate is an account party, into which any Affiliate makes deposits or from which any Affiliate has the power to make withdrawals, except as otherwise permitted by the Transaction Documents.

 

It shall insure that any consolidated financial statements of CCRT and the financial statements of CAR have notes to the effect that the Borrower is a separate entity whose creditors have a claim on its assets prior to those assets becoming available to its equity holders.

 

It shall not amend, supplement or otherwise modify (i) its articles of incorporation in any respect that affects its limited purpose or its separateness covenants without the prior written consent of the Required Lenders (which consent shall not be unreasonably withheld) or (ii) its bylaws in any manner that is inconsistent therewith or with its articles of incorporation.

 

Interest Rate Caps .

 

The Borrower hereby covenants and agrees that in the event the one-month LIBOR Rate is greater than *** at any Determination Date, it shall, within two Business Days, obtain and deliver to the Collateral Agent one or more Interest Rate Caps from qualified Cap Providers in favor of the Collateral Agent for the benefit of the Secured Parties having, singly or in the aggregate, an Aggregate Interest Rate Caps Notional Amount not less than the Required Interest Rate Caps Notional Amount, provided that each Interest Rate Cap (1) shall have an initial notional principal amount equal to or greater than $1,000,000, (2) may provide for reductions of the Aggregate Interest Rate Caps Notional Amount on each Distribution Date on an amortization schedule for such Aggregate Interest Rate Caps Notional Amount assuming zero losses and (x) a 0.5 ABS prepayment speed until the pool factor reaches 10% and (y) a 0.0 ABS prepayment speed thereafter, and (3) shall have other terms and conditions and be represented by Cap Agreements otherwise acceptable to the Required Lenders and the Rating Agencies.  The Borrower agrees that each Interest Rate Cap shall provide that payments by the Cap Provider shall be made to the Collateral Agent and that such payments shall be deposited into the Collection Account.

 

On any Determination Date on which the Minimum Liquidity Amount Test has not been satisfied, the Borrower shall be required to deposit an amount equal to the Cap Funding Reserve Account Requirement into the Cap Funding Reserve Account on the related Date; provided, however, that if the Minimum Liquidity Amount Test is subsequently satisfied on any Determination Date following the Determination Date on which the Minimum Liquidity Amount Test failed to be satisfied, all funds then on deposit in the Cap Funding Reserve Account shall be released to the Borrower on such Determination Date; provided further , that if the Cap Funding Reserve Account Requirement shall increase on any applicable Determination Date as a result of an increase in the estimated cost of purchasing Interest Rate Caps from qualified Cap Providers, the Borrower shall be required to deposit an amount equal to such additional cost into the Cap Funding Reserve Account on the related Distribution Date; provided further , that if the Cap Funding Reserve Account Requirement shall decrease on any applicable Determination Date as a result of a decrease in the estimated cost of purchasing Interest Rate Caps from qualified Cap Providers, the excess of the amount on deposit in the Cap Funding Reserve Account over the adjusted Cap Funding Reserve Account Requirement shall be withdrawn from the Cap

 

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Funding Reserve Account and released to the Borrower on such Determination Date.  As specified in Section 11.6(a)  above, in the event the one-month LIBOR Rate is greater than 6.00% at any Determination Date, the Borrower may use the funds in the Cap Funding Reserve Account to purchase one or more Interest Rate Caps.  If the Borrower defaults on its obligations under Section 11.6(a) , the Administrative Agent, at the direction of the Required Lenders, may use the funds in the Cap Funding Reserve Account to purchase the Interest Rate Caps; provided, however , that such action by the Administrative Agent shall not release the Borrower from its obligations under this Section 11.6 ; provided further , that the Servicer shall provide the Administrative Agent with all information necessary to purchase such Interest Rate Caps; provided further , that if the amount on deposit in the Cap Funding Reserve Account is insufficient to purchase any required Interest Rate Caps, the Borrower shall be responsible for any such shortfall; provided further , that if the Borrower defaults on its obligation with respect to such Cap Funding Reserve Account shortfall, the Administrative Agent shall follow the instructions provided by the Required Lenders with respect to the satisfaction of any such shortfall or the purchase of any Interest Rate Caps.  Funds retained in the Cap Funding Reserve Account following application as set forth above shall be invested at the direction of the Servicer in Permitted Investments with maturities not later than the next succeeding Business Day.  Any earnings on such invested funds shall be applied pursuant to Section 9.1 .

 

In the event that any Cap Provider defaults in its obligation to make a payment to the Collateral Agent under one or more Cap Agreements on any date on which payments are due pursuant to a Cap Agreement, the Collateral Agent shall make a demand on such Cap Provider, or any guarantor, if applicable, demanding payment by 12:30 p.m., New York City time, on such date.  The Collateral Agent shall give notice to the Lenders and the Rating Agencies upon the continuing failure by any Cap Provider to perform its obligations within two Business Days following a demand made by the Collateral Agent on such Cap Provider, and shall take such action with respect to such continuing failure as may be directed in writing by the Required Lenders.

 

In the event that any Cap Provider no longer maintains the ratings specified in the definition of “Cap Provider,” then within 30 days after receiving notice of such decline in the creditworthiness of such Cap Provider as determined by any Rating Agency, either (x) such Cap Provider, upon the receipt of the consent of the Required Lenders, will enter into an arrangement the purpose of which shall be to assure performance by the Cap Provider of its obligations under the Interest Rate Cap; or (y) the Borrower shall at its option either (i) upon the receipt of the consent of the Required Lenders, cause such Cap Provider to pledge securities in the manner provided by applicable law which shall be held by the Collateral Agent free and clear of the Lien of any third party, in a manner conferring on the Collateral Agent a perfected first Lien in such securities securing such Cap Provider’s performance of its obligations under the applicable Interest Rate Cap, (ii) provided that a Replacement Interest Rate Cap or Qualified Substitute Arrangement meeting the requirements of Section 11.6(e)  has been obtained, (A) provide written notice to such Cap Provider (with a copy to the Administrative Agent and the Collateral Agent) of its intention to terminate the applicable Interest Rate Cap within such 30-day period and (B) terminate the applicable Interest Rate Cap within such 30-day period, request the payment to it of all amounts due to the Collateral Agent under the applicable Interest Rate Cap through the termination date and deposit any such amounts so received, on the day of receipt, to the Collection Account, or (iii) establish any other arrangement (including an arrangement or arrangements in addition to or in substitution for any prior arrangement made in accordance with the provisions of this Section 11.6(d) ) which are reasonably satisfactory to the Required Lenders (a “ Qualified Substitute Arrangement ”); provided , however , that in the event at any time any alternative arrangement established pursuant to clause (x) or (y)(i) or (y)(iii) above shall cease to be satisfactory to the Required Lenders, then the provisions of this Section 11.6(d)  shall again be applied and in connection therewith the 30-day period referred to above shall commence on the date the Borrower receives notice of such cessation or termination, as the case may be.

 

Unless an alternative arrangement pursuant to clause (x) or (y)(i) or (y)(iii) of Section 11.6(d)  is being established, the Borrower shall use reasonable efforts to obtain a Replacement Interest Rate Cap or Qualified Substitute Arrangement meeting the requirements of this Section 11.6(e)  during the 30-day period referred to in Section 11.6(d) .  Neither the Borrower nor the Collateral Agent shall terminate the Interest Rate Cap unless, prior to the expiration of the 30-day period referred to in said Section 11.6(d) , the Borrower delivers to the Collateral Agent (i) a Replacement Interest Rate Cap or Qualified Substitute Arrangement, (ii) to the extent applicable, an Opinion of Counsel as to the due authorization, execution and delivery and validity and enforceability of such Replacement Interest Rate Cap or Qualified Substitute Arrangement, as the case may be, and (iii) evidence that the Required Lenders have consented to the termination of the Interest Rate Cap and its replacement with such Replacement Interest Rate Cap or Qualified Substitute Arrangement.

 

The Servicer or the Borrower shall notify in writing the Administrative Agent and the Collateral Agent within five Business Days after obtaining actual knowledge that the senior unsecured debt rating of the Cap Provider has been withdrawn or reduced by any Rating Agency.

 

Notwithstanding the foregoing, the Borrower may at any time obtain a Replacement Interest Rate Cap, provided that the Borrower delivers to the Collateral Agent evidence of the receipt of the consent of the Required Lenders to the termination of the then-current Interest Rate Cap and its replacement with such Replacement Interest Rate Cap.

 

The Borrower shall not agree to any amendment to any Interest Rate Cap unless the Borrower shall have received evidence of the consent of the Required Lenders to such amendment to such Interest Rate Cap (which consent will not be unreasonably withheld or delayed).

 

The Borrower shall notify the Lenders and the Collateral Agent after obtaining actual knowledge of the transfer by the related Cap Provider of any Interest Rate Cap, or any interest or obligation thereunder.

 

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The Collateral Agent, upon written direction from the Borrower and the Required Lenders, shall sell all or a portion of the Interest Rate Caps subject to the following conditions having been met:

 

(x)                                    the Aggregate Interest Rate Caps Notional Amount after giving effect to such sale shall equal or exceed the Required Interest Rate Caps Notional Amount as of the date of such sale after giving effect to all payments and allocations made pursuant to this Agreement; and

 

(y)                                  the minimum notional amount denomination of any Interest Rate Cap to be sold is $1,000,000.

 

The Borrower shall have the duty of obtaining a fair market value price for the sale of the Collateral Agent’s rights under any Interest Rate Cap, notifying the Collateral Agent of prospective purchasers and bids, and selecting the purchaser of such Interest Rate Cap.  The Collateral Agent upon receipt of the purchase price in the Collection Account shall execute all documentation prepared by the Borrower necessary to effect the transfer of the Collateral Agent’s rights under such Interest Rate Cap and to release the Lien of the Collateral Agent on such Interest Rate Cap and proceeds thereof.

 

Tangible Net Worth .  The Borrower shall maintain at all times a positive Tangible Net Worth.

 

Stock, Merger, Consolidation, Etc.   The Borrower shall not merge or consolidate with any other Person or permit any other Person to become the successor to all or substantially all of its business or assets without the prior written consent of the Required Lenders.

 

Change in Name .  It shall not make any change to its name or use any trade names, fictitious names, assumed names or “doing business as” names.

 

Indebtedness; Guarantees .  The Borrower shall not create, incur, assume or suffer to exist any Indebtedness other than Indebtedness permitted under the Transaction Documents.  The Borrower shall incur no additional borrowed money indebtedness secured by the Borrower Collateral other than the Advances.  The Borrower shall not assume, guarantee, endorse or otherwise be or become directly or contingently liable for the obligations of any Person by, among other things, agreeing to purchase any obligation of another Person, agreeing to advance funds to such Person or causing or assisting such Person to maintain any amount of capital.

 

Limitation on Transactions with Affiliates .  The Borrower shall not enter into, or be a party to any transaction with any Affiliate of the Borrower, except for (a) the transactions contemplated by the Transaction Documents and (b) to the extent not otherwise prohibited under this Agreement, other transactions upon fair and reasonable terms materially no less favorable to the Borrower than would be obtained in a comparable arm’s-length transaction with a Person not an Affiliate.

 

Documents .  Except as otherwise expressly permitted herein (including, without limitation, in Section 11.6 regarding Interest Rate Caps), it shall not cancel or terminate any of the Transaction Documents to which it is party (in any capacity), or consent to or accept any cancellation or termination of any of such agreements, or amend or otherwise modify any term or condition of any of the Transaction Documents to which it is party (in any capacity) or give any consent, waiver or approval under any such agreement, or waive any default under or breach of any of the Transaction Documents to which it is party (in any capacity) or take any other action under any such agreement not required by the terms thereof, unless (in each case) the Required Lenders shall have consented thereto (which consent shall not unreasonably be withheld to the extent set forth in such Transaction Document).

 

Preservation of Existence .  It shall observe all procedures required by its organizational documents and preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its formation and qualify and remain qualified in good standing in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualifications would materially adversely affect (1) the interests hereunder of the Required Lenders or any Secured Party, (2) the collectibility of any Transferred Receivables or Transferred Dealer Transaction Right or (3) its ability to perform its obligations hereunder or under any of the other Transaction Documents.

 

Accounting Treatm