Exhibit 10.1

 

CALIFORNIA REPUBLIC AUTO RECEIVABLES TRUST 2018-1,
as Issuer,
 
CALIFORNIA REPUBLIC FUNDING, LLC,
as Depositor,
 
MECHANICS BANK,
as Seller, Servicer, Administrator and Custodian,
 
and
 
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
 
____________________________________
 
SALE AND SERVICING AGREEMENT

Dated as of June 1, 2018
 
____________________________________
 

 

--------------------------------------------------------------------------------

 
TABLE OF CONTENTS
 
Page
 
ARTICLE ONE
DEFINITIONS
Section 1.01.
Capitalized Terms; Rules of Usage
1
Section 1.02.
Calculations of Interest
1
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; BOOKS AND RECORDS;
PROVISIONS FOR CLOSING
Section 2.01.
Conveyance of the Receivables
2
Section 2.02.
Ownership and Possession of Receivable Files
2
Section 2.03.
Books and Records; Intention of the Parties
2
ARTICLE THREE
THE CONVEYED ASSETS
Section 3.01.
Representations and Warranties of the Seller; Assignment of Representations and
Warranties by the Depositor
4
Section 3.02.
Representations and Warranties of the Depositor
4
Section 3.03.
Repurchase of Receivables Upon Breach
5
Section 3.04.
Dispute Resolution
6
Section 3.05.
Appointment of Custodian; Custody and Delivery of Receivable Files
9
Section 3.06.
Duties of Servicer as Custodian
9
Section 3.07.
Instructions; Authority to Act
10
Section 3.08.
Custodian’s Indemnification
11
Section 3.09.
Effective Period and Termination
11
Section 3.10.
Risk Retention
11
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01.
Duties of Servicer
12
Section 4.02.
Collection of Payments on Receivables; Receivable Modifications
13
Section 4.03.
Realization upon Receivables
14
Section 4.04.
Physical Damage Insurance
15
Section 4.05.
Maintenance of Security Interests in Financed Vehicles; Other Amounts
15

i

--------------------------------------------------------------------------------

 
Page
 
Section 4.06.
Covenants of Servicer
15
Section 4.07.
Purchase of Receivables by Servicer upon Breach of Covenant
16
Section 4.08.
Servicing Fee
16
Section 4.09.
Monthly Reports
17
Section 4.10.
Annual Statement as to Compliance; Notice of Servicer Termination Event
17
Section 4.11.
Annual Independent Accountants’ Report; Attestation and Assessment of Compliance
18
Section 4.12.
Access to Certain Documentation and Information Regarding Receivables
19
Section 4.13.
Access to Information Regarding Issuer and Basic Documents
19
Section 4.14.
Agreement on Compliance
19
Section 4.15.
Compliance with the FDIC Rule
20
Section 4.16.
Duties of a Backup Servicer
20
Section 4.17.
Exchange Act Reporting
20
Section 4.18.
Indemnification
23
Section 4.19.
Back-up Sarbanes-Oxley Certification
23
ARTICLE FIVE
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01.
Establishment of Trust Accounts
24
Section 5.02.
Collections; Monthly Remittance Condition
26
Section 5.03.
Application of Collections
26
Section 5.04.
Distributions
26
Section 5.05.
Additional Deposits and Payments; Reserve Account
28
Section 5.06.
Statements to Noteholders and the Indenture Trustee
29
Section 5.07.
Advances by the Servicer
31
ARTICLE SIX
THE DEPOSITOR
Section 6.01.
Representations and Warranties of the Depositor
32
Section 6.02.
Entities’ Existence
33
Section 6.03.
Limitation on Liability of Depositor and Others
34
Section 6.04.
Depositor May Own Securities
34
ARTICLE SEVEN
THE SERVICER AND THE BACKUP SERVICER
Section 7.01.
Representations and Warranties of  the Servicer
34
Section 7.02.
Appointment and Representations and Warranties of Backup Servicer
35

ii

--------------------------------------------------------------------------------

 
Page
 
Section 7.03.
Indemnities of Servicer
37
Section 7.04.
Merger or Consolidation of, or Assumption of the Obligations of, Servicer or
Backup Servicer
38
Section 7.05.
Limitation on Liability of Servicer, Backup Servicer and Others
39
Section 7.06.
Appointment of Subservicer
40
Section 7.07.
Servicer and Backup Servicer Not to Resign
40
Section 7.08.
Mechanics Bank May Own Securities
41
Section 7.09.
Regulation RR Risk Retention
41
ARTICLE EIGHT
DEFAULT
Section 8.01.
Servicer Termination Events
42
Section 8.02.
Consequences of a Servicer Termination Event
42
Section 8.03.
Appointment of Successor Servicer
43
Section 8.04.
Notification to Noteholders
44
Section 8.05.
Waiver of Past Servicer Termination Events
44
ARTICLE NINE
TERMINATION
Section 9.01.
Optional Purchase of All Receivables
45
Section 9.02.
Termination
46
ARTICLE TEN
MISCELLANEOUS
Section 10.01.
Amendment
47
Section 10.02.
Protection of Title to Issuer
48
Section 10.03.
Notices
49
Section 10.04.
Assignment by the Depositor or the Servicer
51
Section 10.05.
Limitations on Rights of Others
51
Section 10.06.
Severability
51
Section 10.07.
Counterparts
52
Section 10.08.
Table of Contents and Headings
52
Section 10.09.
GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
52
Section 10.10.
No Partnership or Joint Venture
52
Section 10.11.
Confidential Information
52
Section 10.12.
Nonpetition Covenant
53
Section 10.13.
Limitation of Liability of Trustees
53

 
iii

--------------------------------------------------------------------------------

EXHIBITS
     
Exhibit A –
Location of Receivable Files
A-1
Exhibit B –
Form of Servicer’s Monthly Certificate Pursuant to Section 4.09(a) of the Sale
and Servicing Agreement
B-1
     
Exhibit C –
Form of Servicer’s Annual Certification Pursuant to Section 4.10 of the Sale And
Servicing Agreement
C-1
     
Exhibit D –
Form of Servicer’s Sarbanes-Oxley Act Certification
D-1
Exhibit E –
Backup Servicer Duties
E-1
     
SCHEDULES
     
Schedule A –
Schedule of Receivables
SA-1
Schedule B –
Form 10-D Disclosure Items
SB-1
     
APPENDICES
     
Appendix A –
Usage and Definitions
AA-1

iv

--------------------------------------------------------------------------------

This SALE AND SERVICING AGREEMENT, dated as of June 1, 2018 (as amended,
restated, supplemented or otherwise modified from time to time, this
“Agreement”), is among CALIFORNIA REPUBLIC AUTO RECEIVABLES TRUST 2018-1, a
Delaware statutory trust (the “Issuer”), CALIFORNIA REPUBLIC FUNDING, LLC, a
Delaware limited liability company (the “Depositor”), MECHANICS BANK, a
California corporation authorized to transact a banking business (“Mechanics
Bank”), as servicer (in such capacity, the “Servicer”), as seller (in such
capacity, the “Seller”), as administrator (in such capacity, the
“Administrator”), and as custodian (in such capacity, the “Custodian”), and U.S.
BANK NATIONAL ASSOCIATION, a national banking association, as indenture trustee
(the “Indenture Trustee”).
 
WHEREAS, the Issuer desires to purchase from the Depositor a portfolio of motor
vehicle retail installment sale contracts and installment loans and related
rights;
 
WHEREAS, the Depositor is willing to sell to the Issuer such motor vehicle
retail installment sale contracts and installment loans described in the
preceding paragraph; and
 
WHEREAS, Mechanics Bank, as Servicer, is willing to service such motor vehicle
retail installment sale contracts and installment loans pursuant to the terms
hereof.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
 
ARTICLE ONE

DEFINITIONS
 
Section 1.01.  Capitalized Terms; Rules of Usage.  Capitalized terms used herein
that are not otherwise defined shall have the meanings ascribed thereto in
Appendix A.  Appendix A also contains rules as to usage applicable to this
Agreement.
 
Section 1.02.  Calculations of Interest.  Collections of interest on the
Receivables will be calculated in accordance with the Simple Interest Method.
 

--------------------------------------------------------------------------------

ARTICLE TWO

CONVEYANCE OF RECEIVABLES; BOOKS AND RECORDS;
PROVISIONS FOR CLOSING
 
Section 2.01.  Conveyance of the Receivables.
 
(a)            In consideration for the Issuer’s delivery to or upon the order
of the Depositor on the Closing Date of the Notes and the Certificates resulting
in an increase in the residual value of the equity interest in the Issuer owned
by the Depositor, the Depositor does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse, but subject to the other terms
and conditions of this Agreement, each and all of the following (collectively,
the “Depositor Conveyed Assets”):
 
(i)            all right, title and interest of the Depositor in and to the
Conveyed Assets; 
 
(ii)            all of the Depositor’s rights under the Receivables Purchase
Agreement, including the representations of the Seller made therein and the
Depositor’s right to enforce a breach of any such representation made with
respect to any Conveyed Assets; and
 
(iii)            all proceeds of the foregoing.
 
(b)            As of the Closing Date, the Issuer acknowledges the conveyance to
it of the Depositor Conveyed Assets transferred to it, including all right,
title and interest of the Depositor in and to the Depositor Conveyed Assets,
receipt of which is hereby acknowledged by the Issuer.  Concurrent with such
delivery, pursuant to the Indenture, the Issuer pledges and/or assigns the
Depositor Conveyed Assets and the other Collateral to the Indenture Trustee as
security for the Notes.
 
Section 2.02.  Ownership and Possession of Receivable Files.  The ownership of
the contents of the Receivable Files shall be vested in the Issuer and pledged
to the Indenture Trustee for the benefit of the Noteholders pursuant to the
Indenture, as of the Closing Date, although possession of the Receivable Files
on behalf of and for the benefit of the Noteholders shall remain with the
Custodian.
 
Section 2.03.  Books and Records; Intention of the Parties.
 
(a)            The books and records for each Receivable have been clearly
marked to reflect, as of the Closing Date, (i) the ownership of each Receivable
by the Issuer and (ii) the pledge of the each Receivable by the Issuer to the
Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture.
 
(b)            It is the intention of the parties hereto that, for non-tax
purposes, the transfer and assignment of the Depositor Conveyed Assets and the
other Collateral on the Closing Date constitutes an absolute sale (and not a
pledge to secure debt or other obligations of the Depositor)
2

--------------------------------------------------------------------------------

of the Depositor Conveyed Assets and the other Collateral such that (i) the
Depositor Conveyed Assets and the other Collateral shall not be included in the
bankruptcy estate of the Depositor pursuant to 11 U.S.C. § 541, (ii) the FDIC
shall not, by exercise of its authority to disaffirm or repudiate contracts
under Section 13(e) of the Federal Deposit Insurance Act, reclaim, recover or
recharacterize as property of the Seller any Depositor Conveyed Assets or any
other Collateral transferred by the Seller to the Depositor or disregard the
separateness of the Depositor or the Issuer from the Seller and (iii) the
transfer of Depositor Conveyed Assets and the other Collateral pursuant to this
Agreement shall comply with the requirements of 12 C.F.R. Section 360.6.
 
(c)            If any of the assignments and transfers of the Conveyed Assets to
the Depositor pursuant to the Receivables Purchase Agreement and of the
Depositor Conveyed Assets to the Issuer pursuant to this Agreement, for non-tax
purposes, is held or deemed not to be a sale or is held or deemed to be a pledge
of security for a loan, the parties hereto intend that the rights and
obligations of the parties shall be established pursuant to the terms of the
Receivables Purchase Agreement and this Agreement, and that, in such event, with
respect to such property and proceeds thereof (including all Receivables and
related property), the Seller and the Depositor shall be deemed to have granted
and do hereby grant to the Issuer as of the Closing Date, a first priority
security interest in the entire right, title and interest of such Person in and
to such property and the proceeds thereof.  In such event, with respect to the
Conveyed Assets and the Depositor Conveyed Assets, respectively, the Receivables
Purchase Agreement and this Agreement, shall each constitute, and each hereby is
deemed by the parties to be, a security agreement under the New York UCC.
 
(d)            The sales, transfers, assignments, set overs and conveyances of
the Depositor Conveyed Assets made under this Article shall not constitute, and
are not intended to result in, an assumption by the Issuer of any obligation of
the Depositor or the Seller to the Obligors or any other Person in connection
with the Receivables and the other Depositor Conveyed Assets or any obligation
of the Depositor or the Seller under any agreement, document or instrument
related thereto.
 
(e)            The parties hereto intend to treat the Notes as indebtedness
secured by the Collateral for federal, State and local income, single business
and franchise tax purposes as provided for in Section 2.09(a) of the Indenture.
 
3

--------------------------------------------------------------------------------

ARTICLE THREE

THE CONVEYED ASSETS
 
Section 3.01.  Representations and Warranties of the Seller; Assignment of
Representations and Warranties by the Depositor.
 
(a)            The Seller hereby makes to the Issuer each of the representations
and warranties set forth in Sections 3.02 and 3.03 of the Receivables Purchase
Agreement as of the dates specified therein and consents to the assignment by
the Depositor to the Issuer of such representations and warranties and of the
Depositor’s rights with respect to any breach thereof, including the right to
require the Seller to repurchase Receivables in accordance with the Receivables
Purchase Agreement.  Such representations and warranties speak as of the
execution and delivery of this Agreement or as of such other date specified
therein and shall survive the sale, transfer and assignment of the Receivables
to the Issuer and the pledge and/or assignment, as the case may be, of the
Receivables to the Indenture Trustee.
 
(b)            Pursuant to Section 2.01, the Depositor has sold, assigned,
transferred and conveyed to the Issuer all of its rights under the Receivables
Purchase Agreement, including the representations, warranties and covenants of
the Seller.  Each of the Depositor and the Seller acknowledges that the Issuer
is relying on such representations and warranties in accepting the Depositor
Conveyed Assets, together with all rights of the Depositor with respect to any
breach thereof, including the right to require the Seller to repurchase the
Receivables in accordance with the Receivables Purchase Agreement.  It is
understood and agreed that the representations and warranties referred to in
this Section shall survive the sale of the Conveyed Assets to the Issuer and the
delivery thereof to the Custodian.
 
(c)            The Seller acknowledges the assignment of the Conveyed Assets
from the Depositor to the Issuer and Indenture Trustee and hereby agrees that
the Issuer and Indenture Trustee shall have the right to enforce any and all
rights under the Receivables Purchase Agreement assigned to the Issuer herein,
including the right to cause the Seller to repurchase any Receivable with
respect to which it is in breach of any of its representations and warranties
set forth in Section 3.03 of the Receivables Purchase Agreement and
Section 3.01(a).  Such right may be enforced by the Issuer and the Indenture
Trustee directly against the Seller as though the Issuer and the Indenture
Trustee were each a party to the Receivables Purchase Agreement, and the Issuer
and the Indenture Trustee shall not be obligated to exercise any such rights,
and shall have no liability for failing to exercise any such rights, indirectly
through the Depositor.
 
Section 3.02.  Representations and Warranties of the Depositor.  The Depositor
represents and warrants with respect to the Receivables being conveyed by it to
the Issuer, on which the Issuer relies in accepting such Receivables:
 
(a)            This Agreement creates a valid and continuing security interest
(as defined in the applicable UCC) in the Receivables in favor of the Issuer,
which security interest is prior to all other Liens, and is enforceable as such
against creditors of and purchasers from the Depositor.
4

--------------------------------------------------------------------------------

 
(b)            The Depositor has taken all steps necessary to perfect its
security interest against the Obligors in the Financed Vehicles.
 
(c)            The Receivables constitute “tangible chattel paper” or
“electronic chattel paper” under the applicable UCC.
 
(d)            The Depositor owns and has good and marketable title to the
Receivables free and clear of any Lien, claim or encumbrance of any Person.
 
(e)            The Depositor has received a written acknowledgment from the
Servicer that the Servicer is holding the loan agreements and installment sale
contracts that constitute or evidence the Receivables solely on behalf and for
the benefit of the Issuer.
 
(f)            Other than the security interest granted by the Depositor
pursuant to this Agreement, the Depositor has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Receivables. 
The Depositor has not authorized the filing of and is not aware of any financing
statements against the Depositor that include a description of collateral
covering the Receivables other than any financing statement relating to the
security interest granted to the Issuer hereunder or that has been terminated. 
The Depositor is not aware of any judgment or tax lien filings against the
Depositor.
 
(g)            None of the installment sale contracts that constitute or
evidence the Receivables has any marks or notations indicating that they have
been pledged, assigned, or otherwise conveyed by the Depositor to any Person
other than the Purchaser.
 
Notwithstanding the foregoing, so long as Standard & Poor’s is a Rating Agency,
the representations and warranties set forth in this Section (i) may not be
waived and (ii) will survive the termination of this Agreement until the
Indenture has been discharged.
 
Section 3.03.  Repurchase of Receivables Upon Breach.
 
(a)            Investigation of Breach.  If a Responsible Officer of the either
the Seller or the Depositor (i) has knowledge of a breach of a representation or
warranty made in Section 3.03 of the Receivables Purchase Agreement or Section
3.02 of this Agreement, (ii) receives notice from the Issuer, the Owner Trustee
or the Indenture Trustee of a breach of a representation or warranty made in
Section 3.03 of the Receivables Purchase Agreement or Section 3.02 of this
Agreement, (iii) receives a Repurchase Request from the Owner Trustee, a Note
Owner, a Noteholder or the Indenture Trustee for a Receivable or (iv) receives a
Review Report that indicates a Test Fail for a Receivable, then, in each case,
the Seller or the Depositor will investigate the Receivable to confirm the
breach and determine if the breach has a material adverse effect on the
Receivable.  None of the Servicer, the Issuer, the Owner Trustee, the Indenture
Trustee, the Administrator or the Asset Representations Reviewer will have an
obligation to investigate whether a breach of any representation or warranty has
occurred or whether any Receivable is required to be repurchased under this
Section.
5

--------------------------------------------------------------------------------

 
(b)            Repurchase of Receivables; Payment of Purchase Price.  Either of
the Seller or the Depositor may, and if the breach has a material adverse effect
on the Receivable will, repurchase the Receivable described in Section 3.03(a)
by paying the Purchase Price to the Issuer on the Business Day before the
Payment Date (or, with satisfaction of the Rating Agency Condition, on the
Payment Date) related to the Collection Period in which the Seller or the
Depositor, as applicable, has knowledge or was notified of and confirmed the
breach or, at the Seller’s or Depositor’s option, as applicable, on the
following Payment Date, unless the breach is cured in all material respects
before that Payment Date.
 
(c)            Sale and Assignment of Repurchased Receivable.  When the Purchase
Price is included in Available Collections for a Payment Date, the Issuer will,
without further action, be deemed to have sold and assigned to the Depositor,
effective as of the last day of the Collection Period before the related
Collection Period, all of the Issuer’s right, title and interest in the
Receivable repurchased by the Depositor under this Section and all security and
documents relating to the Receivable.  The sale will not require any action by
the Issuer and will be without recourse, representation or warranty by the
Issuer except the representation that the Issuer owns the Receivable free and
clear of any Lien, other than Permitted Liens.  On the sale, the Servicer will
mark its receivables systems to indicate that the receivable is no longer a
Receivable and may take any action necessary or advisable to evidence the sale
of the receivable, free from any Lien of the Issuer or the Indenture Trustee.
 
(d)            Repurchase Sole Remedy.  The sole remedy of the Issuer, the
Indenture Trustee, the Note Owners or the Noteholders with respect to a breach
of a representation or warranty referred to in Section 3.01(a) with respect to a
breach of a representation or warranty contained in Section 3.03 of the
Receivables Purchase Agreement, provided neither such breach has been cured
pursuant to Section 3.03(b), shall be to require the Seller or the Depositor to
purchase such Receivable pursuant to this Section (it being understood that the
indemnification covenants of the Seller hereunder and under the other Basic
Documents shall still apply notwithstanding this subclause).
 
Section 3.04.  Dispute Resolution.
 
(a)            Referral to Dispute Resolution.  If any Requesting Party makes a
Repurchase Request, and the Repurchase Request has not been fulfilled or
otherwise resolved to the reasonable satisfaction of the Requesting Party within
180 days of the receipt of notice of the Repurchase Request by the Depositor or
the Seller, the Requesting Party may refer the matter, in its discretion, to
either mediation (including non-binding arbitration) or binding third-party
arbitration; provided, however, that if the Indenture Trustee is the Requesting
Party, the directing Noteholder or Note Owner shall determine the referral to
such mediation or arbitration.  The Requesting Party must start the mediation or
arbitration proceeding according to the ADR Rules of the ADR Organization within
90 days after the end of such 180-day period.  The Depositor and the Seller
agree to participate in the dispute resolution method selected by the Requesting
Party.  For the avoidance of doubt, the Indenture Trustee shall be under no
obligation under any other Basic Document or otherwise to monitor repurchase
activity or to independently determine which Repurchase Requests remain
unresolved after 180 days.
6

--------------------------------------------------------------------------------

 
(b)            Mediation.  If the Requesting Party selects mediation (including
non-binding arbitration) for dispute resolution:
 
(i)            The mediation will be administered by the ADR Organization using
its ADR Rules.  If, however, any ADR Rules are inconsistent with the procedures
for mediation stated in this Section, the procedures in this Section will
control.
 
(ii)            A single mediator will be selected by the ADR Organization from
a list of neutrals maintained by it according to the ADR Rules.  The mediator
must be impartial, an attorney admitted to practice in the State of New York and
have at least 15 years of experience in commercial litigation and, if possible,
consumer finance or asset-backed securitization matters.
 
(iii)            The mediation will start within 15 days after the selection of
the mediator and conclude within 30 days after the start of the mediation.
 
(iv)            Expenses of the mediation will be allocated to the parties as
mutually agreed by them as part of the mediation.
 
(v)            If the parties fail to agree at the completion of the mediation,
the Requesting Party may refer the Repurchase Request to arbitration under this
Section.
 
(c)            Arbitration.  If the Requesting Party selects arbitration for
dispute resolution:
 
(i)            The arbitration will be administered by the ADR Organization
using its ADR Rules.  If, however, any ADR Rules are inconsistent with the
procedures for arbitration stated in this Section, the procedures in this
Section will control.
 
(ii)            A single arbitrator will be selected by the ADR Organization
from a list of neutrals maintained by it according to the ADR Rules.  The
arbitrator must be impartial, an attorney admitted to practice in the State of
New York and have at least 15 years of experience in commercial litigation and,
if possible, consumer finance or asset-backed securitization matters.  The
arbitrator will be independent and impartial and will comply with the Code of
Ethics for Arbitrators in Commercial Disputes in effect at the time of the
arbitration.  Before accepting an appointment, the arbitrator must promptly
disclose any circumstances likely to create a reasonable inference of bias or
conflict of interest or likely to preclude completion of the proceedings within
the stated time schedule.   The arbitrator may be removed by the ADR
Organization for cause consisting of actual bias, conflict of interest or other
serious potential for conflict.
 
(iii)            The arbitrator will have the authority to schedule, hear and
determine any motions, including dispositive and discovery motions, according to
New York law, and will do so at the motion of any party.  Discovery will be
completed with 30 days of selection of the arbitrator and will be limited for
each party to two witness depositions not to exceed five hours, two
interrogatories, one document request and one request for admissions.  The
arbitrator may, however, grant additional discovery on a showing of good cause
that the additional discovery is reasonable and necessary.  Briefs may not
exceed ten pages, and will be limited to
7

--------------------------------------------------------------------------------

initial statements of the case, discovery motions and a pre-hearing brief.  The
evidentiary hearing on the merits will start no later than 60 days after
selection of the arbitrator and will proceed for no more than six consecutive
Business Days with equal time allocated to each party for the presentation of
direct evidence and cross examination.  The arbitrator may allow additional time
for discovery and hearings on a showing of good cause or due to unavoidable
delays.
 
(iv)            The arbitrator will make its final determination in writing no
later than 90 days after its selection.  The arbitrator will resolve the dispute
according to the terms of this Agreement and the other Basic Documents, and may
not in any way modify or change this Agreement or any other Basic Document.  The
arbitrator will not have the power to award punitive damages or consequential
damages in any arbitration.  In its final determination, the arbitrator will
determine and award the expenses of the arbitration (including filing fees, the
fees of the arbitrator, expenses of any record or transcript of the arbitration
and administrative fees) to the parties in its reasonable discretion.  Under no
circumstances will the Indenture Trustee be liable for any costs, expenses
and/or liabilities that could be allocated to the Requesting Party in any
dispute resolution proceeding.  The determination of the arbitrator will be in
writing and counterpart copies will be promptly delivered to the parties.  The
determination will be final and non-appealable, except for actions to confirm or
vacate the determination permitted under federal or State law, and may be
entered and enforced in any court of competent jurisdiction.
 
(v)            By selecting arbitration, the Requesting Party is giving up the
right to sue in court, including the right to a trial by jury.
 
(vi)            The Requesting Party may not bring a putative or certificated
class action to arbitration.  If this waiver of class action rights is found to
be unenforceable for any reason, the Requesting Party agrees that it will bring
its claims in a court of competent jurisdiction.
 
(d)            Additional Conditions.  For each mediation or arbitration:
 
(i)            The mediation or arbitration will be held in New York, New York
at the offices of the mediator or arbitrator or at another location selected by
the Depositor or the Seller.  Any party or witness may participate by
teleconference or video conference.
 
(ii)            The Depositor, the Seller and the Requesting Party will have the
right to seek provisional relief from a competent court of law, including a
temporary restraining order, preliminary injunction or attachment order, if such
relief is available by law.
 
(iii)            Neither the Depositor nor the Seller will be required to
produce personally identifiable customer information for purposes of any
mediation or arbitration.  The existence and details of any unresolved
Repurchase Request, any informal meetings, mediations or arbitration
proceedings, the nature and amount of
8

--------------------------------------------------------------------------------

any relief sought or granted, any offers or statements made and any discovery
taken in the proceeding will be confidential, privileged and inadmissible for
any purpose in any other mediation, arbitration, litigation or other
proceeding.  The parties will keep this information confidential and will not
disclose or discuss it with any third party (other than a party’s attorneys,
experts, accountants and other advisors, as reasonably required in connection
with the mediation or arbitration proceeding under this Section), except as
required by law, regulatory requirement or court order.  If a party to a
mediation or arbitration proceeding receives a subpoena or other request for
information from a third party (other than a Governmental Authority) for
confidential information of the other party to the mediation or arbitration
proceeding, the recipient will promptly notify the other party and will provide
the other party with the opportunity to object to the production of its
confidential information.
 
Section 3.05.  Appointment of Custodian; Custody and Delivery of Receivable
Files.  To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Issuer hereby appoints the Servicer, and the Servicer
hereby accepts such appointment, to act for the benefit of the Issuer and the
Indenture Trustee (for the benefit of the Noteholders) as Custodian of the
Receivable Files which are constructively delivered by the Issuer to the
Indenture Trustee on the Closing Date.
 
Section 3.06.  Duties of Servicer as Custodian.
 
(a)            Safekeeping.  The Servicer, in its capacity as Custodian, shall
hold each Receivable File as Custodian for the benefit of and as bailee of the
Issuer and the Indenture Trustee (for the benefit of the Noteholders), and shall
maintain such accurate and complete accounts, records and computer systems
pertaining to each Receivable File as shall enable the Servicer and the Issuer
to comply with this Agreement and the Indenture Trustee to comply with the
Indenture.  In performing its duties as Custodian, the Servicer shall act with
reasonable care and in accordance with the Servicing Standard.  The Servicer
shall conduct, or cause to be conducted, periodic audits of the Receivable Files
held by it as Custodian under this Agreement and of the related accounts,
records and computer systems, in such a manner as shall enable the Issuer or the
Indenture Trustee to verify the accuracy of the Servicer’s record keeping, and
the Issuer and the Indenture Trustee shall not be obligated to exercise any such
rights, and shall have no liability for failing to exercise any such rights, to
so verify the accuracy of the Servicer’s record keeping.  The Servicer shall
promptly report to the Issuer and the Trustees any failure on its part to hold
the Receivable Files and maintain its accounts, records and computer systems as
herein provided and shall promptly take appropriate action to remedy any such
failure.  Nothing herein shall be deemed to require an initial review or any
periodic review by the Issuer, the Indenture Trustee or any Backup Servicer of
the Receivable Files.
 
(b)            Maintenance of and Access to Receivable Files.  The Servicer
shall maintain each Receivable File at one of the locations specified in Exhibit
A or at such other location as shall be specified to the Issuer, the Indenture
Trustee and any Backup Servicer  by written notice not later than 30 days after
any change in location.  Upon not less than 30 days’ prior written notice to the
Issuer, the Indenture Trustee, any Backup Servicer and each Rating Agency, the
Servicer may appoint an Affiliate to act as a sub-custodian to maintain up to
all Receivable Files at one or more locations identified in such notice;
provided, however, if either Rating Agency shall object in writing to such
9

--------------------------------------------------------------------------------

appointment, such appointment shall not be made and no Receivable File shall be
maintained by such Affiliate.  Any such Affiliate so appointed shall execute an
agreement with the Servicer obligating the Affiliate to perform all functions
otherwise required of the Servicer herein when acting as Custodian.  The
Servicer shall remain liable as Custodian notwithstanding the appointment of an
Affiliate as sub-custodian and the maintenance by such Affiliate of Receivable
Files.  The Servicer may temporarily move individual Receivable Files or any
portion thereof without notice as necessary to conduct collection and other
servicing activities in accordance with its customary practices and procedures. 
Upon reasonable notice by the Issuer or the Indenture Trustee, the Servicer
shall make available to the Issuer and the Indenture Trustee or their duly
authorized representatives, attorneys or auditors a list of locations of the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times during normal business hours as the
Issuer and the Indenture Trustee shall reasonably request.
 
(c)            Release of Documents.  As soon as practicable after receiving a
reasonably written request from the Indenture Trustee or, if the aggregate Note
Balance has been reduced to zero, from the Owner Trustee, the Custodian shall
release any Receivable File to the requesting Trustee or to its agent or
designee, at such place or places as the requesting Trustee may reasonably
designate.  Upon the release and delivery of any such document in accordance
with the instructions of the Indenture Trustee or the Owner Trustee, the
Custodian shall be released from any further liability and responsibility under
this Section with respect to such documents and any other provision of this
Agreement or any other Basic Document if the fulfillment of the Custodian’s
responsibilities is dependent upon possession of such documents, unless and
until such time as such documents shall be returned to the Custodian.  In no
event shall the Servicer or the Custodian be responsible for any loss occasioned
by either Trustee’s failure to return any Receivable File or any portion thereof
in a timely manner.
 
(d)            Title to Receivables.  The Servicer shall not at any time have,
or in any way attempt to assert, any interest in any Receivable held by it as
Custodian hereunder or in the related Receivable File, other than for collecting
or enforcing such Receivable for the benefit of the Issuer.  The entire
equitable interest in such Receivable and the related Receivable File shall at
all times be vested in the Issuer.
 
(e)            Independent Contractor.  For all purposes of this Agreement, the
Custodian shall be an independent contractor and shall not be subject to the
supervision of the Issuer or either Trustee with respect to the manner in which
it accomplishes the performance of its obligations hereunder.  Unless expressly
set forth herein or otherwise authorized by the Issuer, the Custodian shall have
no authority to act for or represent the Issuer, either Trustee or any
Noteholder in any way and shall not otherwise be deemed an agent of any of them.
 
Section 3.07.  Instructions; Authority to Act.  The Servicer shall be deemed to
have received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by a Responsible Officer of the Indenture
Trustee, or, if the aggregate Note Balance has been reduced to zero, by a
Responsible Officer of the Owner Trustee.  A certified copy of excerpts of
authorizing resolutions of the board of directors of a Trustee shall constitute
conclusive evidence of the authority of the related Responsible Officer to act
and shall be considered in full force and effect until receipt by the Servicer
of written notice to the contrary given by such Trustee.
 
10

--------------------------------------------------------------------------------

Section 3.08.  Custodian’s Indemnification.
 
(a)            The Custodian shall indemnify the Issuer, the Trustees, any
Backup Servicer and each of their respective officers, directors, employees and
agents for any and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses of any kind whatsoever that may be imposed on,
incurred by or asserted against them as the result of any improper act or
omission in any way relating to the maintenance and custody by the Custodian of
the Receivable Files, including legal fees and expenses incurred in connection
with any action or suit brought by the Trustees to enforce any indemnification
or other obligation of the Custodian; provided, however, that the Custodian
shall not be so liable for any portion of any such amount resulting from
(i) actions taken by the Custodian pursuant to instructions as provided in
Section 3.07, (ii) release and delivery of documents by the Custodian as
provided in Section 3.06(c) or (iii) the willful misfeasance, bad faith or gross
negligence of any such Person listed above, or any such officer, director,
employee or agent of such Person.
 
(b)            Indemnification under this Section shall survive the resignation
or removal of the Custodian or the termination of this Agreement with respect to
acts or omissions of the Custodian preceding such resignation or removal or
termination and shall include reasonable fees and expenses of counsel and
expenses of litigation.  If the Custodian shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Custodian.
 
Section 3.09.  Effective Period and Termination.  The Servicer’s appointment as
Custodian shall become effective as of the Closing Date and shall continue in
full force and effect unless and until terminated pursuant to this Section or
Section 8.02(a).  If the Servicer resigns as Servicer in accordance with the
provisions of this Agreement or if all of the rights and obligations of the
Servicer are terminated under Section 8.02(a), the appointment of the Servicer
as Custodian shall be terminated.  The Indenture Trustee or, with the consent of
the Indenture Trustee, the Owner Trustee, may terminate the Servicer’s
appointment as Custodian, with cause, at any time upon written notification to
the Servicer.  As soon as practicable after any termination of such appointment
(but in no event more than five Business Days after any such termination of
appointment), the Custodian shall deliver the Receivable Files to the Indenture
Trustee or its agent at such place or places as the Indenture Trustee may
reasonably designate.  Notwithstanding the termination of the Servicer as
Custodian, the Indenture Trustee and the Issuer agree that, upon any such
termination and for so long as the Servicer may not be acting as Custodian
hereunder, the Indenture Trustee or the Issuer, as the case may be, shall
provide, or cause its agent to provide, access to the Receivable Files to the
Servicer for the purpose of enabling the Servicer to perform its obligations
under this Agreement with respect to the servicing of the Receivables.
 
Section 3.10.  Risk Retention.  The Seller, as sponsor, shall retain an economic
interest in a material portion of the credit risk of the Receivables, which
interest retention obligation may be satisfied by retaining an interest of not
less than 5% in each of the credit tranches sold or transferred to the investors
or a representative sample of the Receivables having a principal balance equal
to not less than 5% of the Cutoff Date Pool Balance.  This retained interest may
not be sold, pledged or hedged, except for the hedging of interest rate or
currency risk, during the term of the transactions contemplated hereby.  Neither
Trustee shall have any obligation to monitor or enforce compliance with any risk
retention rules.
11

--------------------------------------------------------------------------------

 
ARTICLE FOUR

ADMINISTRATION AND SERVICING OF RECEIVABLES
 
Section 4.01.  Duties of Servicer.
 
(a)            The Servicer, for the benefit of the Issuer, shall manage,
service, administer and make collections on the Receivables and perform the
other actions required by the Servicer under this Agreement.  The Servicer shall
be required to service the Receivables in accordance with reasonable care but in
no event less than the care that the Servicer exercises with respect to all
comparable motor vehicle retail installment sale contracts and installment loans
that it services for itself or others or the procedures employed by banking
institutions that service motor vehicle retail installment sale contracts or
installment loans for their own account or for the account of third parties (the
“Servicing Standard”).  Mechanics Bank agrees that for so long as it is the
Servicer, the Servicing Standard shall be consistent in all material respects
with the servicing standards with respect to motor vehicle retail installment
sale contracts and installment loans for which Mechanics Bank or any of its
Affiliates is the owner or the appointed servicer from time to time.
 
(b)            The Servicer’s duties shall include the collection and posting of
all payments on the Receivables, responding to inquiries of Obligors or by
Governmental Authorities with respect to the Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors in accordance with its customary practices, policing the collateral,
accounting for collections, furnishing monthly and annual statements to the
Trustees  with respect to distributions, providing collection and repossession
services in the event of an Obligor default  and performing the other duties
specified herein.  The Servicer also shall administer and enforce all rights of
the Issuer as holder of the Receivables and the Indenture Trustee as pledgee of
the Receivables and shall enforce the provisions of the applicable Dealer
Agreements and assignment forms.  To the extent consistent with the Servicing
Standard, the Servicer shall follow its customary standards, policies and
procedures and shall have full power and authority, acting alone, to do any and
all things in connection with the managing, servicing, administration and
collection of the Receivables that it may reasonably in good faith in accordance
with the Servicing Standard deem necessary or desirable.
 
(c)            Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered to execute and deliver, on behalf of itself and
any one or more of the Issuer, the Owner Trustee or the Indenture Trustee any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments with respect to the
Receivables and with respect to the Financed Vehicles; provided, however, that,
notwithstanding the foregoing, the Servicer shall not, except (i) pursuant to an
order from a court of competent jurisdiction or a directive from an arbitrator
in an arbitration proceeding or (ii) in settlement of a legal proceeding in
court or in arbitration in a manner consistent with the applicable Servicing
Standard or (iii) otherwise in accordance with the Servicing Standard, and
except as provided in Section 4.02(c), execute documents that would release an
Obligor from payment of any unpaid amount due under any Receivable, reduce the
related APR on a Receivable, waive the right to collect the unpaid balance of
any Receivable from the related Obligor, release any Obligor from its
obligations with respect to a Receivable or extend the final payment date under
any Receivable beyond the Class D Final Scheduled Payment Date.
12

--------------------------------------------------------------------------------

 
(d)            The Servicer is hereby authorized to commence, in its own name or
in the name of the Issuer, a legal proceeding to enforce the rights of the
Issuer under any Contract pursuant to Section 4.03 or to commence or participate
in any other legal Proceeding (including a bankruptcy Proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle.  If the Servicer
commences or participates in any such legal Proceeding in its own name, the
Issuer shall thereupon be deemed to have automatically assigned the applicable
Receivable and the other property conveyed pursuant to Section 2.01 with respect
to such Receivables to the Servicer, solely for purposes of commencing or
participating in any such Proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Issuer to execute and deliver in the Servicer’s
name any notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such Proceeding.  If in any
enforcement suit or legal Proceeding it shall be held that the Servicer may not
enforce the rights of the Issuer under the Receivables on the grounds that it
shall not be a real party in interest or a holder entitled to enforce such
Receivables, the Owner Trustee shall, subject to the terms of the Trust
Agreement, at the Servicer’s expense and direction, take steps to enforce such
Receivables, including bringing suit in the name of the Servicer or the Issuer
on behalf of the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders or any of them.  The Owner Trustee and the Indenture Trustee
shall, upon the written request of the Servicer, furnish the Servicer as soon as
practicable with any revocable powers of attorney and other documents (in a form
acceptable to the Indenture Trustee or the Owner Trustee, as applicable)
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
 
(e)            The Servicer, at its expense, shall obtain on behalf of the
Issuer all licenses, if any, required by the laws of any jurisdiction to be held
by the Issuer in connection with the ownership of the Receivables and shall make
all filings and pay all fees as may be required in connection therewith during
the term of this Agreement.  The Servicer shall, or shall cause the
Administrator to, prepare, execute and deliver all certificates or other
documents required to be delivered by the Issuer pursuant to the Sarbanes-Oxley
Act of 2002 or the rules and regulations promulgated thereunder.
 
(f)            For all purposes of this Agreement, the Servicer shall be an
independent contractor and shall not be subject to the supervision of the Issuer
or either Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder.  Unless expressly set forth herein or
otherwise authorized by the Issuer, the Servicer shall have no authority to act
for or represent the Issuer, either Trustee or any Noteholder in any way and
shall not otherwise be deemed an agent of the Issuer, either Trustee or any
Noteholder.
 
Section 4.02.  Collection of Payments on Receivables; Receivable Modifications.
 
(a)            The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Contracts as and when
the same shall become due, in accordance with the Servicing Standard.
 
13

--------------------------------------------------------------------------------

(b)            (i) The Servicer may grant payment extensions and holidays on the
Receivables in accordance with the Servicing Standard and as required by
Applicable Law; provided, however, that no such extension shall extend the final
payment date on any Receivable beyond the last day of the Collection Period
immediately preceding the Class D Final Scheduled Payment Date, and (ii) upon
any extension of a Receivable not in accordance with Section 4.02(b)(i) or upon
the reduction of the APR or Principal Balance of any Receivable other than as
required by Applicable Law (including by the Servicemembers Civil Relief Act,
the California Military Families Financial Relief Act or similar State law), the
Servicer shall be required to purchase the related Receivable in accordance with
Section 4.07.
 
(c)            Notwithstanding the foregoing, the Servicer is authorized in its
discretion to grant a Small Balance Waiver with respect to any Receivable, and
to waive any prepayment charge, late payment charge or any other similar fees
that may be collected in the ordinary course of servicing any Receivable.
 
Section 4.03.  Realization upon Receivables.
 
(a)            Consistent with the Servicing Standard, the Servicer shall use
commercially reasonable efforts to repossess or otherwise convert the ownership
of and liquidate any Financed Vehicle securing a Receivable with respect to
which the Servicer shall have determined that eventual payment in full is
unlikely.  The Servicer shall begin such repossession and conversion procedures
as soon as practicable after default on such Receivable in accordance with the
Servicing Standard; provided, however, that the Servicer will not repossess or
otherwise convert the ownership of a Financed Vehicle within such time period if
it calculates that the proceeds ultimately recoverable with respect to the
related Receivable would be increased by forbearance.  In repossessing or
otherwise converting the ownership of a Financed Vehicle and liquidating the
related Receivable, the Servicer is authorized to follow such customary
practices and procedures as it shall reasonably deem necessary or advisable,
consistent with the Servicing Standard, which practices and procedures may
include the sale of the Financed Vehicle at public or private sale, the
submission of claims under an insurance policy and other actions by the Servicer
in order to realize upon such Receivable; provided, however, that in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with any repair or towards the repossession of such
Financed Vehicle unless it shall determine in its reasonable judgment that such
repair or repossession shall increase the related Liquidation Proceeds by an
amount materially greater than the expense for such repair or repossession.  The
Servicer shall be entitled to recover all expenses incurred by it that are
reasonably allocated to repossessing and liquidating a Financed Vehicle into
cash proceeds (other than overhead), but only out of the cash proceeds of the
sale of such Financed Vehicle or any deficiency obtained from the related
Obligor.
 
(b)            If the Servicer elects to commence a Proceeding to enforce a
Dealer Agreement, the act of commencement shall be deemed to be an automatic
assignment from the Issuer to the Servicer of the rights of recourse under such
Dealer Agreement.  If, however, in any Proceeding, it is held that the Servicer
may not enforce a Dealer Agreement on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement, the Owner
Trustee, at the Servicer’s expense and direction,
14

--------------------------------------------------------------------------------

shall take such steps as the Servicer deems necessary to enforce the Dealer
Agreement, including bringing suit in its name or the names of the Indenture
Trustee, not in its individual capacity, but solely as Indenture Trustee on
behalf of the Issuer, the Securityholders or any of them.
 
Section 4.04.  Physical Damage Insurance.  The Servicer shall, in accordance
with the Servicing Standard, require that each Obligor shall have obtained
physical loss damage insurance covering the related Financed Vehicle as of the
execution of the related Contract.
 
Section 4.05.  Maintenance of Security Interests in Financed Vehicles; Other
Amounts.  The Servicer shall, in accordance with the Servicing Standard, take
such steps as are necessary to maintain the perfection of the security interest
created by each Receivable in the related Financed Vehicle.  The Servicer is
hereby authorized to take such steps as are necessary to re-perfect such
security interest on behalf of the Issuer and the Indenture Trustee in the event
the Servicer receives notice of, or otherwise has actual knowledge of, the fact
that such security interest is not perfected as a result of the relocation of a
Financed Vehicle or for any other reason.  In the event that the assignment of a
Receivable to the Issuer is insufficient, without a notation on the related
Financed Vehicle’s certificate of title to grant to the Issuer a first priority
perfected security interest in the related Financed Vehicle, each of the
Servicer and Mechanics Bank hereby agree that the designation of Mechanics Bank
as the secured party on such certificate of title is solely in its capacity as
agent of the Issuer.  The Servicer shall not release, in whole or in part, any
security interest in a Financed Vehicle created by the related Receivable except
as permitted herein or in accordance with its customary standards, policies,
practices and procedures, including the payment in full by the Obligor of all
amounts payable pursuant to that Receivable.
 
Section 4.06.  Covenants of Servicer.  The Servicer makes the following
covenants:
 
(a)            Liens in Force.  No Financed Vehicle securing a Receivable shall
be released in whole or in part from the security interest granted by the
related Obligor, except upon payment in full of such Receivable (subject to any
Small Balance Waiver), or as otherwise contemplated by this Agreement or by
Applicable Law.
 
(b)            No Impairment.  The Servicer shall do nothing to impair the
rights of the Issuer or the Indenture Trustee in the property of the Issuer.
 
(c)            No Amendments.  The Servicer shall not extend or otherwise amend
the terms of any Receivable, except in accordance with the Servicing Standard,
Section 4.01(c) and Section 4.02.
 
(d)            Compliance with Agreement, Basic Documents and Applicable Law. 
The Servicer shall comply with its obligations under this Agreement and the
other Servicer Basic Documents.  The Servicer shall comply with all Applicable
Law where the failure to do so could reasonably be expected to have a Material
Adverse Effect.
 
(e)            Arm’s Length.  With respect to its obligations in connection with
the Conveyed Assets, the Servicer shall transact and deal with its Affiliates on
an arm’s-length basis.
15

--------------------------------------------------------------------------------

 
(f)            Licenses and Approvals.  The Servicer shall ensure that it has
and maintains all licenses and approvals necessary for the conduct of its
business in the jurisdictions where the Financed Vehicles are located.
 
(g)            Restrictions on Liens.  The Servicer shall not (i) create, incur
or suffer to exist, or agree to create, incur or suffer to exist, or consent to
or permit in the future (upon the occurrence of a contingency or otherwise) the
creation, incurrence or existence of any Lien (other than suffering to exist any
tax liens, mechanics’ liens and any other liens that attach to property by
operation of law (including statutory purchase liens) to the extent the
applicable obligations are not past due) on or restriction on transferability of
any Receivable except for the Lien of the Indenture and the restrictions on
transferability imposed by this Agreement or (ii) other than as contemplated
herein or in the Indenture, file or authorize the filing in any jurisdiction of
any UCC financing statement that names Mechanics Bank, the Depositor or any
other Person as a debtor, and any Person other than the Depositor, the Indenture
Trustee or the Issuer as a secured party, or sign any security agreement
authorizing any secured party thereunder to file any such financing statement,
in each case with respect to the Receivables.
 
Section 4.07.  Purchase of Receivables by Servicer upon Breach of Covenant. 
Upon discovery by any of the Servicer, the Seller, the Depositor or the Issuer,
or if a Responsible Officer of the Indenture Trustee obtains actual knowledge or
receives written notice of a breach of any of the covenants set forth in
Sections 4.02(b), 4.05 or 4.06, the party discovering such breach shall give
prompt written notice to the other parties hereto; provided, however, that the
failure to give any such notice shall not affect any obligation of the Servicer
under this Section.  Within 30 days of the discovery or notice of such breach,
the Servicer shall use its best efforts to cure such breach so that it does not
materially and adversely affect the interest of the Issuer in the related
Receivables.  On or before the Payment Date immediately following the end of the
Collection Period in which the 30-day cure period referred to above has ended,
the Servicer shall, unless such breach shall have been cured by such date,
purchase from the Issuer the Receivables affected by such breach.  In
consideration of the purchase of such Receivables, the Servicer shall remit the
related Purchase Price into the Collection Account, with written notice to the
Indenture Trustee of such deposit, in the manner specified in Section 5.05. 
Subject to Section 7.03, it is understood and agreed that the obligation of the
Servicer to purchase any Receivables with respect to which such a breach has
occurred and is continuing shall, if such obligation is fulfilled, constitute
the sole remedy against the Servicer for such breach available to the Issuer,
the Trustees or the Securityholders.  The sole remedy of the Issuer, the
Trustees and the Securityholders with respect to a breach of Sections
4.02(b), 4.05 or 4.06 shall be to require the Servicer to repurchase Receivables
pursuant to this Section.
 
Section 4.08.  Servicing Fee.  The Servicing Fee shall be payable to the
Servicer on each Payment Date.  The part of the Servicing Fee that is based on
the Servicing Fee Rate shall be calculated on the basis of a 360-day year
comprised of twelve 30-day months.  The Servicer shall be required to pay all
expenses (apart from expenses incurred in accordance with the Servicing Standard
in connection with liquidating a Financed Vehicle related to a Defaulted
Receivable, such as auction, painting, repair or refurbishment
16

--------------------------------------------------------------------------------

in respect of that Financed Vehicle) incurred by it in connection with its
activities under this Agreement (including taxes imposed on the Servicer,
expenses incurred in connection with distributions and reports made by the
Servicer to the Owner Trustee and the Indenture Trustee and any fees and
expenses of sub-servicers to whom it has delegated servicing responsibilities). 
As additional servicing compensation, the Servicer shall be entitled to keep all
Supplemental Servicing Fees.
 
Section 4.09.  Monthly Reports.
 
(a)            Servicer’s Monthly Certificate.  Not later than 10:00 a.m. (New
York City time) on each Determination Date, the Servicer shall deliver to the
Depositor, the Seller and the Trustees, with a copy to each Rating Agency, a
Servicer’s Monthly Certificate containing all information necessary to make the
payments to be made on the related Payment Date pursuant to Section 5.04 hereof
or Section 5.04(b) of the Indenture for the related Collection Period and any
other information the Indenture Trustee may reasonably request.  Such Servicer’s
Monthly Certificate shall be certified by a Responsible Officer of the Servicer
that the information provided is complete, accurate and no event has occurred
that, with notice or passage of time, would be an Event of Default or a Servicer
Termination Event.  The Servicer shall also specify to the Trustees, no later
than the Determination Date following the last day of a Collection Period, in a
written notice to the Depositor and the Trustees, the Receivables to be
repurchased by the Seller or purchased by the Servicer, as the case may be, for
the related Collection Period.  The Servicer will include the disclosure
required by Rule 4(c)(2)(ii) of Regulation RR in the first Servicer’s Monthly
Certificate.
 
(b)            Asset-Level Information.  On or before the 15th day following
each Distribution Date, the Servicer will prepare a Form ABS-EE, including an
asset data file and asset-related document containing the asset-level
information for each Receivable for the prior Collection Period as required by
Item 1A of Form 10-D.
 
Section 4.10.  Annual Statement as to Compliance; Notice of Servicer Termination
Event.
 
(a)            The Servicer shall deliver to the Depositor, the Indenture
Trustee and each Rating Agency, prior to March 31 of each calendar year,
beginning with March 31, 2019, an Officer’s Certificate (the “Servicer’s Annual
Certification”) in substantially the form of Exhibit C.
 
(b)            The Servicer shall deliver to the Depositor, the Trustees and
each Rating Agency, promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, written notice in an Officer’s
Certificate of any event that is, or with the giving of notice or lapse of time
or both would become, a Servicer Termination Event.
 
(c)            Prior to March 31 of each calendar year, beginning with March 31,
2019, the Servicer shall deliver to the Depositor, the Owner Trustee and the
Administrator and any other Person that will be responsible for signing the
certification required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Sarbanes-Oxley Act) on behalf of the Issuer with
respect to a securitization transaction a certification in substantially the the
form of Exhibit D.
 
17

--------------------------------------------------------------------------------

Section 4.11.  Annual Independent Accountants’ Report; Attestation and
Assessment of Compliance.
 
(a)            Prior to March 31 of each calendar year, beginning with March 31,
2019, the Servicer shall cause a firm of independent certified public
accountants that is a member of the American Institute of Certified Public
Accountants and is independent of the Seller, the Depositor and the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants, to furnish a report to the Depositor, the
Trustees and each Rating Agency to the effect that such firm has examined the
documents or records of the Servicer relating to the Receivables and that such
examination (i) was made in accordance with generally accepted auditing
standards and (ii) included tests relating to motor vehicle retail installment
sale contracts and installment loans serviced for others and that such firm is
of the opinion that the provisions of this Agreement have been complied with
during the preceding calendar year (or, with respect to the first report, the
period from the Closing Date to December 31 of such year), and that, on the
basis of such examination, nothing has come to their attention that would
indicate that such servicing has not been conducted in compliance therewith
during such calendar year or other period, except for (A) such exceptions as
such firm shall believe to be immaterial and (B) such other exceptions as shall
be set forth in such statement; provided, however, that the Servicer shall
direct the Indenture Trustee in writing to enter into any agreed upon procedure
letter that may be executed in connection with any accountant’s report issued
hereunder and the Indenture Trustee shall have no liability in connection with
any such accountant’s report or the content of any such agreed upon procedure
letter; provided, further, that, if at any time a Backup Servicer is acting as
Servicer, it may satisfy the obligations set forth in this Section, by
delivering on an annual basis a report prepared with respect to it in accordance
with SSAE 16, such report to be provided by such Backup Servicer under this
Section within 30 days of its receipt of such report; and provided, further, it
being understood and agreed that the Indenture Trustee will deliver such letter
of agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not have 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.  To the extent the Indenture Trustee
is required to agree to the procedures in order to receive the accountants’
report, such agreement may include, among other things, (1) an acknowledgement
that the Servicer has agreed that the procedures to be performed by the firm are
sufficient for the purposes of the Indenture and that such procedures are
sufficient for the Indenture Trustee’s purposes which are specifically limited
to receipt of the accountants’ report, (2) releases by the Indenture Trustee (on
behalf of itself and the Noteholders) of claims against the firm and
acknowledgement of other limitations of liability in favor of the firm, and (3)
restrictions or prohibitions on the disclosure of the accountants’ report or
other information or documents provided to it by such firm to any party,
including the Noteholders.  Notwithstanding the foregoing, in no event shall the
Indenture Trustee be required to execute any agreement in respect of the
accountants’ report that the Indenture Trustee determines adversely affects it
in its individual capacity.
 
(b)             Notwithstanding Section 4.11(a), prior to March 31 of each
calendar year, beginning with March 31, 2019, the Servicer shall deliver the
report and attestation set forth in Sections 4.11(c) and (d) and the delivery of
a copy of such report and attestation to the Depositor and the Trustees shall be
deemed to satisfy the provisions of this Section.
 
18

--------------------------------------------------------------------------------

(c)             As and when required pursuant to Section 4.11(b), the Servicer
will deliver to the Depositor and the Trustees a report regarding the Servicer’s
assessment of compliance with the Servicing Criteria during the immediately
preceding calendar year (or, if applicable, such shorter period as shall have
elapsed since the Closing Date in the case of the first such report), in
accordance with paragraph (b) of Rule 13a-18 and Rule 15d-18 of the Exchange Act
and Item 1122 of Regulation AB.  Such report shall be signed by an authorized
officer of the Servicer and shall at a minimum address each of the Servicing
Criteria.
 
(d)            The Servicer shall cause a firm of independent certified public
accountants described in Section 4.11(a) above to furnish to the Depositor and
the Trustees, concurrently with the report delivered pursuant to Section
4.11(c), an attestation report providing its assessment of compliance with any
material instance of non-compliance, as required by Rule 13a-18 or Rule 15d-18
under the Servicing Criteria covered in such report during the preceding fiscal
year, including disclosure of any material instance of non-compliance, as
required by Rule 13a-18 or Rule 15d-18 under the Exchange Act and Item 1122(b)
of Regulation AB.  Any such attestation report shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act, stating, among other things, that the Servicer’s assertion of
compliance with the specified Servicing Criteria is fairly stated in all
material respects, or the reason why such an opinion cannot be expressed. Such
report must be available for general use and not contain restricted use
language.
 
Section 4.12.  Access to Certain Documentation and Information Regarding
Receivables.  Subject to Section 3.06(b), the Servicer shall provide the
Depositor and the Trustees with access to the Receivable Files in the cases
where the related Trustee or the Securityholders are required by Applicable Law
to have access to such documentation.  Such access shall be afforded without
charge, but only upon reasonable request and conducted in a reasonable manner
during normal business hours which does not unreasonably interfere with the
normal operations or customer or employee relations of the Servicer, at the
offices of the Servicer.  Nothing in this Section shall affect the obligation of
the Servicer to observe any Applicable Law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
 
Section 4.13.  Access to Information Regarding Issuer and Basic Documents. 
Mechanics Bank, as initial Servicer (and if Mechanics Bank is no longer acting
as Servicer, Mechanics Bank, as Seller), shall furnish to the Trustees from time
to time such information regarding the Issuer or the Basic Documents as the
Owner Trustee and Indenture Trustee (i) shall reasonably request prior to an
Event of Default or (ii) shall request after an Event of Default.  Upon request,
but only if the Notes are then not registered in book-entry form on DTC, the
Indenture Trustee shall furnish to the Owner Trustee annually a copy of the
Register; provided, however, the Indenture Trustee shall not be obligated to
furnish a copy of the Register more than once each calendar year.  The Servicer
shall furnish to the Owner Trustee copies of all documents and reports required
to be provided by the Servicer pursuant to this Article .
 
Section 4.14.  Agreement on Compliance.  The Servicer agrees that, should any
Governmental Authority with bank regulatory powers find that the terms of this
Agreement, or any agreement relating to the servicing of the Receivables
constitute an unsafe and unsound condition with respect to the Servicer, and
such Governmental Authority notifies the Servicer of such finding, then the
Servicer shall negotiate in good faith with the Issuer to correct any such
deficiencies and to bring this Agreement into compliance with Applicable Law.
 
19

--------------------------------------------------------------------------------

Section 4.15.  Compliance with the FDIC Rule.
 
(a)            Mechanics Bank, in its capacity as Servicer, Administrator and
Seller, agrees to perform the covenants and agreements set forth in Article
Twelve of the Indenture applicable to Mechanics Bank and to otherwise comply
with the terms of Article Twelve of the Indenture.
 
(b)            The Depositor agrees to perform the covenants and agreements set
forth in Article Twelve of the Indenture applicable to the Depositor and to
otherwise comply with the terms of Article Twelve of the Indenture.
 
Section 4.16.  Duties of a Backup
Servicer(a)                                                                                                  . 
Commencing on the Backup Servicer Appointment Date and until such time, if any,
as the Backup Servicer shall become Successor Servicer, the Backup Servicer, for
the benefit of the Noteholders, shall perform the monitoring, review, inspection
and other backup servicing functions substantially as are set forth in Annex A,
such performance to be provided for each Collection Period or at such other
times and intervals as may be specified in Annex A.  As set forth in Section
8.03(a), in the event Mechanics Bank is terminated as Servicer following the
Backup Servicer Appointment Date, the Backup Servicer shall become the Successor
Servicer hereunder; provided, that notwithstanding that the Backup Servicer
becomes Successor Servicer hereunder, it shall have no obligation at any time to
make Advances.  Any provision in this Agreement to the contrary notwithstanding,
no Backup Servicer shall have any liability for any acts, omissions, negligence,
fraud or malfeasance by any Servicer (other than the Backup Servicer should it
become Servicer hereunder) or any other party to this Agreement with respect to
the performance by the Servicer or any such other party to this Agreement of
their respective duties hereunder, or for any errors made by the Servicer (other
than the Backup Servicer should it become Servicer hereunder) or any such other
party to this Agreement in the performance of such duties which cause any losses
to Securityholders or any other third parties, including should the Backup
Servicer become Successor Servicer, any breach of a representation, warranty or
covenant by a predecessor Servicer and any obligation to repurchase or purchase
any Receivable resulting from any such breach or other act or omission by a
predecessor Servicer.
 
Section 4.17.  Exchange Act Reporting.
 
(a)            Further Assurances.  The Indenture Trustee and the Servicer shall
reasonably cooperate with the Depositor in connection with the satisfaction of
the Depositor’s reporting requirements under the Exchange Act with respect to
the Issuer.  So long as the Depositor is required to file Exchange Act Reports
with respect to the Issuer, each of the Indenture Trustee and the Servicer shall
promptly notify the Depositor, and, in the case of an event reportable on the
Form 8-K, not later than two Business Days after its occurrence, of any event
reportable on the Exchange Act Reports of which such Person (or in the case of
the Indenture Trustee, a Responsible Officer of the Indenture Trustee) has
knowledge.  In addition to the other information specified in this Section, if
so requested by the Depositor for the purpose of satisfying its reporting
obligation under the Exchange Act, the Indenture Trustee and the Servicer shall
provide the Depositor with (i) such information which is available to such
Person without unreasonable effort or expense and within such timeframe as may
be reasonably requested by the Depositor to comply with the Depositor’s
reporting obligations under the Exchange Act and (ii) to the extent such Person
is a party (and the Depositor is not a party) to any agreement or amendment
required to be filed, copies of such agreement or
20

--------------------------------------------------------------------------------

amendment in EDGAR-compatible form.  Each of the Servicer and the Indenture
Trustee acknowledges that interpretations of the requirements of Regulation AB
may change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel or otherwise, and agrees to comply with
requests made by the Depositor in good faith for delivery of information under
these provisions on the basis of evolving interpretations of Regulation AB and
related rules and regulations.
 
(b)            Form 10-D Filings.  So long as the Depositor is required to file
Exchange Act Reports with respect to the Issuer, no later than each
Determination Date, each of the Indenture Trustee and the Servicer shall notify
(and the Servicer shall cause any subservicer to notify) the Depositor of any
Form 10-D Disclosure Item with respect to such Person (or in the case of the
Indenture Trustee, a Responsible Officer of the Indenture Trustee), together
with a description of any such Form 10-D Disclosure Item in form and substance
reasonably acceptable to the Depositor.  In addition to such information as the
Servicer is obligated to provide pursuant to other provisions of this Agreement,
if so requested by the Depositor, the Servicer shall provide such information
which is available to it, without unreasonable effort or expense regarding the
performance or servicing of the Receivables as is reasonably required to
facilitate preparation of distribution reports in accordance with Item 1121 of
Regulation AB.  Such information shall be provided concurrently with the
statements to Noteholders pursuant to Section 5.06, commencing with the first
such report due not less than five Business Days following such request.
 
(c)            Form 8-K Filings.  So long as the Depositor is required to file
Exchange Act Reports with respect to the Issuer, each of the Indenture Trustee
and the Servicer shall promptly notify the Depositor, but in no event later than
two Business Days after its occurrence, of any Form 8-K Reportable Event of
which such Person (or, in the case of the Indenture Trustee, a Responsible
Officer of the Indenture Trustee) has actual knowledge.  Each Person, other than
the Indenture Trustee as set forth above, shall be deemed to have actual
knowledge of any such event to the extent that it relates to such Person or any
action or failure to act by such Person.
 
(d)            Form 10-K Filings.  So long as the Depositor is required to file
Exchange Act Reports with respect to the Issuer, (i) if the Item 1119 Parties
listed on Schedule B have changed since the Closing Date, no later than February
1 of each year, commencing with 2019, the Depositor shall provide each of the
Indenture Trustee and the Servicer with an updated Schedule B setting forth the
Item 1119 Parties and (ii) no later than March 15 of each year, commencing in
2019, the Indenture Trustee and the Servicer shall notify the Depositor of any
Form 10-K Disclosure Item, together with a description of any such Form 10-K
Disclosure Item in form and substance reasonably acceptable to the Depositor.
 
(e)            Report on Assessment of Compliance and Attestation.  So long as
the Depositor is required to file Exchange Act Reports, on or before March 15 of
each calendar year, commencing in 2019:
21

--------------------------------------------------------------------------------

 
(i)            The Indenture Trustee shall deliver to the Depositor and the
Servicer the Servicing Criteria Assessment signed by an authorized officer of
the Indenture Trustee.  To the extent any of the Servicing Criteria are not
applicable to the Indenture Trustee, with respect to asset-backed securities
transactions taken as a whole involving the Indenture Trustee and that are
backed by the same asset type backing the Notes, such report shall include such
a statement to that effect.  The Indenture Trustee acknowledges and agrees that
the Depositor and the Servicer with respect to each of their respective duties
as the Certifying Person, and each of their respective officers and directors
shall be entitled to rely upon each such Servicing Criteria Assessment and the
attestation delivered pursuant to Section 4.11.
 
(ii)            The Indenture Trustee shall deliver to the Depositor and the
Servicer a report of a registered public accounting firm that attests to, and
reports on, the assessment of compliance made by the Indenture Trustee and
delivered pursuant to the preceding paragraph.  Such attestation shall be in
accordance with Rules 13a-18 and 15d-18 of the Exchange Act, Rules 1-02(a)(3)
and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act,
including, that, in the event that an overall opinion cannot be expressed, such
registered public accounting firm shall state in such report why it was unable
to express such an opinion.  Such report must be available for general use and
not contain restricted use language.
 
(iii)            In the event the Indenture Trustee is terminated or resigns
during the term of this Agreement, such Person shall provide the documents and
information pursuant to this Section with respect to the period of time it was
subject to this Agreement or provided services with respect to the Issuer or the
Receivables.
 
(f)            Indenture Trustee Representations and Warranties.  The Indenture
Trustee represents that as of the date hereof:
 
(i)            there are no affiliations relating to the Indenture Trustee with
respect to any Item 1119 Party;
 
(ii)            there are no relationships or transactions with respect to any
Item 1119 Party and the Indenture Trustee that are outside the ordinary course
of business or on terms other than would be obtained in an arm’s-length
transaction with an unrelated third party, apart from the transactions
contemplated under the Basic Documents, and that are material to the investors’
understanding of the Notes; and
 
(iii)            except as disclosed in the Prospectus, there are no legal
Proceedings pending or, to the best of the Indenture Trustee’s knowledge,
threatened against the Indenture Trustee that, if determined adversely to the
Indenture Trustee, in the Indenture Trustee’s good faith and reasonable
judgment, is likely to materially and adversely affect its ability to perform
its obligations under this Agreement.
 
22

--------------------------------------------------------------------------------

Section 4.18.  Indemnification.
 
(a)            Each of the Indenture Trustee and the Servicer (if the Servicer
is not Mechanics Bank) shall indemnify the Depositor, the Servicer with respect
to its duties as Certifying Person and each Person who controls any of such
parties (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act) and the respective present and former directors, officers,
employees and agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, liabilities, claims, damages and expenses
that any of them may sustain arising out of or based upon:
 
(i)            (A) any untrue statement of a material fact contained or alleged
to be contained in the Provided Information or (B) the omission or alleged
omission to state in the Provided Information a material fact required to be
stated in the Provided Information, or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, that clause (B) shall be construed solely by reference to
the related Provided Information and not to any other information communicated
in connection with a sale or purchase of securities, without regard to whether
the Provided Information or any portion thereof is presented together with or
separately from such other information; or
 
(ii)            With respect to (A) the Indenture Trustee, any failure by it to
deliver any Servicing Criteria Assessment when and as required by this Article
and (B) the Servicer, any failure by it to deliver any information, report,
certification, accountant’s letter or other material when and as required under
Sections 4.10, 4.11 or 4.17, as applicable.
 
(b)            In the case of any failure of performance described in Section
4.18(a)(ii), each of the Indenture Trustee and the Servicer shall promptly
reimburse the Depositor for all costs reasonably incurred by each such party in
order to obtain the information, report, certification, accountant’s letter or
other material not delivered as required by the Indenture Trustee or the
Servicer, as applicable.
 
(c)            Notwithstanding anything to the contrary contained herein, in no
event shall the Indenture Trustee be liable for special, indirect, punitive or
consequential damages of any kind whatsoever, including lost profits, even if
the Indenture Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.
 
Section 4.19.  Back-up Sarbanes-Oxley Certification.
 
(a)            No later than March 15 of each year, beginning in 2019, the
Servicer shall provide the Performance Certification to the Certifying Person as
set forth on Exhibit D (in the case of the Servicer), in each case on which the
Certification Parties can reasonably rely; provided, that so long as the
Servicer is an Affiliate of the Depositor, the Servicer may, but is not required
to, deliver the Performance Certificate.
 
23

--------------------------------------------------------------------------------

(b)            The Depositor will not request delivery of a certification under
this Section unless it is required under the Exchange Act to file an annual
report on Form 10-K with respect to the Issuer.  In the event that prior to the
filing date of the Form 10-K in March of each year, the Servicer has actual
knowledge of information material to the Sarbanes-Oxley Certification, the
Servicer shall promptly notify the Depositor.
 
ARTICLE FIVE

DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
 
Section 5.01.  Establishment of Trust Accounts.
 
(a)            The Issuer, for the benefit of the Noteholders, shall cause the
Servicer to establish and maintain in the name of the Indenture Trustee three
non-interest bearing Eligible Accounts (respectively, the “Collection Account”,
the “Principal Distribution Account” and the “Reserve Account”), each bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Indenture Trustee on behalf of the Noteholders.  The Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders.  If, at any time, any Trust Account ceases
to be an Eligible Account, the Indenture Trustee (or the Servicer on its behalf)
shall within ten Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Eligible
Account as a replacement Trust Account and shall transfer any cash and/or any
investments from the account that is no longer an Eligible Account to the new
Trust Account.
 
(b)            Funds on deposit in the Collection Account and the Principal
Distribution Account shall be invested in Permitted Investments selected by the
Servicer in writing and if no such investment directions are provided, the
related funds will remain uninvested, which investments must mature on the
Business Day prior to the Payment Date in the Collection Period following the
Collection Period during which the investment was made (unless the related
Permitted Investment is one for which the Indenture Trustee or an Affiliate is
the manager of such fund, in which case such investments may mature on such
Payment Date).  Funds on deposit in the Reserve Account may not be invested. The
Servicer shall provide written notice to the Indenture Trustee promptly if any
investment in the Collection Account and the Principal Distribution Account
ceases to be a Permitted Investment, and such notification shall include an
instruction to the Indenture Trustee to withdraw the funds from the ineligible
investment and to invest such funds in another Permitted Investment.  No
Permitted Investment may be purchased at a premium.  Amounts invested in
Permitted Investments may not be converted into cash, sold or otherwise disposed
of other than (i) upon maturity of the related investment, (ii) upon the date
the related investment no longer meets the criteria of a Permitted Investment or
(iii) on the Payment Date immediately following the date of such investment, in
order to allow the amount invested to be distributed to the Noteholders or
Certificateholders in accordance with Section 5.04.  All Net Investment Earnings
in the Collection Account and the Principal Distribution Account shall be
treated as Available Collections.  Except as otherwise provided hereunder or
agreed in writing among the parties hereto, the Issuer shall retain the
authority to institute, participate and join in any plan of reorganization,
readjustment, merger or consolidation with respect to the issuer of any
securities held hereunder, and, in general, to exercise each and every other
power
24

--------------------------------------------------------------------------------

or right with respect to each such asset or investment as individuals generally
have and enjoy with respect to their own assets and investment, including power
to vote upon any securities.  The Indenture Trustee shall have no liability for
any losses on any investments of the amounts on deposit in the Collection
Account and the Principal Distribution Account.
 
(c)            (i)            The Indenture Trustee shall possess all right,
title and interest in all funds and investment property on deposit from time to
time in or credited to the Trust Accounts and in all proceeds thereof (including
all income thereon) and all such funds, investment property, proceeds and income
shall be part of the assets of the Issuer, except as otherwise set forth herein.
 
(ii)            With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that any Trust Property:
 
(A)            that is held in deposit accounts shall be held solely in the
Eligible Accounts, subject to the last sentence of Section 5.01(c)(i); and each
such Eligible Account shall be subject to the exclusive custody and control of
the Indenture Trustee, and the Indenture Trustee shall have sole signature
authority with respect thereto;
 
(B)            that constitutes Physical Property shall be delivered to the
Indenture Trustee in accordance with clause (i) of the definition of the term
“Delivery” and shall be held, pending maturity or disposition, solely by the
Indenture Trustee or a Securities Intermediary acting solely for the Indenture
Trustee;
 
(C)            that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations shall be delivered in
accordance with clause (ii) of the definition of the term “Delivery” and shall
be maintained by the Indenture Trustee, pending maturity or disposition, through
continued book-entry registration of such Trust Account Property as described in
such paragraph;
 
(D)            that is an “uncertificated security” under Article 8 of the UCC
and that is not governed by clause (C) above shall be delivered to the Indenture
Trustee in accordance with clause (iii) of the definition of the term “Delivery”
and shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture Trustee’s (or its
nominee’s) ownership of such security; and
 
(E)            that is a Security Entitlement shall be delivered in accordance
with clause (iv) of the definition of the term “Delivery” and shall be held
pending maturity or disposition by the Indenture Trustee or a securities
intermediary acting solely for the Indenture Trustee.
 
(iii)            The Servicer shall have the power (which power shall be
revocable by the Indenture Trustee, or by the Owner Trustee with the consent of
the Indenture Trustee, following a Servicer Termination Event) to instruct the
Indenture Trustee to make withdrawals and payments from the Trust Accounts held
by the
25

--------------------------------------------------------------------------------

Indenture Trustee for the purpose of withdrawing any amounts deposited in error
into the Trust Accounts and withdrawing therefrom amounts that the Servicer is
authorized to withdraw in accordance with Section 5.04(a) hereof and Section
5.04 of the Indenture.
 
Section 5.02.  Collections; Monthly Remittance Condition.
 
(a)            For so long as the Monthly Remittance Condition is (i) not met,
the Servicer shall remit all amounts received on or in respect of the
Receivables during any Collection Period to the Collection Account in
immediately available funds no later than two Business Days after processing or
(ii) met, the Servicer may remit all amounts received on or in respect of the
Receivables during any Collection Period to the Collection Account in
immediately available funds on or prior to the related Payment Date.
 
(b)            The Servicer shall remit to the Collection Account on or prior to
the Closing Date all amounts received and identified by the Servicer on or in
respect of the Receivables (including Net Liquidation Proceeds and all amounts
received by the Servicer in connection with the repossession and sale of a
Financed Vehicle (whether or not the related Receivable has been classified as a
Defaulted Receivable)) during the period from but excluding the Cutoff Date to
and including the second Business Day preceding the Closing Date.
 
(c)            The Depositor and the Servicer may make any remittances pursuant
to this Article with respect to a Collection Period net of distributions or
reimbursements to be made to or by the Depositor or the Servicer with respect to
such Collection Period; provided, however, that such obligations shall remain
separate obligations, no party shall have a right of offset, and each such party
shall account for all of the above described remittances and distributions as if
the amounts were deposited or transferred separately.
 
Section 5.03.  Application of Collections.  All payments by or on behalf of an
Obligor during each Collection Period with respect to each Receivable shall be
allocated to interest, fees, principal and other amounts in accordance with the
Simple Interest Method as effectuated through the Servicer’s customary
procedures.
 
Section 5.04.   Distributions.
 
(a)            On each Payment Date prior to any acceleration of the Notes
pursuant to Section 5.02 of the Indenture, the Indenture Trustee (based solely
on information contained in, and as directed by, the related Servicer’s Monthly
Certificate) shall apply Available Funds on deposit in the Collection Account to
make the following payments and deposits in the following order of priority:
 
(i)            first, pro rata, to (A) the Servicer, the Servicing Fee, and to
any Backup Servicer, the Backup Servicing Fee, in each case for the related
Collection Period, and all accrued and unpaid Servicing Fees and Backup
Servicing Fees with respect to prior Collection Periods and (B) any Successor
Servicer, Transition Costs (including boarding fees) not to exceed $200,000 in
the aggregate;
 
26

--------------------------------------------------------------------------------

(ii)            second, pro rata, to (A) the Class A-1 Noteholders, the Accrued
Class A-1 Note Interest for the related Interest Period, (B) the Class A-2
Noteholders, the Accrued Class A-2 Note Interest for the related Interest
Period, (C) the Class A-3 Noteholders, the Accrued Class A-3 Note Interest for
the related Interest Period and (D) the Class A-4 Noteholders, the Accrued
Class A-4 Note Interest for the related Interest Period;
 
(iii)            third, to the Principal Distribution Account for distribution
to the Noteholders pursuant to Section 5.04(b), the First Allocation of
Principal, if any;
 
(iv)            fourth, to the Class B Noteholders, the Accrued Class B Note
Interest for the related Interest Period;
 
(v)            fifth, to the Principal Distribution Account for distribution to
the Noteholders pursuant to Section 5.04(b), the Second Allocation of Principal,
if any;
 
(vi)            sixth, to the Class C Noteholders, the Accrued Class C Note
Interest for the related Interest Period;
 
(vii)            seventh, to the Principal Distribution Account for distribution
to the Noteholders in accordance with Section 5.04(b), the Third Allocation of
Principal, if any;
 
(viii)            eighth, to the Class D Noteholders, the Accrued Class D Note
Interest for the related Interest Period;
 
(ix)            ninth, to the Principal Distribution Account for distribution to
the Noteholders in accordance with Section 5.04(b), the Fourth Allocation of
Principal, if any;
 
(x)            tenth, to the Reserve Account, any amounts required to increase
the amount in the Reserve Account up to the Reserve Account Required Amount;
 
(xi)            eleventh, to the Principal Distribution Account for distribution
to the Noteholders in accordance with Section 5.04(b), the Regular Principal
Distribution Amount, if any;
 
(xii)            twelfth, pro rata, to (A) the Owner Trustee, the Indenture
Trustee, the Administrator and the Asset Representations Reviewer, accrued and
unpaid fees, reasonable expenses and indemnification amounts due and owing under
this Agreement, the Trust Agreement, the Administration Agreement, the Asset
Representations Review Agreement and the Indenture, as applicable, which have
not been previously paid, and to or at the direction of the Issuer, any expenses
of the Issuer incurred under the Basic Documents and (B) any Successor Servicer,
Transition Costs in excess of the related cap in clause (i) above; and
 
(xiii)            thirteenth, to the Certificate Distribution Account, any funds
remaining for distribution to the Certificateholders.
 
27

--------------------------------------------------------------------------------

Notwithstanding any other provision of this Section, following the occurrence
and during the continuation of an Event of Default which has resulted in an
acceleration of the Notes, the Indenture Trustee shall apply all amounts on
deposit in the Collection Account pursuant to Section 5.04(b) of the Indenture.
 
(b)            Prior to the acceleration of the Notes pursuant to Section 5.02
of the Indenture, on each Payment Date and the Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Principal Distribution
Account to Noteholders in respect of principal of the Notes to the extent of the
funds therein in the following order of priority:
 
(i)            first, to the Holders of the Class A-1 Notes, until the Class A-1
Notes have been paid in full;
 
(ii)            second, to the Holders of the Class A-2 Notes, until the
Class A-2 Notes have been paid in full;
 
(iii)            third, to the Holders of the Class A-3 Notes, until the
Class A-3 Notes have been paid in full;
 
(iv)            fourth, to the Holders of the Class A-4 Notes, until the
Class A-4 Notes have been paid in full;
 
(v)            fifth, to the Holders of the Class B Notes, until the Class B
Notes have been paid in full;
 
(vi)            sixth, to the Holders of the Class C Notes, until the Class C
Notes have been paid in full; and
 
(vii)            seventh, to the Holders of the Class D Notes, until the Class D
Notes have been paid in full.
 
Section 5.05.  Additional Deposits and Payments; Reserve Account.
 
(a)            On each Payment Date, the following deposits will be made to the
Collection Account, in immediately available funds, (i) the Seller will deposit
the aggregate Purchase Price with respect to Receivables repurchased by the
Seller pursuant to Section 3.03 hereof or Section 3.04 of the Receivables
Purchase Agreement, (ii) the Servicer will deposit (A) the aggregate Purchase
Price with respect to Receivables purchased by the Servicer pursuant to
Section 4.07 and (B) the Optional Purchase Price to be paid under Section 9.01
in connection with the Optional Purchase and (iii) the Indenture Trustee shall
deposit, from amounts on deposit in the Reserve Account, pursuant to (A) Section
5.05(c)(i), the Reserve Account Draw Amount and (B) Section 5.05(c)(ii) the
Reserve Account Excess Amount.  All such deposits shall be made no later than
11:00 a.m. (New York City time) on the related Payment Date.
 
(b)            On the Closing Date, the Depositor shall deposit an amount equal
to the Reserve Account Initial Deposit into the Reserve Account.  On each
Payment Date, based on amounts set forth in the related Servicer’s Monthly
Certificate, the Indenture Trustee will deposit into the Reserve Account,
pursuant to Section 5.04(a)(viii), from
28

--------------------------------------------------------------------------------

Available Collections not otherwise used on such Payment Date to pay the
Required Amount, the amount, if any, by which the Reserve Account Required
Amount for that Payment Date exceeds the Reserve Account Amount on that Payment
Date, after giving effect to all required withdrawals from the Reserve Account
on that Payment Date.
 
(c)            On each Payment Date, based on amounts set forth in the related
Servicer’s Monthly Certificate, the Indenture Trustee will withdraw from the
Reserve Account and deposit into the Collection Account, if (i) the Reserve
Account Draw Amount is greater than zero, an amount equal to the Reserve Account
Draw Amount and (ii) if the Reserve Account Amount on such Payment Date (after
giving effect to the withdrawal of any Reserve Account Draw Amount for such
Payment Date and the deposit thereof described in clause (i) above) exceeds the
Reserve Account Required Amount for such Payment Date, the amount of such
Reserve Account Excess Amount as Available Collections.
 
(d)            The Indenture Trustee shall receive written instructions from the
Servicer (which will be in the form of the Servicer’s Monthly Certificate)
directing the Indenture Trustee to make the foregoing deposits and payments.
 
Section 5.06.  Statements to Noteholders and the Indenture Trustee.
 
(a)            On or before each Determination Date, the Servicer shall deliver
to the Depositor, the Indenture Trustee and each Paying Agent, with a copy to
each Rating Agency, and the Indenture Trustee (upon receiving notice from the
Issuer that the statement has been posted on the Rule 17g-5 Website), shall make
available on its website described below a copy to the Issuer and to each
Noteholder as of the most recent Record Date, the Servicer’s Monthly Certificate
for the related Collection Period and Payment Date pursuant to Section 4.09(a). 
Such Servicer’s Monthly Certificate shall contain the following information (to
the extent applicable):
 
(i)            the aggregate amount being paid on such Payment Date in respect
of interest on and principal of each Class of Notes;
 
(ii)            the Class A-1 Note Balance, the Class A-2 Note Balance, the
Class A-3 Note Balance, the Class A-4 Note Balance, the Class B Note Balance,
the Class C Note Balance and the Class D Note Balance, in each case after giving
effect to payments on such Payment Date;
 
(iii)            (A) the amount deposited in the Reserve Account in respect of
such Payment Date, if any, (B) the Reserve Account Draw Amount and the Reserve
Account Excess Amount, if any, to be withdrawn from the Reserve Account on such
Payment Date, (C) the Reserve Account Required Amount and the balance on deposit
in the Reserve Account, after giving effect to withdrawals therefrom and
deposits thereto in respect of such Payment Date and (D) the change in such
balance from the immediately preceding Payment Date;
 
(iv)            the First Allocation of Principal, the Second Allocation of
Principal, the Third Allocation of Principal, the Fourth Allocation of Principal
and the Regular Principal Distribution Amount;
 
29

--------------------------------------------------------------------------------

(v)            the Pool Balance as of the close of business on the last day of
the preceding Collection Period and the Note Factor for each Class of Notes,
after giving effect to all payments of principal on such Payment Date;
 
(vi)            the amount of the Servicing Fee to be paid to the Servicer with
respect to the related Collection Period and the amount of any unpaid Servicing
Fees;
 
(vii)            the amount of the Backup Servicing Fee to be paid to any Backup
Servicer with respect to the related Collection Period and the amount of any
unpaid Backup Servicing Fees;
 
(viii)            the amount of the Class A-1 Noteholders’ Interest Carryover
Shortfall, the Class A-2 Noteholders’ Interest Carryover Shortfall, the
Class A-3 Noteholders’ Interest Carryover Shortfall, the Class A-4 Noteholders’
Interest Carryover Shortfall, the Class B Noteholders’ Interest Carryover
Shortfall, the Class C Noteholders’ Interest Carryover Shortfall and the Class D
Noteholders’ Interest Carryover Shortfall, if any, on such Payment Date and the
change in such amounts from the preceding Payment Date;
 
(ix)            the aggregate Purchase Price with respect to Purchased
Receivables (A) purchased by the Servicer and (B) repurchased by the Seller with
respect to such Collection Period;
 
(x)            the amount of Available Collections for such Collection Period;
 
(xi)            the number of, and aggregate amount of payments due on, the
related Receivables which are delinquent as of the end of such Collection
Period;
 
(xii)            the aggregate amount of proceeds received by the Servicer, net
of reimbursable out-of-pocket expenses, in respect of a Receivable which is a
Defaulted Receivable;
 
(xiii)            the amount remaining of any overcollateralization;
 
(xiv)            the number and aggregate Principal Balance of Receivables for
which the related Financed Vehicle has been repossessed; and
 
(xv)            the aggregate amount distributed to Certificateholders.
 
Each amount set forth pursuant to clause (i) or (viii) above relating to the
Notes shall be expressed as a dollar amount per $1,000 of the Initial Note
Balance of the Notes (or Class thereof).
 
(b)            The Indenture Trustee will make available via the Indenture
Trustee’s internet website all reports or notices required to be provided by the
Indenture Trustee under this Section and Section 7.07(b) of the Indenture.  Any
information that is disseminated in accordance with the provisions of this
Section shall not be required to be disseminated in any other form or manner. 
The Indenture Trustee will make no representations or warranties as to the
accuracy or completeness of such documents and will assume no responsibility
therefor.
 
The Indenture Trustee’s internet website shall be initially located at
http://www.usbank.com/abs or at such other address as shall be specified by the
Indenture Trustee from time to time in writing to the Noteholders, the Servicer,
the Issuer or any Paying Agent.  In connection with providing access to the
Indenture Trustee’s internet website, the Indenture Trustee may require
registration and the acceptance of a disclaimer.  The Indenture Trustee shall
not be liable for the dissemination of information in accordance with this
Agreement.
 
30

--------------------------------------------------------------------------------

The Indenture Trustee shall have no duty or obligation to verify or confirm the
accuracy of any of the information or numbers set forth in the Servicer’s
Monthly Certificate delivered by the Servicer to the Indenture Trustee, and the
Indenture Trustee shall be fully protected in relying upon such Servicer’s
Monthly Certificate and the information delivered pursuant to this Agreement.
 
(c)             Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Issuer, but not later
than the latest date permitted by Applicable Law, the Servicer shall cause each
Trustee to mail to each Person who at any time during such calendar year shall
have been a Securityholder, a statement, prepared by the Servicer, containing
certain information for such calendar year or, in the event such Person shall
have been a Securityholder during a portion of such calendar year, for the
applicable portion of such year, for the purposes of such Securityholder’s
preparation of federal income tax returns.  In addition, the Servicer shall
furnish to the Trustees for distribution to each such Person at such time any
other information necessary under Applicable Law for the preparation of such tax
returns.
 
Section 5.07.  Advances by the Servicer.
 
(a)            If, as of the end of any Collection Period, the payments received
during such Collection Period by or on behalf of an Obligor in respect of a
Receivable (other than a Purchased Receivable) shall be less than the related
monthly payment, whether as a result of any extension granted to the Obligor or
otherwise, then, at the option of the Servicer, an amount equal to the product
of the Principal Balance of such Receivable as of the first day of the related
Collection Period and one-twelfth of its APR minus the amount of interest
actually received on such Receivable during such Collection Period (each, an
“Advance”) may be deposited by the Servicer into the Collection Account on the
related Payment Date.  If such a calculation in respect of a Receivable results
in a negative number, an amount equal to such negative amount shall be paid to
the Servicer in reimbursement of any outstanding Advances.  In addition, in the
event that a Receivable becomes a Defaulted Receivable, the amount of accrued
and unpaid interest thereon (but not including interest for the current
Collection Period) shall, up to the amount of outstanding Advances, be withdrawn
from the Collection Account and paid to the Servicer in reimbursement of such
outstanding Advances.  No Advances will be made with respect to the Principal
Balance of Receivables.  The Servicer shall not be required to make an Advance
to the extent that the Servicer, in its sole discretion, shall determine that
such Advance is likely to become a Nonrecoverable Advance.
 
(b)            Notwithstanding the provisions of Section 5.07(a), the Servicer
shall be entitled to reimbursement for an outstanding Advance made in respect of
a Receivable, without interest, from the following sources with respect to such
Receivable: (i) subsequent payments made by or on behalf of the related Obligor,
(ii) Liquidation Proceeds and
31

--------------------------------------------------------------------------------

Recoveries and (iii) the Purchase Price.  If the Servicer determines that it has
made a Nonrecoverable Advance, the Servicer shall reimburse itself, without
interest, from unrelated amounts received by the Servicer on or in respect of
the Receivables (including Liquidation Proceeds and all amounts received by the
Servicer in connection with the repossession and sale of a Financed Vehicle
(whether or not the related Receivable has been classified as a Defaulted
Receivable)).

ARTICLE SIX

THE DEPOSITOR
 
Section 6.01.  Representations and Warranties of the Depositor.  The Depositor
makes the following representations and warranties upon which the Issuer is
deemed to have relied in acquiring the Depositor Conveyed Assets.  Such
representations are made as of the date of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the transfer of the
Depositor Conveyed Assets to the Issuer and the pledge thereof to the Indenture
Trustee in accordance with the terms of the Indenture.
 
(a)            Organization and Good Standing.  The Depositor is duly formed and
validly existing as a limited liability company in good standing under the laws
of the State of Delaware, with the power and authority under its amended and
restated limited liability company agreement and under the Delaware Limited
Liability Company Act to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
 
(b)            Due Qualification.  The Depositor 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 adversely affect the Depositor’s ability to transfer the
Depositor Conveyed Assets being conveyed by it to the Issuer pursuant to this
Agreement or the validity or enforceability of the Receivables.
 
(c)            Power and Authority.  The Depositor has the power and authority
under its limited liability company agreement and under the Delaware Limited
Liability Company Act to execute and deliver this Agreement and the other
Depositor Basic Documents and to carry out their respective terms; the Depositor
has full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Issuer, and the Depositor shall have duly
authorized such sale and assignment to the Issuer by all necessary limited
liability company action; and the execution, delivery and performance of this
Agreement and the other Depositor Basic Documents have been duly authorized by
the Depositor by all necessary limited liability company action.
 
(d)            Binding Obligation.  This Agreement effects a valid sale,
transfer, assignment and conveyance to the Issuer of the Receivables and the
other Collateral, enforceable against all creditors of and purchasers from the
Depositor.  This Agreement and the other Depositor Basic Documents, when duly
executed and
32

--------------------------------------------------------------------------------

delivered by the other parties hereto and thereto, shall constitute legal, valid
and binding obligations of the Depositor, enforceable against the Depositor in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization or similar laws now or
hereafter in effect relating to or affecting creditors’ rights generally and
relating to general principles of equity (whether applied in a proceeding at law
or in equity).
 
(e)            No Violation.  The consummation of the transactions contemplated
by this Agreement and the other Depositor Basic Documents and the fulfillment of
the terms hereof and thereof shall not conflict with, result in any breach of
any of the terms or provisions of or constitute (with or without notice or lapse
of time or both) a default under, the amended and restated limited liability
company agreement of the Depositor or any indenture, agreement, mortgage, deed
of trust or other instrument or agreement to which the Depositor is a party or
by which it is bound; 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 or agreement other than this
Agreement and the other Depositor Basic Documents; or violate any law, order,
rule or regulation applicable to the Depositor of any Governmental Authority
having jurisdiction over the Depositor.
 
(f)            No Proceedings.  There are no proceedings or investigations
pending or, to the Depositor’s knowledge, threatened, against the Depositor
before any Governmental Authority having jurisdiction over the Depositor or its
properties (i) asserting the invalidity of this Agreement or any other Basic
Document; (ii) seeking to prevent the issuance of the Notes or the consummation
of any of the transactions contemplated by this Agreement or any other Basic
Document; (iii) that could adversely affect the performance by the Depositor of
its obligations under, or the validity or enforceability of, this Agreement or
any other Depositor Basic Document; or (iv) seeking to adversely affect the
federal income tax attributes of the Issuer or the Notes.
 
(g)            No Consents.  The Depositor is not required to obtain the consent
of any other party or any consent, license, approval, registration,
authorization or declaration of or with any Governmental Authority in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement or any other Basic Document to which it is a party that has not
already been obtained.
 
Section 6.02.  Entities’ Existence.  During the term of this Agreement, the
Depositor will keep in full force and effect its existence, rights and
franchises as a limited liability company under the laws of the State of
Delaware and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the other Depositor Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby.  In addition, all transactions and dealings between the Depositor and
its Affiliates will be conducted on an arm’s-length basis.  The Depositor shall
not merge or consolidate with any other entity or otherwise amend its
organizational documents except in accordance with the provisions of its
organizational documents.
 
33

--------------------------------------------------------------------------------

Section 6.03.  Limitation on Liability of Depositor and Others.  The Depositor
and any director, officer, employee or agent thereof may reasonably rely in good
faith on the advice of counsel on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder. 
The Depositor shall not be under any obligation to appear in, prosecute or
defend any legal action that shall not be incidental to its obligations under
this Agreement and that in its opinion may involve it in any expense or
liability.
 
Section 6.04.  Depositor May Own Securities.  The Depositor and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the Depositor
or an Affiliate thereof, except as expressly provided herein or in any other
Basic Document.  Except as otherwise expressly provided in the Basic Documents,
Securities so owned by or pledged to the Depositor or any such Affiliate shall
have an equal and proportionate benefit under the Basic Documents, without
preference, priority or distinction as among the Notes and the Certificates, as
the case may be.
 
ARTICLE SEVEN

THE SERVICER AND THE BACKUP SERVICER
 
Section 7.01.  Representations and Warranties of  the Servicer.  The Servicer
makes the following representations and warranties upon which the Issuer is
deemed to have relied in acquiring the Depositor Conveyed Assets.  Such
representations are made as of the date of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the transfer of the
Depositor Conveyed Assets to the Issuer and the pledge thereof to the Indenture
Trustee in accordance with the terms of the Indenture.
 
(a)            Organization and Good Standing.  It is a California corporation
authorized to transact a banking business duly incorporated and validly existing
under the laws of California and continues to hold a valid certificate to do
business as such.  It is duly authorized to own its properties and transact its
business and is in good standing in each jurisdiction in which the character of
the business transacted by it or any properties owned or leased by it requires
such authorization and in which the failure to be so authorized could reasonably
be expected to have a Material Adverse Effect.  It has, and at all relevant
times had, the power, authority and legal right to acquire, own and service the
Receivables.
 
(b)            Securitization Structure.  It is the holder of 100% of the equity
and voting interest in the Depositor.
 
(c)            Licenses and Approvals.  It has obtained all necessary licenses
and approvals, in all jurisdictions where the failure to do so could reasonably
be expected to materially and adversely affect its ability to acquire, own and
service the Receivables.
 
(d)            Power and Authority.  It has the power and authority to execute
and deliver this Agreement and the other Servicer Basic Documents and to carry
out their respective terms; and the execution, delivery and performance of this
Agreement and the other Servicer Basic Documents have been duly authorized by it
by all necessary action.
 
34

--------------------------------------------------------------------------------

(e)            Binding Obligation.  This Agreement and the other Servicer Basic
Documents constitute its legal, valid and binding obligations, enforceable
against it in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors’ rights generally
and to general principles of equity, whether applied in a proceeding in equity
or at law.
 
(f)            No Violation.  It is not in default under any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing agreement,
or similar agreement or instrument to which it is a party except where such
default could not reasonably be expected to have a material adverse effect on
the Noteholders.  The consummation of the transactions contemplated by this
Agreement and the other Servicer Basic Documents and the fulfillment of their
respective terms 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
or both) a default under, its articles of incorporation or bylaws or any
indenture, agreement, mortgage, deed of trust or other instrument or agreement
to which it is a party or by which it is bound; or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument or
agreement, other than this Agreement and the other Basic Documents, or violate
any law, order, rule or regulation applicable to it of any Governmental
Authority having jurisdiction over it or any of its properties.
 
(g)            No Proceedings.  There are no proceedings or investigations
pending, or to its knowledge threatened, against it before any Governmental
Authority having jurisdiction over it or its properties:  (i) asserting the
invalidity of this Agreement or any of the other Basic Documents; (ii) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic Documents;
(iii) that could materially and adversely affect the performance by it of its
obligations under, or the validity or enforceability of, this Agreement or any
of the other Servicer Basic Documents; or (iv) seeking to adversely affect the
federal income tax or other federal, State or local tax attributes of the Notes.
 
(h)            No Consents.  The Servicer is not required to obtain the consent
of any other party or any consent, license, approval, registration,
authorization or declaration of or with any Governmental Authority in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement or any other Basic Document to which it is a party that has not
already been obtained.
 
Section 7.02.  Appointment and Representations and Warranties of Backup
Servicer.  Within 60 days of the occurrence of a Backup Servicer Appointment
Event, Mechanics Bank shall appoint an entity to be the Backup Servicer
hereunder, which appointment shall be subject to satisfaction of the Rating
Agency Condition.  Upon such appointment, such Backup Servicer will become party
to this Agreement by executing a joinder hereto, and will assume the duties of,
and otherwise act as, the Backup Servicer in accordance with the terms hereof,
such duties set forth on Exhibit E.  Effective as of the Backup Servicer
Appointment Date, such Backup Servicer further makes the following
representations and warranties upon which Mechanics Bank is deemed to have
relied in appointing the Backup Servicer:
 
35

--------------------------------------------------------------------------------

(a)            Organization and Good Standing.  It is duly incorporated or
organized, as the case may be, and validly existing under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and
continues to hold a valid certificate to do business as such.  It is duly
authorized to own its properties and transact its business and is in good
standing in each jurisdiction in which the character of the business transacted
by it or any properties owned or leased by it requires such authorization and in
which the failure to be so authorized could reasonably be expected to have a
Material Adverse Effect.  It has at all relevant times the power, authority and
legal right to service the Receivables.
 
(b)            Licenses and Approvals.  It has obtained all necessary licenses
and approvals, in all jurisdictions where the failure to do so could reasonably
be expected to materially and adversely affect its ability to service the
Receivables.
 
(c)            Power and Authority.  It has the power and authority to execute
and deliver this Agreement and to carry out its terms; and the execution,
delivery and performance of this Agreement has been duly authorized by it by all
necessary action.
 
(d)            Binding Obligation.  This Agreement constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally and to general principles of equity, whether applied in a
proceeding in equity or at law.
 
(e)            No Violation.  It is not in default under any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing agreement,
or similar agreement or instrument to which it is a party except where such
default could not reasonably be expected to have a material adverse effect on
the Noteholders.  The consummation of the transactions contemplated by this
Agreement and the fulfillment of its terms 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 or both) a default under, its articles of incorporation
or bylaws or any indenture, agreement, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it is bound; or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument or agreement (other than this Agreement, if applicable), or
violate any law, order, rule or regulation applicable to it of any Governmental
Authority having jurisdiction over it or any of its properties.
 
(f)            Proceedings.  There are no proceedings or investigations pending,
or to its knowledge threatened, against it before any Governmental Authority
having jurisdiction over it or its properties that could materially and
adversely affect the performance by it of its obligations under, or the validity
or enforceability of, this Agreement.
 
36

--------------------------------------------------------------------------------

(g)             No Consents.  It is not required to obtain the consent of any
other party or any consent, license, approval, registration, authorization or
declaration of or with any Governmental Authority in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
that has not already been obtained.
 
Section 7.03.  Indemnities of Servicer.
 
(a)            The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer.  Such
obligations shall include the indemnification by the Servicer of the Issuer, the
Trustees, any Backup Servicer and their respective officers, directors,
employees and agents from and against:
 
(i)            any and all losses, liabilities, claims, damages and expenses
arising out of or incurred in connection with the use, ownership or operation by
the Servicer or any Affiliate thereof of a Financed Vehicle;
 
(ii)            any taxes that may at any time be asserted against any of such
parties with respect to the transactions contemplated in this Agreement,
including any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including (A) any federal, State or other
income taxes, (B) any general corporation or franchise taxes or (C) any taxes
asserted with respect to the transfer of the Collateral to the Issuer or the
issuance and original sale of the Securities), and any costs and expenses in
defending against such taxes; provided, that for the avoidance of doubt, the
Servicer will not indemnify any such Person for any losses, liabilities, claims,
damages or expenses due to the credit risk of any Obligor and for which
reimbursement would constitute recourse for uncollectible Receivables;
 
(iii)            any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) directly or indirectly related to, arising
out of or incurred in connection with, in the case of (A) the Indenture Trustee,
the performance of its duties under the Indenture, (B) the Owner Trustee, the
performance of its duties herein and under the Trust Agreement, (C) either
Trustee, the acceptance, administration or performance by, or action or inaction
of such Trustee of the trusts and duties contained in the Basic Documents or (D)
any Backup Servicer, the performance of its duties under this Agreement; except
in each case to the extent that any such loss, liability, claim, damage or
expense suffered (1) is due to the willful misconduct, bad faith or negligence
of the Person seeking to be indemnified, (2) to the extent otherwise payable to
(x) the Indenture Trustee, arises from the Indenture Trustee’s breach of any of
its representations or warranties under the Indenture, (y) the Owner Trustee,
arises from the Owner Trustee’s breach of any of its representations or
warranties set forth under the Trust Agreement or (z) any Backup Servicer,
arises from such Backup Servicer’s breach of any of its representations or
warranties set forth under this Agreement or (3) shall arise out of or be
incurred as a result of the negligence or willful misconduct of such Backup
Servicer in connection with its performance of the duties of Successor Servicer
hereunder should the Indenture Trustee assume such duties.
 
37

--------------------------------------------------------------------------------

(iv)            any loss, liability, claim, damage or expense (including any
costs or expenses incurred in connection with bringing suit against the Servicer
to enforce its obligations) to the extent that such loss, liability, claim,
damage or expense arose out of, or was imposed upon any such Person (A) through
any breach of the Servicer’s obligations under any Servicer Basic Document, (B)
through the negligence, willful misfeasance or bad faith of the Servicer (except
errors in judgment) in the performance of its duties under this Agreement, (C)
by reason of breach of the Servicer’s representations, warranties, obligations
or duties under this Agreement or (D) for any violation of law by the Servicer.
 
(b)            Indemnification under this Section shall survive the resignation
or removal of the Servicer, either Trustee, any Backup Servicer or the
termination of this Agreement and shall include reasonable fees and expenses of
counsel, agents, experts and reasonable expenses of litigation.  For purposes of
this Section, in the event of the termination of the rights and obligations of
Mechanics Bank (or any successor thereto pursuant to Section 7.04) as Servicer
pursuant to Section 8.01(a), or the resignation by such Servicer pursuant to
Section 7.07, such Servicer shall be deemed to be the Servicer pending
appointment of a Successor Servicer (other than the Backup Servicer, if any, or
the Indenture Trustee) pursuant to Section 8.03, and in the case of any Backup
Servicer or the Indenture Trustee becoming Successor Servicer, Mechanics Bank
shall continue to be deemed the Servicer for purposes of the indemnities in this
Section.  If the Servicer shall have made any indemnity payments pursuant to
this Section, and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall promptly
repay such amounts to the Servicer, without interest.
 
Section 7.04.  Merger or Consolidation of, or Assumption of the Obligations of,
Servicer or Backup Servicer.  Any Person (i) into which the Servicer or any
Backup Servicer may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Servicer or any Backup Servicer shall be a party,
(iii) that acquires by conveyance, transfer or lease substantially all of the
assets of the Servicer or any Backup Servicer or (iv) succeeding to the business
of the Servicer or any Backup Servicer, which Person shall execute an agreement
of assumption to perform every obligation of the Servicer or such Backup
Servicer, as applicable, under this Agreement and each other Basic Document to
which such entity is a party, shall be the successor to the Servicer or the
Backup Servicer, respectively, under this Agreement and any such other Basic
Document without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement.  The Servicer or such Backup
Servicer, as applicable, shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trustees and each Rating Agency. 
Notwithstanding the foregoing, the Servicer shall not merge or consolidate with
any other Person where it shall not be the survivor thereof or permit any other
Person to become a successor to its automobile finance or leasing business
unless (i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 7.01 shall have been
breached (for purposes hereof, such representations and warranties shall speak
as of the date of the consummation of such transaction) and no event that, after
notice or lapse of time or both, would become a Servicer Termination Event shall
have occurred, (ii) the Servicer shall have delivered to the Trustees an
Officer’s Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent provided for in this
38

--------------------------------------------------------------------------------

Agreement relating to such transaction have been complied with, (iii) the
Servicer shall have delivered to the Trustees an Opinion of Counsel to the
effect that either (a) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to preserve
and protect the interest of the Issuer and the Indenture Trustee, respectively,
in the assets of the Issuer and reciting the details of such filings or (b) no
such action shall be necessary to preserve and protect such interest, (iv) such
other Person is an Eligible Servicer and (v) such other Person shall have
validly assumed the obligations of the Servicer under the Servicer Basic
Documents.
 
Section 7.05.  Limitation on Liability of Servicer, Backup Servicer and Others.
 
(a)            Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability to the Issuer, the Depositor,
either Trustee or any Securityholder for any action taken or for refraining from
the taking of any action pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such Person against any liability by reason of willful misfeasance, bad faith or
negligence in the performance of its duties nor otherwise alter the
indemnification obligations under Section 7.03.  The Servicer, any Backup
Servicer and their respective directors, officers, employees or agents may
conclusively rely in good faith on the written advice of counsel or any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
 
(b)            Should the Indenture Trustee at any time agree to become
Successor Servicer hereunder, the parties expressly acknowledge and consent to
the Indenture Trustee’s simultaneously acting in the capacity of Successor
Servicer and Indenture Trustee.  The Indenture Trustee may, in such capacities,
discharge its separate functions fully, without hindrance or regard to conflict
of interest principles, duty of loyalty principles or other breach of fiduciary
duties to the extent that any such conflict or breach arises from the
performance by the Indenture Trustee of express duties set forth in this
Agreement in any of such capacities.
 
(c)            The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of Backup Servicer hereunder.  Without limiting the generality of the foregoing,
the Backup Servicer, except as expressly set forth herein, shall have no
obligation to supervise, verify, monitor or administer the performance of the
Servicer.  The Backup Servicer may act through its agents, nominees, attorneys
and custodians in performing any of its duties and obligations under this
Agreement but any such appointment shall not release the Backup Servicer from
its obligations and responsibilities hereunder.
 
Notwithstanding anything contained herein to the contrary, in no event shall the
Backup Servicer be liable for any consequential, incidental or special damages,
including damages for loss of currency, funds, data, profits or goodwill.  The
Backup Servicer’s maximum liability for any breach of this Agreement by it in
its capacity as Backup Servicer shall not exceed the fees actually paid to
Backup Servicer hereunder for the services as Backup Servicer for the 12-month
period immediately preceding such breach; provided, however, that the
limitations set forth in this Section shall not apply to or in any way limit the
Backup Servicer’s liability arising from its willful misconduct or
39

--------------------------------------------------------------------------------

gross negligence.  It is expressly agreed and acknowledged that the Backup
Servicer is not guaranteeing or insuring the performance of or assuming any
liability for the obligations of the other parties hereto or any of the
Receivables.
 
Section 7.06.  Appointment of Subservicer.
 
(a)            Subject to Section 7.06(b), the Servicer may at any time, upon
notice to the Indenture Trustees and each Rating Agency, reasonably appoint a
subservicer in good faith to perform all or any portion of its obligations as
Servicer hereunder.
 
(b)            The appointment of a subservicer pursuant to Section 7.06(a) is
subject to the condition that the Servicer remains obligated and liable to the
Owner Trustee, the Indenture Trustee and the Noteholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the Trust
Estate.
 
(c)            The fees and expenses of any subservicer shall be as agreed
between the Servicer and such subservicer from time to time, and none of the
Issuer, the Trustees, any Backup Servicer or any Securityholders shall have any
responsibility therefor.
 
(d)            Any such subservicing agreement shall provide that a successor to
the Servicer may at its discretion, upon becoming Successor Servicer, either
continue or terminate such fee arrangement.
 
Section 7.07.  Servicer and Backup Servicer Not to Resign.
 
(a)            Subject to the provisions of Section 7.04, neither the Servicer
nor any Backup Servicer shall resign from the obligations and duties imposed on
it by this Agreement, except upon a determination that the performance of its
duties under this Agreement shall no longer be permissible under Applicable Law.
 
(b)            Notice of any determination that the performance by the Servicer
or any Backup Servicer of its duties contemplated hereunder is no longer
permitted under Applicable Law shall be communicated to the Trustees at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered by the Servicer or any Backup Servicer to the Trustees concurrently
with or promptly after such notice.  Any such resignation of the Servicer will
become effective in accordance with Section 8.03 and, except as may otherwise be
required by Applicable Law, no resignation of the Backup Servicer shall become
effective until (i) a successor has been appointed and the Rating Agency
Conditions has been satisfied or (ii) a successor acceptable to the Noteholders
representing not less than 51% of the Note Balance of the Controlling Class
shall have assumed the responsibilities and obligations of the Backup Servicer;
provided, that if no successor Backup Servicer has been appointed within 30 days
of resignation, Noteholders representing not less than 51% of the Note Balance
of the Controlling Class may petition any court of competent jurisdiction for
such appointment.
 
40

--------------------------------------------------------------------------------

Section 7.08.  Mechanics Bank May Own Securities.  Mechanics Bank and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Securities with the same rights as it would have if it were not
the Servicer or an Affiliate thereof, except as expressly provided herein or in
any other Basic Document.  Except as otherwise expressly provided in the Basic
Documents, Securities so owned by or pledged to the Servicer or any such
Affiliate shall have an equal and proportionate benefit under the Basic
Documents, without preference, priority or distinction as among the Notes and
the Certificates, as the case may be.
 
Section 7.09.  Regulation RR Risk Retention.  Mechanics Bank and the Depositor
agree that Mechanics Bank (i) will cause the Depositor to, and the Depositor
will, retain at least 5.0% of each Class of Notes and the Certificates on the
Closing Date and (ii) will not permit the Depositor to, and the Depositor will
not, sell, transfer, finance or hedge such Securities except as permitted by
Regulation RR.
 
41

--------------------------------------------------------------------------------

ARTICLE EIGHT

DEFAULT
 
Section 8.01.  Servicer Termination Events.
 
(a)            For purposes of this Agreement, the occurrence and continuance of
any of the following shall constitute a “Servicer Termination Event”:
 
(i)            any failure by the Servicer to deposit into the Collection
Account any proceeds or any payment required to be so delivered under the terms
of this Agreement that continues unremedied for a period of two Business Days;
 
(ii)            any representation or warranty of the Servicer made in this
Agreement, any other Servicer Basic Document or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
herewith or therewith, other than any representation or warranty relating to a
Receivable that has been purchased by the Servicer in accordance with the terms
hereof, shall prove to have been incorrect in any material respect as of the
time when the same shall have been made, and the circumstance or condition in
respect of which such representation or warranty was incorrect shall not have
been eliminated or otherwise cured for a period of 30 days after (A) the date of
discovery of such failure by a Responsible Officer of the Servicer or
(B) written notice of such circumstance or condition, requiring the same to be
eliminated or cured, shall have been received by the Servicer from the
Depositor, either Trustee or the Noteholders holding at least 25% of the Note
Balance of the Controlling Class;
 
(iii)            any failure by the Servicer to deliver to the Owner Trustee,
the Indenture Trustee, and the Seller the Servicer’s Monthly Certificate by the
applicable Determination Date, which failure continues unremedied for a period
of five Business Days;
 
(iv)            any failure on the part of the Servicer duly to observe or
perform any other covenants or agreement of the Servicer set forth in this
Agreement, which failure materially and adversely affects the rights of the
Depositor or Noteholders and continues unremedied for a period of 30 days after
(A) the date of discovery of such failure by a Responsible Officer of the
Servicer or (B) written notice of such circumstance or condition, requiring the
same to be eliminated or cured, shall have been received by the Servicer from
the Depositor, either Trustee or the Noteholders holding at least 25% of the
Note Balance of the Controlling Class; or
 
(v)            an Insolvency Event shall occur with respect to the Servicer.
 
Section 8.02.  Consequences of a Servicer Termination Event.
 
(a)            Following a Servicer Termination Event, the Indenture Trustee
may, or, at the written direction of Noteholders holding not less than 51% of
the Note Balance of the Controlling Class shall, terminate all of the rights and
obligations of the Servicer under this Agreement by notice in writing to the
Servicer, each Rating Agency, the
42

--------------------------------------------------------------------------------

Noteholders and the Asset Representations Reviewer.  On or after the receipt by
the Servicer of such written notice, all authority, power, obligations and
responsibilities of the Servicer under this Agreement automatically shall pass
to, be vested in and become obligations and responsibilities of, either the
Backup Servicer (if one has been appointed and becomes the Successor Servicer
pursuant to Section 8.03) or another Successor Servicer appointed pursuant to
Section 8.03; provided, however, that the Successor Servicer shall have no
liability with respect to any obligation that was required to be performed by
the terminated Servicer prior to the date that such Successor Servicer becomes
the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer.  As soon as practicable after the
declaration of a Servicer Termination Event, the Indenture Trustee shall notify
the Backup Servicer, if any, thereof and in any event shall notify the Backup
Servicer, if any, of any notice by the Indenture Trustee to, or direction to the
Indenture Trustee from, Noteholders regarding a Servicer Termination Event.
 
(b)            The Successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables, and related documents to show the Indenture
Trustee (or the Issuer if the aggregate Note Balance has been reduced to zero)
as lienholder or secured party on the related certificates of title of the
Financed Vehicles or otherwise.  The terminated Servicer agrees to cooperate
with the Successor Servicer and with the Indenture Trustee in effecting the
termination of the responsibilities and rights of the terminated Servicer under
this Agreement, including (i) the transfer to the Successor Servicer for
administration by it of all money and property held by the terminated Servicer
with respect to the Receivables and other records relating to the Receivables,
including the Receivable Files, held by the terminated Servicer and a reasonably
current computer tape or other electronic storage device containing in readable
form all information necessary to enable the Successor Servicer to service the
Receivables, (ii) the prompt transfer of any remaining amounts relating to
Receivables in the possession of the Servicer to the Indenture Trustee,
(iii) the notification of existing Obligors of the new address for payment and
(iv) the prompt remittance of any future amounts received by the Servicer with
respect to Receivables to the successor.  The terminated Servicer shall also
provide the Successor Servicer access to personnel and computer records of such
terminated Person in order to facilitate the orderly and efficient transfer of
servicing duties.
 
(c)            If the Servicer is replaced, the outgoing Servicer shall be
entitled to receive reimbursement for outstanding and unreimbursed Advances made
by it pursuant to Section 5.07.
 
Section 8.03.  Appointment of Successor Servicer.
 
(a)            Upon the resignation of the Servicer pursuant to Section 7.07 or
the termination of the Servicer pursuant to Section 8.02, the Backup Servicer,
if any, or, under the circumstances provided in Section 8.03(b), a successor
Servicer other than the Backup Servicer, shall be the successor in all respects
to the Servicer in its capacity as Servicer under this Agreement (the Backup
Servicer or such other successor Servicer as successor to the Servicer, the
“Successor Servicer”) and, except as otherwise provided
43

--------------------------------------------------------------------------------

herein, shall be subject to all the obligations and duties of the Servicer
pursuant to the terms of this Agreement.  The Successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effect any such
succession, including providing such information in writing as reasonably
requested by the Depositor to allow the Depositor to comply with its Exchange
Act reporting obligations with respect to such succession.
 
(b)            Notwithstanding the provisions of Section 8.03(a), upon the
resignation of the Servicer pursuant to Section 7.07 or the termination of the
Servicer pursuant to Section 8.02to the extent no Backup Servicer is then
appointed, or if the appointed Backup Servicer is legally unable so to act,
Mechanics Bank shall appoint an Eligible Servicer to be the successor to the
Servicer, which appointment will become effective upon the satisfaction of the
Rating Agency Condition.  Pending appointment pursuant to this Section, the
outgoing Servicer shall continue to act as Servicer until a successor has been
appointed and accepted such appointment.  Notwithstanding the foregoing, if
Mechanics Bank does not so appoint an Eligible Servicer, either Trustee or the
Holders of not less than 51% of the Note Balance of the Controlling Class may
petition a court of competent jurisdiction to appoint an Eligible Servicer as
the successor to the Servicer.
 
(c)            Upon appointment, the Successor Servicer shall be the successor
in all respects to its predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on its predecessor Servicer, and shall be entitled to the Servicing Fee
as and to the extent provided for in this Agreement and all the rights granted
to the predecessor in such capacity by the terms and provisions of this
Agreement and the other Servicer Basic Documents; provided, however, that the
Successor Servicer shall not be required to make any Advances pursuant to
Section 5.07.  The Indenture Trustee shall withdraw from the Collection Account
and remit to the Successor Servicer or such other party entitled thereto all
reasonably incurred Transition Costs, subject to the provisions of Section
5.04(a) of this Agreement and Section 5.04(b) of the Indenture.
 
Section 8.04.  Notification to Noteholders.  Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article, the
Indenture Trustee shall give prompt written notice thereof to the Noteholders,
each Rating Agency and the Asset Representations Reviewer.
 
Section 8.05.  Waiver of Past Servicer Termination Events.  The Noteholders
holding not less than 51% of the Note Balance of the Controlling Class may, on
behalf of all Noteholders, waive in writing any Servicer Termination Event and
its consequences, except an event resulting from the failure to make any
required deposits to or payments from the Trust Accounts in accordance with this
Agreement.  Upon any such waiver of a Servicer Termination Event, such event
shall cease to exist, and shall be deemed to have been remedied for every
purpose of this Agreement.  No such waiver shall extend to any subsequent or
other event or impair any right consequent thereto.
 
44

--------------------------------------------------------------------------------

ARTICLE NINE

TERMINATION
 
Section 9.01.  Optional Purchase of All Receivables.
 
(a)            If, as of the last day of any Collection Period, the Pool Balance
shall be less than or equal to 10% of the Cutoff Date Pool Balance, the Servicer
shall have the option to purchase on the following Payment Date the Trust
Estate, other than the Reserve Account.  To exercise such option, the Servicer
shall notify the Depositor, the Trustees and the Rating Agencies, not fewer than
ten nor more than 30 days prior to the Payment Date on which such repurchase is
to be effected and shall deposit into the Collection Account on the Business Day
prior to the related Payment Date an amount equal to the aggregate Purchase
Price for the Receivables (including Receivables that became Defaulted
Receivables during the related Collection Period) (the “Optional Purchase
Price”), less the Reserve Account Amount, which funds shall be transferred from
the Reserve Account to the Collection Account.  Notwithstanding the foregoing,
the Servicer shall not be permitted to exercise such option on any Payment Date
unless the amount to be deposited in the Collection Account (together with
amounts on deposit in the Reserve Fund and the Collection Account) pursuant to
this Section is at least equal to the sum of (i) the Note Balance as of such
Payment Date, (ii) accrued but unpaid interest on each Class of Notes at the
related Interest Rate, (iii) all amounts due to the Servicer in respect of its
servicing compensation, any unreimbursed Advances and Nonrecoverable Advances
and all accrued but unpaid amounts owing to the Trustees, the Asset
Representations Reviewer, any Backup Servicer and the Administrator.
 
The aggregate amount so deposited in respect of such Payment Date, plus, to the
extent necessary, all other Available Funds, shall be used to make payments in
full to the Noteholders in the manner set forth in Section 5.04.  If the
Servicer exercises the Optional Purchase, the Notes shall be redeemed in whole
but not in part on the related Payment Date for the Redemption Price.  The
obligations of the Servicer under this Agreement, except pursuant to Article
Seven, shall terminate upon the purchase of the Receivables by the Servicer
under this Section.
 
The Servicer agrees to give the Indenture Trustee notice, at least 30 days prior
to the Payment Date on which such purchase is to be effected, that the Servicer
reasonably believes that the Pool Balance will be less than or equal to 10% of
the Cutoff Date Pool Balance as of the last day of the related Collection Period
and that the Servicer expects (but is not obligated) to provide the notice
required in the first paragraph of this Section and thereafter to purchase the
Trust Estate (other than the Reserve Account) as provided in the first paragraph
of this Section.
 
(b)            Following the satisfaction and discharge of the Indenture
following the reduction of the aggregate Note Balance to zero, the Owner Trustee
will succeed to the rights of the Indenture Trustee pursuant to this Agreement. 
Notwithstanding the satisfaction and discharge of the Indenture and the
reduction of the aggregate Note Balance to zero, the Servicer shall continue to
perform its obligations under this Agreement until the earlier of (i) exercise
by the Servicer of its Optional Purchase right under Section 9.01(a) or (ii)
repayment in full or liquidation of the last of the Receivables.
 
Section 9.02.  Termination.  Notwithstanding anything in this Agreement to the
contrary, this Agreement shall terminate upon the earliest to occur of (i) the
maturity or liquidation of the latest maturing Receivable and the disposition of
any amounts received thereon in accordance with Section 5.04, (ii) the payment
to the Holders of the Securities of all amounts required to be paid to them
under the Basic Documents and (iii) the exercise by the Servicer of its rights
under Section 9.01(a), the deposit into the Collection Account by the Servicer
of the amount required to be deposited therein in accordance with Section
9.01(a) and the application of such amounts in accordance with Section 5.04.
 
45

--------------------------------------------------------------------------------

ARTICLE TEN

MISCELLANEOUS
 
Section 10.01.  Amendment.
 
(a)            This Agreement may be amended from time to time by the parties
hereto without the consent of the Noteholders to cure any ambiguity, to correct
or supplement any provision hereof that may be defective or inconsistent with
any other provision of this Agreement or the Prospectus, to add or supplement
any credit enhancement arrangement or to add, change or eliminate any other
provisions with respect to matters or questions arising under this Agreement;
provided, however, that no such amendment may materially adversely affect the
interests of any Noteholder.  An amendment to this Agreement shall be deemed not
to materially adversely affect the interests of any Noteholder if (i) the Person
requesting such amendment obtains and delivers to the Trustees an Opinion of
Counsel or an Officer’s Certificate of the Issuer to that effect or (ii) the
Rating Agency Condition has been satisfied with respect to such action.
 
(b)            This Agreement may also be amended from time to time by the
parties hereto, with the consent of Noteholders holding not less than 51% of the
Note Balance of the Controlling Class (or, if the Notes are no longer
Outstanding, Holders of Certificates evidencing not less than 51% of the
aggregate Percentage Interests), for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment, without the consent of 100% of the Holders of the Notes,
may (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, or change the allocation of priority of, collections of payments
on or in respect of the Receivables or distributions that are required to be
made for the benefit of the Noteholders or change any Interest Rate or the
Reserve Account Required Amount or (ii) reduce the percentage of the Note
Balance of the Controlling Class, the consent of the Noteholders of which is
required for any amendment to this Agreement
 
(c)            Notwithstanding the provisions of Sections 10.01(a) and (b), no
such amendment may significantly change the permitted activities or powers of
the Issuer, even if such amendment would not have an adverse effect on the
interests of Noteholders, without the consent of Noteholders holding not less
than 51% of the Note Balance of the Controlling Class.
 
(d)            Prior to the execution of any amendment pursuant to this Section,
the Trustees shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent thereto have been satisfied.  Each
Trustee may, but shall not be obligated to, enter into any such amendment that
affects such Trustee’s rights, duties or immunities under this Agreement.
 
(e)            Prior to the execution of any amendment to this Agreement, the
Depositor shall provide each Rating Agency with written notice of the substance
of such amendment.  Promptly after the execution of any amendment or consent,
the Administrator shall furnish written notification of the substance of such
amendment or consent to each Noteholder, the Indenture Trustee and each Rating
Agency.
 
46

--------------------------------------------------------------------------------

(f)            Notwithstanding the foregoing provisions of this Section, in the
event the parties desire to further clarify or amend any provision of Sections
4.17 or 4.18, or subject to Section 4.17(c), the information contained in
Schedule B, this Agreement shall be amended to reflect the new agreement among
the parties covering matters in Sections 4.17 or 4.18 or Schedule B; provided,
however, that (i) such amendment will not require any Opinion of Counsel or
satisfaction of the Rating Agency Condition, (ii) the Servicer shall deliver an
Officer’s Certificate to the Indenture Trustee that such amendment is in
accordance with the terms of this Agreement and (iii) the Servicer shall have
given written notice to the Rating Agencies not fewer than ten days prior to the
effectiveness of any such amendment.
 
Section 10.02.  Protection of Title to Issuer.
 
(a)            Mechanics Bank, as initial Servicer, shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, or take such other actions all in such a manner and in such places
as may be required by Applicable Law or as shall be necessary to fully preserve,
maintain and protect the interest of the Issuer and the Indenture Trustee in the
Trust Estate.  The Issuer hereby authorizes the filing of financing statements
describing as the collateral covered thereby “all assets of the debtor,
including all personal property of the debtor” or words to that effect, and any
limitations on such collateral description, notwithstanding that such collateral
description may be broader in scope than the Conveyed Assets described in this
Agreement.  All financing statements filed or to be filed against in connection
with this Agreement describing the Trust Estate shall contain a statement to the
following effect:  “A purchase of, or grant of a security interest in, any of
the collateral covered by this financing statement will violate the rights of
the secured party”.  The Servicer shall deliver or cause to be delivered to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above as soon as available
following such filing.
 
(b)            Neither the Depositor, the Seller nor the Servicer shall change
its name, identity or limited liability company or corporate structure, as
applicable, in any manner that would, could or might make any financing
statement or continuation statement filed in accordance with Section 10.02(a)
seriously misleading under Section 9-506 or 9-507 of the UCC, unless it shall
have given the Owner Trustee and the Indenture Trustee at least 45 days’ prior
written notice thereof and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation statements or such new
financing statements as may be necessary to continue the perfection of the
interest of the Issuer and the Indenture Trustee for the benefit of the
Noteholders in the Trust Estate.
 
(c)            Each of the Depositor, the Issuer and Mechanics Bank shall give
the Trustees at least 30 Business Days’ prior written notice of any change in
its name, identity, organizational structure or jurisdiction of organization or
any relocation of its principal place of business or chief executive office if,
as a result of such change or relocation, the applicable provisions of the UCC
would require the filing of any amendment to any previously filed financing
statement or continuation statement or of any new financing statement, and shall
promptly file any such amendment or new financing statement.  The Servicer shall
at all times maintain each office from which it shall service Receivables, and
its principal executive office, within the United States (other than the State
of Louisiana).
 
47

--------------------------------------------------------------------------------

(d)            The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of each Receivable, including payments and
recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on or with respect to each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of each such Receivable.
 
(e)            Each of the Servicer and the Depositor shall maintain its
computer systems so that, from and after the time of sale of the Receivables
under this Agreement, its master computer records (including any backup
archives) that refer to a Receivable to indicate clearly and unambiguously the
interest of the Issuer and the Indenture Trustee in such Receivable and that
such Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee pursuant to the Indenture.  Indication of the interest of the Issuer and
the Indenture Trustee in a  Receivable shall be deleted from or modified on the
computer systems of the Depositor and the Servicer when, and only when, the
Receivable shall have been paid in full, repurchased by the Seller or purchased
by the Servicer, as the case may be.
 
(f)            If at any time the Depositor or Mechanics Bank shall propose to
sell, grant a security interest in or otherwise transfer any interest in any
motor vehicle retail installment sale contract or installment loan to any
prospective purchaser, lender or other transferee, it shall provide such
prospective purchaser, lender or other transferee computer tapes, records or
printouts (including any restored from backup archives) that, if they shall
refer in any manner whatsoever to any Receivable, indicate clearly and
unambiguously that such Receivable has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee (unless such Receivable has been paid
in full, repurchased by the Seller or purchased by the Servicer.
 
(g)            The Servicer shall permit the Trustees and their respective
agents at any time during normal business hours, upon reasonably prior notice,
to inspect, audit and make copies of and abstracts from the Servicer’s records
regarding any Receivable.
 
(h)            Upon request, the Servicer shall furnish to the Owner Trustee or
the Indenture Trustee, within five Business Days, a list of all Receivables (by
Contract number and name of Obligor) then held as part of the Issuer, together
with a reconciliation of such list to the Schedule of Receivables furnished
prior to such request indicating removal of Conveyed Assets from the Trust.
 
Section 10.03.  Notices.  All demands, notices, communications and instructions
upon or to the Depositor, the Servicer, the Issuer, the Owner Trustee, the
Indenture Trustee or any Rating Agency under this Agreement shall be in writing,
personally delivered, faxed and followed by first class mail, or mailed by
certified mail, return receipt requested, and shall be deemed to have been duly
given upon receipt:
 
48

--------------------------------------------------------------------------------

(a)            in the case of the Depositor, to:
 
California Republic Funding, LLC
1111 Civic Drive, Suite 390
Walnut Creek, California 94596
Attention:  General Counsel
Facsimile No. (925) 627-3274
 
with a copy to
 
Mechanics Bank
1111 Civic Drive, Suite 390
Walnut Creek, California 94596
Attention:  General Counsel
Facsimile No. (925) 627-3274
 
(b)            in the case of the Servicer, the Administrator and Custodian, to:
 
Mechanics Bank
1111 Civic Drive, Suite 390
Walnut Creek, California 94596
Attention:  General Counsel
Facsimile No. (925) 627-3274;
 
(c)            in the case of Indenture Trustee, to:
 
U.S. Bank National Association
190 South LaSalle Street
7th Floor Mail Code MK-IL-SL7R
Chicago, Illinois  60603
Attention: Structured Finance – California Republic Auto Receivables Trust
2018-1
 
(d)            in the case of the Issuer or the Owner Trustee, to:
 
Wilmington Trust
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention:  Corporate Trust Administration
Facsimile No. (302) 651-8882;
 
(e)            in the case of any Backup Servicer, to the address identified in
the related joinder hereto executed by such Backup Servicer;
 
(f)            in the case of the Asset Representations Reviewer, to:
 
Center Street Finance
200 North Mesquite Street Suite 202
Arlington, Texas  76011
Attention: Chris Hawke
Facsimile No. (214) 853-5870;
 
49

--------------------------------------------------------------------------------

(g)            in the case of DBRS, to:
 
DBRS, Inc.
140 Broadway
New York, New York  10005
Facsimile No. (212) 806-3201
abs_surveillance@dbrs.com; and
 
(h)            in the case of Standard & Poor’s, to:
 
Standard & Poor’s Ratings Services
55 Water Street
New York, New York 10041
Attention: Asset Backed Surveillance Department
 
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
 
Section 10.04.  Assignment by the Depositor or the Servicer.
 
(a)            Notwithstanding anything to the contrary contained herein, except
as provided in Sections 7.04, 8.02 and 10.04(b), this Agreement may not be
assigned by the Depositor or the Servicer without the prior written consent of
the Trustees and Holders of Notes evidencing at least 66-2/3% of the Note
Balance of the Controlling Class.
 
(b)            The Depositor hereby acknowledges and consents to the Grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest of
the Issuer in, to and under the Trust Estate and the assignment of any or all of
the Issuer’s rights and obligations hereunder to the Indenture Trustee.
 
Section 10.05.  Limitations on Rights of Others.  The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Depositor,
the Issuer, the Trustees and the Noteholders and their successor and permitted
assigns, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
 
Section 10.06.  Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
 
50

--------------------------------------------------------------------------------

Section 10.07.  Counterparts.  This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be an original, but
all of which shall together constitute but one and the same instrument.
 
Section 10.08.  Table of Contents and Headings.  The Table of Contents and the
various headings in this Agreement are included for convenience only and shall
not affect the meaning or interpretation of any provision of this Agreement.
 
Section 10.09.  GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS (OTHER THAN SECTIONS 5‑1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.  EACH OF THE PARTIES
HERETO HEREBYAGREES TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK, LOCATED IN THE BOROUGH OF MANHATTAN, AND THE FEDERAL COURTS LOCATED
WITHIN THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN.  EACH OF THE PARTIES
HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO
OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS
INDENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY.  INSTEAD, ANY SUCH DISPUTE
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
 
Section 10.10.  No Partnership or Joint Venture.  Nothing herein contained shall
constitute a partnership between or joint venture by the parties hereto or
constitute either party the agent of the other.  No party shall hold itself out
contrary to the terms of this Section nor become liable by any representation,
act or omission of the other contrary to the provisions hereof.  This Agreement
is not for the benefit of any third party and shall not be deemed to give any
right or remedy to any such party whether referred to herein or not.
 
Section 10.11.  Confidential Information.  The Issuer agrees that it will
neither use nor disclose to any Person names and addresses of the Obligors or
any other personally identifiable information of an Obligor, except in
connection with the enforcement of the Issuer’s rights hereunder, under the
Receivables, under the Receivables Purchase Agreement or any other Basic
Document or as required by any of the foregoing or by Applicable Law.
 
51

--------------------------------------------------------------------------------

Section 10.12.  Nonpetition Covenant.  Each of the parties hereto covenants that
it will not at any time institute against, or join any Person in instituting
against, the Issuer or the Depositor any bankruptcy, reorganization,
arrangement, insolvency or liquidation Proceedings or other Proceedings under
any Insolvency Law in connection with any obligations relating to the Basic
Documents, and agrees that it will not cooperate with or encourage others to
file a bankruptcy petition against the Issuer or the Depositor.
 
Section 10.13.  Limitation of Liability of Trustees.
 
(a)            Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall Wilmington Trust in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee of the Issuer, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer in accordance with the priorities set forth
herein.  For all purposes of this Agreement, in the performance of its duties or
obligations hereunder or in the performance of any duties or obligations of the
Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles Six, Seven and Eight of the
Trust Agreement.
 
(b)            Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by U.S. Bank, not in its individual capacity but
solely as Indenture Trustee, and in no event shall U.S. Bank have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer in accordance with the priorities set forth herein.
 
(c)            The parties hereto acknowledge that in accordance with
Section 326 of the Patriot Act, U.S. Bank and Mechanics Bank, like all financial
institutions and in order to help fight the funding of terrorism and money
laundering, are required to obtain, verify, and record information that
identifies each person or legal entity that establishes a relationship or opens
an account.  The parties to this Agreement agree that they will provide U.S.
Bank and Mechanics Bank, as the case may be, with such information as either may
request in order for U.S. Bank and Mechanics Bank to satisfy the requirements of
the Patriot Act.
 
52

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Sale and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
 

  CALIFORNIA REPUBLIC FUNDING, LLC          
 
By:
        Name:       Title:          

 

  MECHANICS BANK          
 
By:
        Name:       Title:          

 
 
 
 

--------------------------------------------------------------------------------

  U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee          
 
By:
        Name:       Title:          

 
 
 
 
 

--------------------------------------------------------------------------------

 
CALIFORNIA REPUBLIC AUTO
RECEIVABLES TRUST 2018-1
            By:
WILMINGTON TRUST, NATIONAL
ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
         
 
By:
        Name:       Title:          

 
 
 
 

 

--------------------------------------------------------------------------------

EXHIBIT A
 
LOCATION OF RECEIVABLE FILES
 
Mechanics Bank
1111 Civic Drive, Suite 390
Walnut Creek, California  94596

Iron Mountain
1025 -1035 North Highland Avenue
Los Angeles, California  90038

Iron Mountain
1340 East 6th Street
Los Angeles, California  90021

Iron Mountain
890 Pilot Road
Las Vegas, Nevada  89119

Iron Mountain
4105 North Lamb Boulevard
Las Vegas, Nevada  89110

Iron Mountain
3051 North Marion Drive, Suite 101
Las Vegas, Nevada  89120

Iron Mountain
4105 North Lamb Boulevard
Las Vegas, Nevada  89110

Iron Mountain
1800 Columbian Club
Carrollton, Texas  75006

Iron Mountain
4117 Pinnacle Point
Dallas, Texas  75211

 
A-1

--------------------------------------------------------------------------------

EXHIBIT B
 
FORM OF SERVICER’S MONTHLY CERTIFICATE
 
PURSUANT TO SECTION 4.09(a) OF THE SALE AND SERVICING AGREEMENT
 
[Determination Date]
 
This Servicer’s Monthly Certificate is delivered in connection with the sale by
Mechanics Bank, a California corporation licensed and authorized to transact a
banking business (“Mechanics Bank”) to California Republic Auto Receivables
Trust 2018-1 (the “Issuer”) of the Depositor Conveyed Assets pursuant to a sale
and servicing agreement, dated as of June 1, 2018 (the “Sale and Servicing
Agreement”), among the Issuer, California Republic Funding LLC (the
“Depositor”), Mechanics Bank and U.S. Bank National Association, as indenture
trustee (the “Indenture Trustee”).  All capitalized terms used but not defined
herein shall have the meaning assigned thereto in the Sale and Servicing
Agreement.
 
The undersigned, a Responsible Officer of Mechanics Bank, hereby certifies that:
 
(a)            No Event of Default or Servicer Termination Event has occurred
and is continuing; and
 
(b)            The information contained in Annex A, attached hereto, is
complete and accurate and among other things, contains all information necessary
to make the payments to be made on the _________________, 20__ Payment Date
pursuant to Section 5.04 of the Sale and Servicing Agreement for this Collection
Period.
 
(c)            [For the first Servicer’s Monthly Certificate following the
Closing Date] [The Depositor owns __% of the Class A-1 Notes, __% of the Class
A-2 Notes, __% of the Class A-3 Notes, __% of the Class A-4 Notes, __% of the
Class B Notes, __% of the Class C Notes, __% of the Class D Notes and a __%
percentage interest in the Certificates.]
 
IN WITNESS WHEREOF, the undersigned, in my capacity as a Responsible Officer of
Mechanics Bank as specified below, has caused this certificate to be executed as
of the date first above written.
 

 
 
 
 
 
Name:
 
 
Title:

 
B-1

--------------------------------------------------------------------------------

Annex A
 
[EXCEL Spread Sheet Attached]
 

 

 

 

B-2

--------------------------------------------------------------------------------

EXHIBIT C
 
FORM OF SERVICER’S ANNUAL CERTIFICATION
 
PURSUANT TO SECTION 4.10 OF THE SALE AND SERVICING AGREEMENT
 
__________, 20__
 
This Servicer’s Annual Certification is delivered pursuant to a sale and
servicing agreement, dated as of June 1, 2018 (the “Sale and Servicing
Agreement”), among California Republic Auto Receivables Trust 2018-1, California
Republic Funding, LLC, Mechanics Bank, as servicer (the “Servicer”), and U.S.
Bank National Association, as indenture trustee (the “Indenture Trustee”).  All
capitalized terms used but not defined herein shall have the meaning assigned
thereto in Appendix A to the Sale and Servicing Agreement.
 
The undersigned, a Responsible Officer of the Servicer, hereby certifies that:
 
1.            A review of the activities of the Servicer and of the performance
of their respective obligations under the Sale and Servicing Agreement during
the period from __________, 20__ to and including __________, 20__ (the “Review
Period”) was conducted under my supervision.
 
2.            Based on my knowledge and such review, except as otherwise
disclosed pursuant to paragraph 3 below, the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement during the applicable Review
Period and there is no significant deficiency known by me with respect to the
applicable Review Period which has not been disclosed herein.
 
3.            Based on such review, to my knowledge, the following is a
description of each significant deficiency during the Review Period in the
performance of the Servicer’s obligations under the provisions of the Sale and
Servicing Agreement, which sets forth in detail (i) the nature and status of
each such deficiency and (ii) the action taken by the Servicer, if any, to
remedy each such deficiency:  [List Out]
 

 

IN WITNESS WHEREOF, the undersigned, in my capacity as specified below, has
caused this certificate to be executed as of the date first above written.

Dated:  ________________________
_________________________________
Name:
Title:

C-1

--------------------------------------------------------------------------------

EXHIBIT D
 
FORM OF SERVICER’S SARBANES-OXLEY ACT CERTIFICATION

Re:            California Republic Auto Receivables Trust 2018-1

I, ____________, certify that:

1.            I have reviewed this report on Form 10-K and all reports on Form
10-D required to be filed in respect of the period covered by this report on
Form 10-K of California Republic Auto Receivables Trust 2018-1 (the “Exchange
Act periodic reports”);
 
2.            Based on my knowledge, the Exchange Act periodic reports, taken as
a whole, do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
 
3.            Based on my knowledge, all of the distribution, servicing and
other information required to be provided under Form 10-D for the period covered
by this report is included in the Exchange Act periodic reports;
 
4.            I am responsible for reviewing the activities performed by the
servicers and based on my knowledge and the compliance reviews conducted in
preparing the servicer compliance statements required in this report under Item
1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicers have fulfilled their obligations under the servicing
agreements in all material respects; and
 
5.            All of the reports on assessment of compliance with servicing
criteria for asset-backed securities and their related attestation reports on
assessment of compliance with servicing criteria for asset-backed securities
required to be included in this report in accordance with Item 1122 of
Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as an
exhibit to this report, except as otherwise disclosed in this report.  Any
material instances of noncompliance described in such reports have been
disclosed in this report on Form 10-K.
 
In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: _____________

Date: ____________

 
By:
     
Name:
Title:

D-1

--------------------------------------------------------------------------------

SCHEDULE A
 
SCHEDULE OF RECEIVABLES
 
[On file with the Servicer and the Backup Servicer]
 

 
SA-1

--------------------------------------------------------------------------------

SCHEDULE B
 
Part I.            Form 10-D Disclosure Items
 
FORM 10-D DISCLOSURE ITEMS
Item on Form 10-D
Responsible Party
Item 1: Distribution and Pool Performance Information
 
Information included in the Monthly Investor Report
Servicer
Administrator
Any information required by 1121 which is NOT included on the Monthly Investor
Report
Depositor
Item 2: Legal Proceedings
· Any legal Proceeding pending against the following entities or their
respective property, that is material to noteholders, including any Proceeding
known to be contemplated by governmental authorities:
 
· Issuing Entity (Trust Fund)
Depositor
· Sponsor (Seller)
Seller (if a party to the Sales and Servicing Agreement) or Depositor
· Depositor
Depositor
· Indenture Trustee
Indenture Trustee
· Administrator
Administrator
· Servicer
Servicer
· Owner Trustee
Owner Trustee
· 1110(b) Originator
Depositor
· Any 1108(a)(2) Servicer (other than the Servicer or Administrator)
Depositor
· Any other party contemplated by 1100(d)(1)
Depositor
Item 3: Sale of Securities and Use of Proceeds
Information from Item 2(a) of Part II of Form 10-Q
With respect to any sale of securities by the sponsor, depositor or issuing
entity, that are backed by the same asset pool or are otherwise issued by the
issuing entity, whether or not registered, provide the sales and use of proceeds
information in Item 701 of Regulation S-K. Pricing information can be omitted if
securities were not registered.
Depositor
Item 4: Defaults Upon Senior Securities
Information from Item 3 of Part II of Form 10-Q
Report the occurrence of any Event of Default (after expiration of any grace
period and provision of any required notice)
Administrator
Item 5: Submission of Matters to a Vote of Security Holders
Information from Item 4 of Part II of Form 10-Q
Administrator
Indenture Trustee

 
SB-1

--------------------------------------------------------------------------------

 
FORM 10-D DISCLOSURE ITEMS (continued)
Item on Form 10-D
Responsible Party
Item 6: Significant Obligors of Pool Assets
Item 1112(b) – Significant Obligor Financial Information*
Depositor
*This information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the Item.
 
Item 7: Significant Enhancement Provider Information
Item 1114(b)(2) – Credit Enhancement Provider Financial Information*
 
· Determining applicable disclosure threshold
Depositor
· Requesting required financial information (including any required accountants’
consent to the use thereof) or effecting incorporation by reference
Depositor
Item 1115(b) – Derivative Counterparty Financial Information*
 
· Determining current maximum probable exposure
Depositor
· Determining current significance percentage
Depositor
· Requesting required financial information (including any required accountants’
consent to the use thereof) or effecting incorporation by reference
Depositor
*This information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the Items.
 
Item 8: Other Information
Disclose any information required to be reported on Form 8-K during the period
covered by the
Form 10-D but not reported
Any party responsible for the applicable Form 8-K Disclosure item
Item 9: Exhibits
 
Monthly Statement to Noteholders
Administrator
Exhibits required by Item 601 of Regulation S-K, such as material agreements
Depositor

 
SB-2

--------------------------------------------------------------------------------

Part II. Form 8-K Reportable Events
 
FORM 8-K REPORTABLE EVENTS
Item on Form 8-K
Responsible Party
Item 1.01- Entry into a Material Definitive Agreement
Disclosure is required regarding entry into or amendment of any definitive
agreement that is material to the securitization, even if depositor is not a
party.
Examples: servicing agreement, custodial agreement.
Note: disclosure not required as to definitive agreements that are fully
disclosed in the prospectus.
All parties as to themselves
Item 1.02- Termination of a Material Definitive Agreement
Disclosure is required regarding termination of any definitive agreement that is
material to the securitization (other than expiration in accordance with its
terms), even if depositor is not a party.
Examples: servicing agreement, custodial agreement.
All parties as to themselves
Item 1.03- Bankruptcy or Receivership
Disclosure is required regarding the bankruptcy or receivership, with respect to
any of the following:
Depositor
· Sponsor (Seller)
Depositor/Sponsor (Seller)
· Depositor
Depositor
· Servicer
Servicer
· Affiliated Servicer
Servicer
· Other Servicer servicing 20% or more of the pool assets at the time of the
report
Servicer
· Other material servicers
Servicer
· Indenture Trustee
Indenture Trustee
· Administrator
Administrator
· Significant Obligor
Depositor
· Credit Enhancer (10% or more)
Depositor
· Derivative Counterparty
Depositor
· Owner Trustee
Owner Trustee
Item 2.04- Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
Includes an early amortization, performance trigger or other event, including
event of default, that would materially alter the payment priority/distribution
of cash flows/amortization schedule.
Disclosure will be made of events other than waterfall triggers which are
disclosed in the monthly statements to the noteholders.
Depositor
Servicer
Administrator

SB-3

--------------------------------------------------------------------------------

 
FORM 8-K REPORTABLE EVENTS (continued)
Item on Form 8-K
Responsible Party
Item 3.03- Material Modification to Rights of Security Holders
Disclosure is required of any material modification to documents defining the
rights of Noteholders, including the Sale and Servicing Agreement.
Administrator
Indenture Trustee
Depositor
Item 5.03- Amendments of Articles of Incorporation or Bylaws; Change of Fiscal
Year
Disclosure is required of any amendment “to the governing documents of the
issuing entity”.
Depositor
Item 6.01- ABS Informational and Computational Material
Depositor
Item 6.02- Change of Servicer or Administrator
Requires disclosure of any removal, replacement, substitution or addition of any
Servicer, affiliated servicer, and other servicer servicing 10% or more of pool
assets at time of report, other material servicers or Indenture Trustee.
A change of both – Depositor
A change of Servicer or Administrator - Servicer/Administrator/Depositor/
Reg AB disclosure about any new servicer or Servicer is also required.
Servicer/Depositor
Reg AB disclosure about any new Indenture Trustee is also required.
New Indenture Trustee
Item 6.03- Change in Credit Enhancement or External Support
Covers termination of any enhancement in manner other than by its terms, the
addition of an enhancement, or a material change in the enhancement provided.
Applies to external credit enhancements as well as derivatives.
N/A
Reg AB disclosure about any new enhancement provider is also required.
Depositor
Item 6.04- Failure to Make a Required Distribution
Servicer
Indenture Trustee
Item 6.05- Securities Act Updating Disclosure
If any material pool characteristic differs by 5% or more at the time of
issuance of the securities from the description in the final prospectus, provide
updated Reg AB disclosure about the actual asset pool.
Depositor
If there are any new servicers or originators required to be disclosed under
Regulation AB as a result of the foregoing, provide the information called for
in Items 1108 and 1110 respectively.
Depositor
Item 7.01- Reg FD Disclosure
Depositor
Item 8.01- Other Events
Any event, with respect to which information is not otherwise called for in Form
8-K, that the registrant deems of importance to noteholders.
Depositor
Item 9.01- Financial Statements and Exhibits
Responsible party, as applicable, for reporting/disclosing the financial
statement or exhibit

SB-4

--------------------------------------------------------------------------------

 
FORM 10-K DISCLOSURE ITEMS
Item on Form 10-K
Responsible Party
Item 1B: Unresolved Staff Comments
Depositor
Item 9B: Other Information
Any party responsible for disclosure items on Form 8-K
Item 15: Exhibits, Financial Statement Schedules
Depositor
Additional Item:
Disclosure per Item 1117 of Reg AB
(i) All parties to the Sale and Servicing Agreement (as to themselves), (ii) the
Depositor as to the issuing entity, (iii) the Depositor as to the sponsor, any
1106(b) originator, any 1100(d)(1) party
Additional Item:
Disclosure per Item 1119 of Reg AB
(i) All parties to the Sale and Servicing Agreement (as to themselves), (ii) the
Depositor as to the sponsor, originator, significant obligor, enhancement or
support provider
Additional Item:
Disclosure per Item 1112(b) of Reg AB
Depositor/ Servicer
Additional Item:
Disclosure per Items 1114(b) and 1115(b) of Reg AB
Depositor

 
Part III: Form 10-K Disclosure Items
 

SB-5

--------------------------------------------------------------------------------

Part IV:  Servicing Criteria

Reg AB Reference
Servicing Criteria
Responsible
Party
 
General Servicing Considerations
 
1122(d)(1)(i)
Policies and procedures are instituted to monitor any performance or other
triggers and events of default in accordance with the transaction agreements.
Servicer
Backup Servicer
1122(d)(1)(ii)
If any material servicing activities are outsourced to third parties, policies
and procedures are instituted to monitor the third party’s performance and
compliance with such servicing activities.
Servicer
1122(d)(1)(iii)
Any requirements in the transaction agreements to maintain a back-up servicer
for the pool assets are maintained.
Servicer
1122(d)(1)(iv)
A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period in the
amount of coverage required by and otherwise in accordance with the terms of the
transaction agreements.
 
1122(d)(1)(v)
Aggregation of information, as applicable is mathematically accurate and the
information conveyed accurately reflects the information
   
Cash Collection and Administration
 
1122(d)(2)(i)
Payments on pool assets are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the transaction
agreements.
Servicer
1122(d)(2)(ii)
Disbursements made via wire transfer on behalf of an obligor or to an investor
are made only by authorized personnel.
Servicer
1122(d)(2)(iii)
Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances, are
made, reviewed and approved as specified in the transaction agreements.
Servicer
1122(d)(2)(iv)
The related accounts for the transaction, such as cash reserve accounts or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth in the
transaction agreements.
Servicer
Indenture Trustee

SB-6

--------------------------------------------------------------------------------

Reg AB Reference
Servicing Criteria
Responsible Party
1122(d)(2)(v)
Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of this
criterion, “federally insured depository institution” with respect to a foreign
financial institution means a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
Indenture Trustee
1122(d)(2)(vi)
Unissued checks are safeguarded so as to prevent unauthorized access.
 
1122(d)(2)(vii)
Reconciliations are prepared on a monthly basis for all asset-backed securities
related bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate; (B) prepared
within 30 calendar days after the bank statement cutoff date, or such other
number of days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the reconciliation; and
(D) contain explanations for reconciling items. These reconciling items are
resolved within 90 calendar days of their original identification, or such other
number of days specified in the transaction agreements.
Servicer
 
 
Investor Remittances and Reporting
 
1122(d)(3)(i)
Reports to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors’ or the
trustee’s records as to the total unpaid principal balance and number of Pool
Assets serviced by the Servicer.
Servicer
1122(d)(3)(ii)
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the transaction
agreements.
Servicer
1122(d)(3)(iii)
Disbursements made to an investor are posted within two business days to the
Servicer’s investor records, or such other number of days specified in the
transaction agreements.
Servicer
Indenture Trustee
1122(d)(3)(iv)
Amounts remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.
Servicer

SB-7

--------------------------------------------------------------------------------

Reg AB Reference
Servicing Criteria
Responsible Party
 
Pool Asset Administration
 
1122(d)(4)(i)
Collateral or security on pool assets is maintained as required by the
transaction agreements or related pool asset documents.
Servicer
1122(d)(4)(ii)
Pool assets and related documents are safeguarded as required by the transaction
agreements
Servicer
1122(d)(4)(iii)
Any additions, removals or substitutions to the asset pool are made, reviewed
and approved in accordance with any conditions or requirements in the
transaction agreements.
Servicer
1122(d)(4)(iv)
Payments on pool assets, including any payoffs, made in accordance with the
related pool asset documents are posted to the Servicer’s obligor records
maintained no more than two business days after receipt and identification, or
such other number of days specified in the transaction agreements, and allocated
to principal, interest or other items (e.g., escrow) in accordance with the
related pool asset documents.
Servicer
1122(d)(4)(v)
The Servicer’s records regarding the pool assets agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.
Servicer
1122(d)(4)(vi)
Changes with respect to the terms or status of an obligor’s pool assets (e.g.,
loan modifications or re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements and related pool asset
documents.
Servicer
1122(d)(4)(vii)
Loss mitigation or recovery actions (e.g., forbearance plans, modifications and
deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the timeframes or other
requirements established by the transaction agreements.
Servicer
1122(d)(4)(viii)
Records documenting collection efforts are maintained during the period a pool
asset is delinquent in accordance with the transaction agreements. Such records
are maintained on at least a monthly basis, or such other period specified in
the transaction agreements, and describe the entity’s activities in monitoring
delinquent pool assets including, for example, phone calls, letters and payment
rescheduling plans in cases where delinquency is deemed temporary (e.g., illness
or unemployment).
Servicer
1122(d)(4)(ix)
Adjustments to interest rates or rates of return for pool assets with variable
rates are computed based on the related pool asset documents.
N/A

SB-8

--------------------------------------------------------------------------------

Reg AB Reference
Servicing Criteria
Responsible Party
1122(d)(4)(x)
Regarding any funds held in trust for an obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance with the obligor’s pool asset documents,
on at least an annual basis, or such other period specified in the transaction
agreements; (B) interest on such funds is paid, or credited, to obligors in
accordance with applicable pool asset documents and state laws; and (C) such
funds are returned to the obligor within 30 calendar days of full repayment of
the related pool assets, or such other number of days specified in the
transaction agreements.
N/A
1122(d)(4)(xi)
Payments made on behalf of an obligor (such as tax or insurance payments) are
made on or before the related penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided that such support has
been received by the Servicer at least 30 calendar days prior to these dates, or
such other number of days specified in the transaction agreements.
N/A
1122(d)(4)(xii)
Any late payment penalties in connection with any payment to be made on behalf
of an obligor are paid from the Servicer’s funds and not charged to the obligor,
unless the late payment was due to the obligor’s error or omission.
N/A
1122(d)(4)(xiii)
Disbursements made on behalf of an obligor are posted within two business days
to the obligor’s records maintained by the Servicer, or such other number of
days specified in the transaction agreements.
N/A
1122(d)(4)(xiv)
Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.
Servicer
1122(d)(4)(xv)
Any external enhancement or other support, identified in Item 1114(a)(1) through
(3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction
agreements.
N/A

SB-9

--------------------------------------------------------------------------------

EXHIBIT E
 
BACKUP SERVICER DUTIES

Duties of Backup Servicer
California Republic Auto Receivables Trust 2018-1

One-time, Upfront Duties
 

·
The Backup Servicer will request an initial extract file specific to CRART
2018-1 from Servicer.  The Backup Servicer’s extract file layout will be
provided to Servicer.

 

·
Information from the initial extract file received from Servicer will be mapped
to the Backup Servicer 's system within 60 days of receipt of the complete file.

 

·
The Backup Servicer will compare information from the initial extract file to
the initial Servicer’s Monthly Certificate and further determine that the
Servicer’s Monthly Certificate is complete on its face.  The Backup Servicer
will verify (1) the aggregate outstanding balance of Receivables at the
beginning of the related Collection Period, (2) the number and principal balance
of delinquent and defaulted Receivables at the close of such Collection Period
and (3) the aggregate outstanding balance of Receivables at the close of such
Collection Period.  This verification will compare the information on the
Servicer’s Monthly Certificate to the information produced on the Backup
Servicer’s system from the monthly extract file received from the Servicer.

 
Monthly Duties
 

·
The Backup Servicer will store the monthly extract file received from Servicer.

 

·
The Backup Servicer will load the information from the monthly extract file to
its system within seven business days of receipt of the complete file.

 

·
The Backup Servicer will review the monthly servicer's report and determine that
the monthly servicer's report is complete on its face.  The Backup Servicer will
verify (1) the aggregate outstanding balance of Receivables at the beginning of
the related Collection Period, (2) verify the number and principal balance of
delinquent and defaulted Receivables at the close of such Collection Period and
(3) verify the aggregate outstanding balance of Receivables at the close of such
Collection Period.

 

·
In the event of any discrepancy on the Monthly Servicer’s Certificate, the
Backup Servicer will promptly notify the Servicer of any discrepancies.

 

·
Warm backup servicing duties assume a readiness state that would allow the
Backup Servicer to convert and transfer the portfolio as soon as reasonably
practical (not immediately) upon the formal request for transfer notice.

 
E-1

--------------------------------------------------------------------------------

APPENDIX A

USAGE AND DEFINITIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
AA-1

--------------------------------------------------------------------------------