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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 10, 1998
AutoBond Acceptance Corporation
Texas 600-21673 75-2487218
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
100 Congress Avenue, 78701
Austin Texas (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (512) 435-7000
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Item 5. Other Events.
On June 10, 1998, AutoBond Acceptance Corporation (the "Company")
and Dynex Capital, Inc. ("Dynex"), a Virginia corporation listed on the NYSE,
entered into a financing arrangement whereby: (i) the Company obtained
non-recourse financing for all currently warehoused and future automobile
finance contract acquisitions through at least May 31, 1999 (the "Warehouse
Financing"); (ii) the Company sold to Dynex $3 million of the Company's 12%
Convertible Senior Notes due 2003 (the "Convertible Notes"); and (iii) Dynex
Holding, Inc. an affiliate of Dynex ("Dynex Holding") received an option (the
"Option"), exercisable for one year, to purchase at a price of $6.00 per share
the common stock of the Company held by the three principal shareholders of the
Company, representing approximately 85% of the currently outstanding common
stock of the Company.
Under the terms of the Warehouse Financing, Dynex will provide
warehouse credit facilities to AutoBond Master Funding Corporation V ("Master
Funding V"), a wholly-owned, special purpose subsidiary of the Company organized
under Nevada law, in an amount equal to 105% of the unpaid principal balance of
finance contracts pledged to Dynex. Advances under the Warehouse Financing are
limited to $10 million in the case of the initial advance, $80 million in the
case of all other advances during the month of June 1998 and thereafter $20
million per month until the commitment termination date. The Warehouse Financing
commitment will terminate on May 31, 1999, upon 90 days' prior written notice
from Dynex, or if such notice is not given, May 31, 2000. Advances under the
Warehouse Financing will be evidenced by Class A and Class B Notes issued by
Master Funding V to Dynex. The Class A Notes will be issued in a principal
amount equal to 95% of the amount of each advance and will bear interest at a
rate equal to 200 basis points over the corporate bond equivalent yield on the
three-year Treasury note on the closing date for each such advance. The Class B
Notes will be issued in a principal amount equal to 10% of the amount of each
advance and will bear interest at a rate equal to 16%. Dynex also will obtain
securitization rights with respect to the warehoused finance contracts. The
Company will service warehoused finance contracts for a servicing fee of $15 per
month per finance contract.
Pursuant to the terms of the Senior Note Agreement between the
Company and Dynex, Dynex purchased at par $3 million of the Company's
Convertible Notes. Interest on the Convertible Notes is payable quarterly in
arrears, with the principal amount due on June 9, 2003. The Convertible Notes
may be converted at the option of Dynex on or before May 31, 1999 into shares of
the Company's common stock at a conversion price of $6.00 per share. Demand and
"piggy-back" registration rights with respect to the underlying shares of common
stock were granted.
William O. Winsauer, chief executive officer and chairman of the
board of directors of the company (the "board"), Adrian Katz, chief operating
officer, chief financial officer and vice chairman of the board and John S.
Winsauer, Secretary and a member of the board (collectively, the
"Stockholders"), entered into a Stock Option Agreement (the "Agreement") with
Dynex Holding wherein the Stockholders granted to Dynex Holding the Option to
purchase all of the shares of the Company's common stock owned by the
Shareholders (approximately 85% of the Company's outstanding common stock) at a
price of $6.00 per share. The Option may be
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exercised in whole and not in part at anytime up to and including June 9, 1999.
In the event that Dynex Holding exercises its Option, the exercise price of the
Option will be payable in shares of a newly issued series of convertible
preferred stock of Dynex ("Dynex Preferred"). The number of Dynex Preferred
shares to be issued will be equal to the product of the number of shares of the
Company's common stock subject to the Option and $6.00, divided by 115% of the
average of the closing prices per share of the common stock of Dynex ("Dynex
Common") for the ten consecutive trading days ending immediately prior to the
exercise of the Option. Upon exercise of the Option, Dynex Holding will deliver
to each Shareholder 80% of his pro rata share of the Dynex Preferred shares,
with the balance to be held by Dynex Holding subject to certain terms and
conditions contained in the Agreement and in each Shareholder's employment
agreement with Dynex. The Dynex Preferred will pay dividends at 9% per anum and
be convertible into shares of Dynex Common at an initial conversion rate of one
to one.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits. The following exhibits are filed herewith.
10.35 Credit Agreement, dated as of June 9, 1998, by and among
AutoBond Master Funding Corporation V, the Company and Dynex
Capital, Inc.
10.36 Servicing Agreement, dated as of June 9, 1998, by and among
the Company, AutoBond Master Funding Corporation V and Dynex
Capital, Inc.
10.37 Trust Indenture, dated as of June 9, 1998, by and among the
Company, AutoBond Master Funding Corporation V and Dynex
Capital, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 24, 1998
AutoBond Acceptance Corporation
By: /s/ William O. Winsauer
------------------------------------
William O. Winsauer
Chairman and Chief Executive Officer
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EXECUTION COPY
================================================================================
CREDIT AGREEMENT
AUTOBOND MASTER FUNDING CORPORATION V
(as Borrower),
AUTOBOND ACCEPTANCE CORPORATION
and
DYNEX CAPITAL, INC.
(as Initial Lender)
Dated as of June 9, 1998
================================================================================
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TABLE OF CONTENTS
Page
SECTION 1. COMMITMENT
Section 1.1 Advances...............................................1
Section 1.2 Borrowings; Closings...................................2
Section 1.3 Notices of Advances....................................2
Section 1.4 Amount of Advances.....................................3
Section 1.5 Trust Indenture........................................3
Section 1.6 Increased Costs........................................3
Section 1.7 Taxes..................................................5
Section 1.8 Definitions............................................7
Section 1.10 Payment Instructions...................................7
SECTION 2. REPRESENTATIONS AND WARRANTIES
Section 2.1 General Representations and Warranties of the
Borrower.............................................7
Section 2.2 General Representations and Warranties of AutoBond....11
Section 2.3 Representations and Warranties with Respect to the
Specified Auto Loans................................13
SECTION 3. CONDITIONS OF OBLIGATION TO MAKE INITIAL ADVANCE ON INITIAL CLOSING
DATE
Section 3.1 Other Agreements......................................18
Section 3.2 Opinion of Special Counsel............................18
Section 3.3 Opinions of Nevada Counsel...........................18
Section 3.5 Organizational and Other Documents....................18
Section 3.6 Necessary Consents....................................18
Section 3.7 Representations True; No Event of Default.............19
SECTION 4. CONDITIONS OF OBLIGATION TO MAKE ADVANCES ON ANY CLOSING DATE.
....................................................19
Section 4.1 Performance of Obligations............................19
Section 4.2 Representations True; No Event of Default.............19
Section 4.3 No Merger or Change in Control........................19
Section 4.4 Searches..............................................19
Section 4.5 Consents and Approvals................................19
Section 4.6 Proceedings, Instruments, etc.........................20
Section 4.8 Continuance of a Funding Termination Event or an
Event of Default....................................20
SECTION 5. CERTAIN SPECIAL RIGHTS.
Section 5.1 Home Office Payment...................................20
Section 5.2 Certain Taxes.........................................20
Section 5.3 ......................................................21
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Page
SECTION 6. ADVANCE MATURITY; ADVANCE PREPAYMENTS.
Section 6.1 Advance Maturity......................................21
Section 6.2 Mandatory Prepayments.................................21
SECTION 7. ASSIGNMENTS AND PARTICIPATIONS
Section 7.1 Assignments...........................................22
Section 7.2 Participations........................................23
SECTION 8. CERTAIN COVENANTS OF THE BORROWER
Section 8.1 Maintenance of Office.................................23
Section 8.2 Existence.............................................23
Section 8.3 General Maintenance of Business, Etc..................24
Section 8.4 Inspection............................................24
Section 8.5 Compliance with Law, etc..............................24
Section 8.6 Payment of Taxes and Claims...........................24
Section 8.7 Limitations on Indebtedness...........................25
Section 8.8 Restricted Investments................................25
Section 8.9 Nature of Business....................................25
Section 8.10 Independence.........................................25
Section 8.11 Other Agreements and Parties.........................26
Section 8.12 Investment Company Act...............................26
Section 8.13 .....................................................26
Liens .....................................................26
SECTION 9. CERTAIN COVENANTS OF AUTOBOND
Section 9.1 Existence.............................................26
Section 9.2 Compliance with Law, etc..............................27
Section 9.3 Payment of Taxes and Claims...........................27
Section 9.4 Inspection............................................27
Section 9.5 Consolidation and Merger..............................27
Section 9.6 Control...............................................28
Section 9.7 Tax Returns...........................................28
Section 9.8 Protection of Right, Title and Interest...............28
Section 9.9 Further Assurances....................................29
Section 9.10 Independence.........................................29
Section 9.11 Other Agreements and Parties.........................30
Section 9.12 Servicing Arrangements...............................31
Section 9.13 Preservation of Quality of Auto Loans................31
Section 9.14 Exclusivity..........................................31
SECTION 10. INFORMATION TO BE FURNISHED TO LENDER.
Section 10.1 Information to be Furnished by the Borrower
and AutoBond........................................31
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Page
SECTION 11. DEFAULTS, REMEDIES AND TERMINATION
Section 11.1 Events of Default. .................................32
SECTION 12. INTERPRETATION OF AGREEMENT
Section 12.1 Definitions..........................................32
Section 12.2 Accounting Terms.....................................42
Section 12.3 Governing Law........................................42
Section 12.4 Headings.............................................42
Section 12.5 Independence of Covenants, etc.......................42
SECTION 13. MISCELLANEOUS
Section 13.1 Notices..............................................42
Section 13.2 Survival.............................................42
Section 13.3 Successors and Assigns...............................42
Section 13.4 Amendment and Waiver.................................43
Section 13.5 Counterparts.........................................43
Section 13.6 Reproduction of Documents............................43
Section 13.7 Consent to Jurisdiction and Venue....................44
Section 13.8 No Petition..........................................44
Section 13.9 Acts of Lender.......................................44
Section 13.10 Confidentiality.....................................45
EXHIBITS
EXHIBIT A Form of Borrowing Notice
EXHIBIT B Form of Special Counsel Opinion
EXHIBIT C Form of Nevada Counsel Opinion
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CREDIT AGREEMENT dated as of June 9, 1998 among AutoBond Master
Funding Corporation V, a Nevada corporation (the "Borrower"), AutoBond
Acceptance Corporation, a Texas corporation ("AutoBond") and Dynex Capital, Inc.
(the "Initial Lender").
The Borrower has requested that the Initial Lender make advances to
the Borrower and the Initial Lender is prepared to make such advances upon the
terms and subject to the conditions hereof. The advances hereunder shall be
evidenced by the Borrower's Variable Funding Notes, Class A and Class B (the
"Notes"), issued to the Initial Lender under the Trust Indenture, dated as of
June 9, 1998 (the "Indenture"), among the Borrower, AutoBond and Dynex Capital,
Inc., as trustee (the "Trustee"). The Notes shall be entitled to the benefits of
the Indenture. Accordingly, the parties hereto agree as follows:
SECTION 1. COMMITMENT.
Section 1.1 Advances. The Initial Lender agrees, on the terms of
this Agreement and subject to the conditions hereof, to make Advances, beginning
on the date hereof and ending on the Commitment Termination Date, to the
Borrower in an aggregate principal amount at any one time outstanding up to but
not exceeding the amount of the Commitment as then in effect. Each Advance shall
(a) mature on the related Maturity Date and (b) bear interest from the date
thereof until such Advance shall be paid in accordance with the terms hereof
(whether at maturity, mandatory prepayment, by acceleration or otherwise) at the
per annum rate with respect to each Interest Period at the Interest Rate,
payable on each Interest Payment Date in accordance with the provisions of
Section 13.04 of the Indenture. Interest shall be computed on the basis of a 360
day year of twelve 30-day months, and on each Interest Payment Date shall equal
all unpaid interest accrued in respect of each prior Interest Period. If the
Borrower shall have paid or agreed to pay any interest on any Advance in excess
of that permitted by law, then it is the express intent of the parties hereto
with respect thereto that (i) to the extent possible given the term of such
Advance, all excess amounts previously paid or to be paid by the Borrower be
applied to reduce the principal amount of such Advance and the provisions
thereof immediately be deemed reformed and the amounts thereafter collectable
thereunder reduced, without the necessity of the execution of any new document,
so as to comply with the then applicable law, but so as to permit the recovery
of the fullest amount otherwise called for thereunder and (ii) to the extent
that the reduction of the principal amount of, and the amounts collectible
under, such Advance and the reformation of the provisions thereof described in
the immediately preceding clause (i) are not possible given the term of such
Advance, such excess amount shall be deemed to have been paid with respect to
such Advance as a result of an error and upon the Lender obtaining actual
knowledge of such error, such amount shall be refunded to the Borrower. Each
Advance shall be subject to mandatory prepayment as set forth in Section 6.2
hereof. Except as provided in Section 1.7 hereof, all sums payable by the
Borrower under this Credit Agreement and the Advances shall be paid without
counterclaim, set-off, deduction or defense and without abatement, suspension,
deferment, diminution or reduction.
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Section 1.2 Borrowings; Closings. (a) This Agreement and the other
Program Documents shall be executed and the initial Advance is to be made on
June 9, 1998 (the "Initial Closing Date"). Additional Advances may be made on
subsequent Business Days (each, a "Subsequent Closing Date", the Subsequent
Closing Dates, together with the Initial Closing Date, the "Closing Dates," and,
either the Initial Closing Date or a Subsequent Closing Date, a "Closing Date")
to the extent the Lender has received prior notice thereof in accordance with
the provisions of Section 1.3 hereof.
(b) The Advances shall be evidenced by the Variable Funding Notes,
Class A and Class B (together, the "Notes") issued pursuant to the terms of the
Indenture, which Notes shall be dated the date of the delivery of such Notes to
the Initial Lender under the Indenture, payable to the Initial Lender in a
principal amount equal to the maximum amount of the Commitment and otherwise
duly completed. The date and amount of each Advance made by the Initial Lender
to the Borrower, the applicable interest rate and each payment made on account
of the principal thereof, shall be recorded by the Initial Lender on its books
and, prior to any transfer of the Notes, endorsed by the Initial Lender on the
schedule attached to the Notes or any continuation thereof.
(c) The Initial Lender shall be entitled to have the Notes
subdivided, by exchange for Notes of lesser denominations or otherwise in
connection with an assignment of all or any portion of the Advances and the
Notes pursuant to the terms of this Agreement; provided that in no event may the
Notes be subdivided into denominations of less than $500,000.
(d) Each Advance shall be made by wire transfer of immediately
available funds to the Loan Purchase Account.
Section 1.3 Notices of Advances. The Borrower will give notice
substantially in the form of Exhibit A hereto of each Advance (a "Borrowing
Notice") to the Initial Lender and the Trustee, which notice shall be
irrevocable and effective only upon receipt by the Initial Lender and the
Trustee, and which shall specify the date (at least two Business Days prior to
the proposed date of such Advance, except in the case of the Initial Advance)
upon which such borrowing is to occur and the amount of such Advance, which
amount, unless otherwise agreed to by the Initial Lender, (a) in the case of the
initial Advance, shall not be less than $2,000,000 and (b) in the case of all
other Advances, shall not be greater than $5,000,000 nor less than the lesser of
(i) the Available Facility Amount and (ii) $1,000,000. Such notice shall be
given not later than 12:00 (noon) New York time on the day which is two (2)
Business Days prior to the related Closing Date or, in the case of the initial
Closing Date, on the Initial Closing Date). Borrowing Notices may be given no
more frequently than six (6) times in any single month. Any notice received by
the Initial Lender after 12:00 (noon) New York time on any Business Day shall be
deemed to have been received on the next succeeding Business Day. On the date
specified in such notice, the Initial Lender will, subject to the conditions set
forth and in accordance with the terms of this Agreement, make an Advance in the
aggregate principal amount set forth in such notice. Notwithstanding the
foregoing, if any of the Auto
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Loans subject to such Advance were acquired from an Originator other than
AutoBond, then AutoBond shall (a) obtain the written consent of the Initial
Lender to the inclusion of such Auto Loans; provided, however, such consent need
not be obtained by AutoBond for Auto Loans acquired from on Originator other
than AutoBond and held by AutoBond as of the date hereof, and (b) afford the
Initial Lender reasonable opportunity to review such Auto Loans and related Loan
Files in advance of the related Borrowing Notice.
Section 1.4 Amount of Advances. The amount of each Advance shall be
calculated as follows (subject to the limits of the Commitment): the aggregate
principal amount of such Advance shall equal 105% of the aggregate Unpaid
Principal Balances of Eligible Auto Loans to be pledged by the Borrower under
the Indenture on the related Closing Date, and 95% of such Unpaid Principal
Balances shall be allocated to the Class A Note and the remaining 10% of such
Unpaid Principal Balances shall be allocated to the Class B Note.
Section 1.5 Trust Indenture. The Advances are to be secured pursuant
to the Indenture (as from time to time amended, supplemented or modified). The
Trust Assets allocated to secure the Borrower's obligations under this Agreement
are identified in Schedule 1 to the Indenture.
Section 1.6 Increased Costs. (a) In the event that any change after
the date upon which the Lender makes an Advance or acquires an interest in an
Advance in any Requirement of Law (including any change to the certificate of
incorporation, articles of association, by-laws or other organizational or
governing documents of the Lender, but only to the extent that such change is
the result of the compliance by the Lender with any request or directive
reflecting a change in Requirement of Law from any central bank or other
Governmental Authority in the United States of America), or in the
interpretation or application thereof or compliance by the Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority in the United States of America made after
the date upon which the Lender makes its Advances or acquires an interest in an
Advance:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Agreement or the Note, or change the basis of taxation of
payments in respect thereof (except for taxes referred to in Section
1.7(a) and changes in the rate of tax on the overall net income of the
Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by the
Lender; or
(iii) shall impose on the Lender any other condition;
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and the result of any of the foregoing is to reduce the amount receivable
hereunder in respect of the Advance below that which such Lender would have
received but for such change or compliance, then after submission by the Lender
to the Borrower and the Trustee of a written request therefor, the Trustee
shall, subject to Section 1.6(c), on behalf of the Borrower, pay to the Lender
any additional amounts necessary to compensate the Lender for such reduced
amount receivable.
(b) In the event that the Lender shall have determined that any
change after the date upon which the Lender makes an Advance or acquires an
interest in an Advance in any Requirement of Law (including any change to the
certificate of incorporation, articles of association, by-laws or other
organizational or governing documents of the Lender, but only to the extent that
such change is the result of the compliance by the Lender with any request or
directive reflecting a change in Requirement of Law from any central bank or
other Governmental Authority in the United States of America) regarding capital
adequacy or in the interpretation or application thereof or compliance by the
Lender or any corporation controlling the Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority in the United States of America made subsequent to the
date upon which such Lender makes its Advances or acquires its interest in an
Advance does or shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of the transactions
contemplated hereby to a level below that which the Lender or such corporation
would have achieved but for such change or compliance (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy),
by an amount reasonably deemed thereby to be material then, from time to time,
after submission by the Lender to the Borrower and the Trustee of a written
request therefor, the Trustee shall, subject to Section 1.6(c), on behalf of the
Borrower, pay to the Lender such additional amount or amounts as will compensate
the Lender for such reduction; provided that to the extent that six months or
more pass between the date upon which the Lender obtains actual knowledge of the
liability resulting in such reduction and the date upon which the Lender
provides notice of such reduction to the Borrower hereunder, the Borrower shall
not be liable for amounts relating to the period six months or more prior to the
date of such notice.
(c) The Lender agrees that it shall use its best efforts to take any
actions that will avoid the need for, or reduce the amount of, any increased
amounts referred to in Section 1.6(a) or (b); provided, that no Lender shall be
obligated to take any actions that would, in the sole opinion of the Lender, be
inconsistent with any applicable law or otherwise be disadvantageous to the
Lender in any material respect.
(d) If the Lender claims the increased amounts described in Section
1.6(a) or (b) ("Increased Cost"), the Lender will furnish to the Borrower and
the Trustee a certificate setting forth the basis and amount of each request by
the Lender for any such Increased Cost.
(e) Failure on the part of the Lender to demand compensation for any
Increased Cost or amount pursuant to Section 1.6(a) with respect to any period
shall not
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constitute a waiver of the Lender's right to demand compensation with respect to
such period; provided that to the extent that six months or more pass between
the date upon which the Lender obtains actual knowledge of the liability
resulting in such reduction and the date upon which the Lender provides notice
of such reduction to the Borrower hereunder, the Borrower shall not be liable
for amounts relating to the period six months or more prior to the date of such
notice.
(f) The Borrower shall have the right, and the Lender shall
cooperate fully, to replace any Lender which makes a claim pursuant to this
Section 1.6 with a new lender that will succeed to the rights of such Lender
under this Agreement; provided, that such Lender shall not be replaced hereunder
with a new lender until such Lender has been paid in full all amounts owed to it
pursuant to this Agreement; provided, further, that the Borrower shall provide
such Lender with an Officer's Certificate stating that such new lender is not
subject to, or has agreed not to seek, such increased costs.
Section 1.7 Taxes. (a) All payments made by the Trustee on behalf of
the Borrower, under this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority in the United States of America, excluding, in the case of the Lender,
net income taxes and franchise taxes imposed on the Lender as a result of a
present or former connection between the jurisdiction of the government or
taxing authority imposing such tax and the Lender (excluding a connection
arising from the Lender having executed, delivered, performed its obligations or
received a payment under, or enforced, this Agreement) or any political
subdivision or taxing authority thereof or therein, and also excluding United
States of America withholding taxes to the extent that a Lender incorporated in
or under the laws of a jurisdiction other than the United States, any state
thereof or the District of Columbia fails to provide to the Trustee at such
times as are required by law a duly completed and executed Internal Revenue
Service form 1001 or 4224, as applicable (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "Taxes"), provided that the Lender is not subject to backup withholding
or provides the Trustee with a duly completed and executed Internal Revenue
Service form W-8 or W-9, as appropriate. If any Taxes are required to be
withheld from any amounts payable to the Lender hereunder, after submission by
the Lender to the Borrower and the Trustee of a written request therefor, the
amounts so payable to the Lender shall be increased by the Trustee, subject to
Section 1.7(c), on behalf of the Borrower, to the extent necessary to yield to
the Lender (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
except that no increase shall be made if the Lender is subject to backup
withholding and fails to provide the Trustee with a duly completed and executed
Internal Revenue Service form W-8 or W-9, as appropriate. Any Lender shall
utilize available tax credits to decrease amounts payable with respect to any
such withholding which the Lender in its sole judgment believes are directly
related to this Agreement, except that no increase shall be made if the Lender
is subject to backup withholding and fails to provide the Trustee with a duly
completed and executed
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Internal Revenue Service form W-8 or W-9, as appropriate. Nothing in the
preceding sentence shall give the Borrower or any other third party rights to
inspect, audit or otherwise request information regarding Lender records,
including records relating to available tax credits. If the Borrower fails to
pay any Taxes when due to the appropriate taxing authority the Trustee shall,
subject to Section 1.7(c), on behalf of the Borrower, pay the Lender for any
incremental taxes, interest or penalties that may become payable by the Lender
as a result of any such failure.
(b) If the Lender claims the amounts for Taxes referred to in
Section 1.7(a), the Lender will furnish to the Borrower and the Trustee an
officer's certificate setting forth the basis and amount of each request by the
Lender for such Taxes. If the Borrower, within 30 days after receiving a notice
of the basis and amount of such Taxes, disputes the basis or amount set forth in
such notice, the Lender and the Borrower shall consult in good faith to resolve
such dispute. If such consultation does not resolve such dispute within 45 days
(or such longer period as the Lender and the Borrower may then agree) after the
Lender shall have provided the Borrower with such notice, the Borrower may
request that the Lender furnish to any certified public accounting firm that is
independent with respect to the Borrower and AutoBond, the Servicer and any
Successor Servicer, as the case may be within the meaning of the Securities Act
(an "Independent Accountant") all information reasonably necessary to permit the
confirmation of the accuracy of the Lender's computation of the Taxes described
in such notice. Within 30 days of the receipt of such information, the
Independent Accountant either shall confirm the accuracy of such computation or
shall notify the Lender and the Borrower that such computation proposed by the
Lender is inaccurate. In the latter event, the Lender shall consult with the
Borrower and the Independent Accountant as to the proper computation of the
Taxes, whereupon the Lender shall recompute the Taxes in such a manner as shall
enable the Independent Accountant to confirm their accuracy. The Borrower and
the Lender agree that the sole responsibility of the Independent Accountant
shall be to verify the calculation of the Taxes and that matters of
interpretation of the Program Documents are not within the scope of its
responsibilities. All expenses incurred by the Lender and the Borrower in
connection with the verification procedures described in this Section 1.7
(including the fees and expenses of the Independent Accountant) shall be paid by
the Borrower. Any information provided to the Independent Accountant by the
Lender shall be and remain the exclusive property of the Lender and shall be
deemed by the parties to be (and the Independent Accountant shall confirm in
writing that it will treat such information as) the private, proprietary and
confidential property of the Lender, and no Person other than the Lender and the
Independent Accountant shall be entitled thereto or to any review thereof, and
all such information shall be returned to the Lender contemporaneously with the
completion of the verification procedure. Notwithstanding the foregoing, the
Lender shall not be obligated to disclose to any Person (other than the
Independent Accountant, subject to the agreement by the Independent Accountant
to keep all information therein confidential), or permit any Person (other than
the Independent Accountant, subject to the agreement by the Independent
Accountant to keep all information contained therein confidential) to examine,
any federal, state or local income tax returns of the Lender or any of its
Affiliates.
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(c) The Lender agrees that it shall use its best efforts to take any
actions that will avoid the need for, or reduce the amount of, any increased
amounts referred to in Section 1.7(a); provided, that no Lender shall be
obligated to take any actions that would, in the sole reasonable opinion of the
Lender, be contrary to applicable law or would otherwise be disadvantageous to
the Lender in any material respect.
(d) The Lender, by its making of an Advance or acceptance of any
interest in any Advance, agrees to treat the interests evidenced by the Advances
as indebtedness for all tax purposes, and further agrees that any Person
acquiring an interest in any Advance from or through it may do so only subject
to the obligation to comply with this Agreement as to the treatment of such
Advance as indebtedness for all tax purposes.
Section 1.8 Definitions. Capitalized terms used in this Agreement
are defined in Section 13.1 hereof. References to a "Section", "Schedule" or
"Exhibit" are, unless otherwise specified, to the appropriate Section, Schedule
or Exhibit of this Agreement.
Section 1.9 Term. The Commitment will terminate on the Commitment
Termination Date.
Section 1.10 Payment Instructions. Each of the Lender and AutoBond
shall provide written payment instructions (including the account number of the
bank account to which payments are to be directed and the name, address and ABA
number of the bank in which such account is maintained, if payments are to be
made to such party by the wire transfer of immediately available funds) to the
Trustee. Failure to provide such notice shall not affect such party's right to
receive any funds to which it is otherwise entitled in accordance with the
Program Documents, but failure to deliver such notice may result in a delay in
the receipt of such funds.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender, as of the date
hereof, and as of each Closing Date, as follows:
Section 2.1 General Representations and Warranties of the Borrower.
(a) Organization and Authority. The Borrower:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted by the Program Documents to enter into the
Program Documents to which it is a party, to
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issue and deliver the Note and to perform its obligations under the
Program Documents to which it is a party and the Note;
(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or
the nature of its activities makes such filings, franchises, licenses,
permits or registrations necessary.
(b) Place of Business. The address of the principal place of
business and chief executive office of the Borrower is 300 South Fourth Street,
Suite 620, Las Vegas, Nevada 89101 and there have been no other such locations
during the immediately preceding four months.
(c) Compliance with Other Instruments, etc. The Borrower is not in
violation of any term of its certificate of incorporation or by-laws. Neither
the execution, delivery or performance by the Borrower of the Program Documents
to which it is a party or the Note nor the borrowings hereunder does or will (i)
conflict with or violate the certificate of incorporation or by-laws of the
Borrower, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any Lien on any of the Properties of the Borrower pursuant to the
terms of any instrument or agreement to which the Borrower is a party or by
which it is bound, or (iii) require any consent of or other action by any
trustee or any creditor of, any lessor to or any investor, or shareholder of,
the Borrower.
(d) Compliance with Law. The Borrower is in compliance with all
statutes, laws and ordinances and all governmental rules and regulations to
which it or any of its Properties are subject. The policies and procedures set
forth in the AutoBond Program Manual are in compliance with all applicable
statutes, laws and ordinances and all governmental rules and regulations.
Neither the execution, delivery or performance of the Program Documents to which
it is a party or the Note nor the borrowings hereunder does or will cause the
Borrower to be in violation of any law or ordinance, or any order, rule or
regulation, of any federal, state, municipal or other governmental or public
authority or agency.
(e) Pending Litigation, etc. There is no action at law, suit in
equity or other proceeding or investigation (whether or not purportedly on
behalf of the Borrower) in any court, tribunal or by or before any other
governmental or public authority or agency or any arbitrator or arbitration
panel, pending or, to the best knowledge of the Borrower, threatened against or
affecting the Borrower or any of its respective Properties that could question
the validity of any Program Document to which it is a party or the Note or the
priority or perfection of any Liens created under the Indenture. The Borrower is
not in default with respect to any order, writ, injunction, judgment or decree
of any court or other governmental or public authority or agency or arbitrator
or arbitration panel.
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(f) Taxes. The Borrower and each entity which might have tax
liabilities for which the Borrower is or may be liable, has filed all tax
returns and paid all taxes required by law to be filed or paid, which are due
pursuant to said returns (or which to the knowledge of the Borrower are due and
payable) and on all assessments received by the Borrower or such entity, as the
case may be, other than taxes being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
established in accordance with generally accepted accounting principles. No
extensions of the time for the assessment of deficiencies have been granted by
the Borrower. There are no Liens on any Properties of the Borrower imposed or
arising as a result of the delinquent payment or the nonpayment of any tax,
assessment, fee or other governmental charge. There are no applicable taxes,
fees or other governmental charges due and payable by the Borrower in connection
with the execution and delivery by the Borrower of the Program Documents to
which it is a party or the Note or the borrowings hereunder.
(g) Investment Company Act. The Borrower is not an "investment
company", or an "affiliated person" of an "investment company", or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and the Borrower is not an
"investment adviser" or an "affiliated person" of an "investment adviser" as
such terms are defined in the Investment Advisers Act of 1940, as amended.
(h) Margin Rules. Without limiting the foregoing, the application in
accordance with the Program Documents of any part of the proceeds from the
Advances by the Borrower pursuant to this Agreement will not violate or result
in a violation of Section 7 of the Securities Exchange Act or any regulations
issued pursuant thereto, including, without limitation, Regulation G (12 C.F.R.,
Part 207), as amended, Regulation T (12 C.F.R., Part 220), as amended, and
Regulation X (12 C.F.R., Part 224), as amended, of the Board of Governors of the
Federal Reserve System. The assets of the Borrower do not include any "margin
stock" within the meaning of such Regulation G, and the Borrower does not have
any intention of acquiring any such margin stock.
(i) Proceedings. The Borrower has taken all action necessary to
authorize the execution and delivery of the Program Documents to which it is a
party and the Note and the borrowings hereunder and the performance of all
obligations to be performed by it hereunder and thereunder.
(j) No Event of Default or Default. No event has occurred, and no
condition exists, that constitutes a Default or an Event of Default.
(k) No Consents. No consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is or
will be required for (i) the valid execution, delivery and performance by the
Borrower of the Program Documents to which it is a party or the Note, (ii) the
perfection or maintenance of the Liens intended to be created by the
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Indenture (including the first priority status thereof) or (iii) the borrowings
hereunder. The Borrower has obtained all consents, approvals or authorizations
of, made all declarations or filings with, or given all notices to, all federal,
state or local governmental or public authorities or agencies which are
necessary for the continued conduct by the Borrower of its business as now
conducted and as proposed to be conducted as contemplated by the Program
Documents.
(l) Validity of Program Documents and Note. The Program Documents to
which it is a party have each been duly executed and delivered by the Borrower
and constitute legal, valid and binding obligations of the Borrower, enforceable
in accordance with their respective terms. Upon receipt by the Borrower of the
proceeds of the initial Advance as provided in this Agreement, the Note will
have been duly issued and will constitute the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, and entitled to the benefits of the Indenture.
(m) Representations and Warranties in Program Documents. The
representations and warranties of the Borrower contained in each of the Program
Documents to which it is a party and in any document, certificate or instrument
delivered pursuant to any such Program Document are true and correct and the
Lender may rely on such representations and warranties, if not made directly to
the Lender, as if such representations and warranties were made directly to the
Lender.
(n) Non-Consolidation. The Borrower has been operated in such a
manner that it would not be substantively consolidated in the bankruptcy trust
estate of any Affiliate, such that the separate existence of the Borrower and
any Affiliate would be disregarded.
(o) Representations and Warranties Updated. The representations and
warranties set forth above shall be deemed repeated on, and as of, each Closing
Date.
(p) Allocated Trust Assets. The Trust Assets allocated to secure the
obligations of the Borrower under this Agreement and the related Trust Assets
have not been pledged as collateral security for any other Indebtedness of the
Borrower.
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Section 2.2 General Representations and Warranties of AutoBond.
AutoBond represents and warrants to the Lender, as of the date
hereof, and as of each Closing Date, as follows:
(a) Organization and Authority. AutoBond:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted as contemplated by the Program Documents to which
it is a party, to enter into the Program Documents to which it is a party
and to perform its obligations under the Program Documents to which it is
a party.
(iii) has made all filings and holds all material franchises,
licenses, permits and registrations which are required under the laws of
each jurisdiction in which the properties owned (or held under lease) by
it or the nature of its activities makes such filings, franchises,
licenses, permits or registrations necessary.
(b) Place of Business. The address of the principal place of
business and chief executive office of AutoBond is 301 Congress Avenue, Austin,
Texas 78701 and there have been no other such locations during the immediately
preceding four months except as may have been previously disclosed in writing to
the Initial Lender.
(c) Compliance with Other Instruments, etc. AutoBond is not in
violation of any term of its articles of incorporation or by-laws. The
execution, delivery and performance by AutoBond of the Program Documents to
which it is a party do not and will not (i) conflict with or violate the
articles of incorporation or by-laws of AutoBond, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation of any Lien on any of the Properties or
assets of AutoBond pursuant to the terms of any instrument or agreement to which
AutoBond is a party or by which it is bound, or (c) require any consent of or
other action by any trustee or any creditor of, any lessor to or any investor in
AutoBond.
(d) Compliance with Law. AutoBond is in compliance with all
statutes, laws and ordinances and all governmental rules and regulations to
which it is subject, the violation of which, either individually or in the
aggregate, could materially adversely affect the business, earnings, Properties
or condition (financial or other) of AutoBond, each taken as a whole. The
policies and procedures set forth in the AutoBond Program Manual are in material
compliance with all applicable statutes, laws and ordinances and all
governmental rules and regulations. The execution, delivery and performance of
the Program Documents to which it is a party do not and will not cause AutoBond
to be in violation of any law or ordinance, or
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any order, rule or regulation, of any federal, state, municipal or other
governmental or public authority or agency.
(e) Pending Litigation, etc. There is no action at law, suit in
equity or other proceeding or investigation (whether or not purportedly on
behalf of AutoBond) in any court, tribunal or by or before any other
governmental or public authority or agency or any arbitrator or arbitration
panel, pending or, to the best knowledge of AutoBond, threatened against or
affecting AutoBond or any of its respective Properties that could question the
validity of the Program Documents. AutoBond is not in default with respect to
any order, writ, injunction, judgment or decree of any court or other
governmental or public authority or agency or arbitrator or arbitration panel.
(f) Taxes. AutoBond and each entity which might have tax liabilities
for which AutoBond is or may be liable, have filed all tax returns and paid all
taxes required by law to be filed or paid, which are due pursuant to said
returns (or which to the knowledge of AutoBond are due and payable) and on all
assessments received by AutoBond or such entity, as the case may be, other than
taxes being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been established in accordance
with generally accepted accounting principles. No extensions of the time for the
assessment of deficiencies have been granted by AutoBond. There are no material
Liens on any Properties of AutoBond imposed or arising as a result of the
delinquent payment or the nonpayment of any tax, assessment, fee or other
governmental charge. There are no applicable taxes, fees or other governmental
charges due and payable by AutoBond in connection with the execution and
delivery of the Program Documents to which it is a party.
(g) Investment Company Act. AutoBond is not an "investment company",
or an "affiliated person" of an "investment company", or a company "controlled"
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, and AutoBond is not an "investment adviser" or an
"affiliated person" of an "investment adviser" as such terms are defined in the
Investment Advisers Act of 1940, as amended.
(h) Proceedings. AutoBond has taken all action necessary to
authorize the execution and delivery by it of the Program Documents to which it
is a party and the performance of all obligations to be performed by it under
the Program Documents.
(i) No Event of Default. No event has occurred and is continuing,
and no condition exists, that constitutes a Default or an Event of Default.
(j) No Consents. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is,
was or will be required for the valid execution, delivery and performance by
AutoBond of the Program Documents to which it is a party. AutoBond has obtained
all consents, approvals or authorizations of, made all
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declarations or filings with, or given all notices to, all federal, state or
local governmental or public authorities or agencies which are necessary for the
continued conduct by AutoBond of its respective businesses as now conducted,
other than such consents, approvals, authorizations, declarations, filings and
notices which, neither individually nor in the aggregate, materially and
adversely affect, or in the future will materially and adversely affect, the
business, earnings, prospects, properties or condition (financial or other) of
AutoBond.
(k) Validity of Agreement. The Program Agreements to which it is a
party have been duly executed and delivered by AutoBond and constitute the
legal, valid and binding obligation of AutoBond, enforceable in accordance with
their terms.
(l) Representations and Warranties in Program Documents. (i) The
representations of AutoBond contained in any document, certificate or instrument
delivered pursuant to the Program Documents are true and correct in all material
respects and the Lender may rely on such representations and warranties, if not
made directly to the Lender, as if such representations and warranties were made
directly to the Lender.
(ii) Each acquisition of a Specified Auto Loan by the Borrower has
been or will be made in compliance with all requirements specified in the
Program Documents; and AutoBond has performed or will perform all of its
obligations with respect to such Specified Auto Loan, including, without
limitation, the payment to the related Dealer in the ordinary course of business
of all amounts then payable to such Dealer by AutoBond in respect of such
Specified Auto Loan.
(m) Representations and Warranties Updated. The representations and
warranties set forth above shall be deemed repeated on, and made as of, each
Closing Date.
Section 2.3 Representations and Warranties with Respect to the
Specified Auto Loans. (a) With respect to each Auto Loan, each of AutoBond and
the Borrower represents and warrants to the Lender, as of the Closing Date on
which such Auto Loan becomes a Specified Auto Loan, that:
(i) such Auto Loan complies in full with, and has been acquired by
AutoBond in accordance with, AutoBond's customary underwriting guidelines
and procedures;
(ii) AutoBond has conducted each of the procedures set forth in the
AutoBond Program Manual to evaluate the Obligor's application in
accordance with the criteria set forth in the AutoBond Program Manual;
(iii) on and after such Closing Date, there shall exist under each
such Auto Loan a valid, subsisting and enforceable security interest in
the Financed Vehicle securing each such Auto Loan and at such time an
enforcement of such security interest is sought and at all times there
shall exist a valid, subsisting and
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enforceable first priority perfected security interest in such Financed
Vehicle in favor of AutoBond;
(iv) such Auto Loan has not been satisfied, subordinated or
rescinded; and no provision of such Auto Loan has been waived, altered or
modified in any respect, except as identified in the Loan File and made in
accordance with the AutoBond Program Manual and the Credit and Collection
Policies;
(v) such Auto Loan is not and will not be subject to any right of
rescission, set-off, recoupment, counterclaim or defense, whether arising
out of transactions concerning such Auto Loan between the Obligor and the
Dealer, the Dealer and AutoBond, the Dealer and an Originator, or
otherwise and no such right has been asserted with respect thereto; the
operation of the terms of such Auto Loan or the exercise of any right
thereunder will not render any such Auto Loan unenforceable in whole or in
part;
(vi) upon assigning such Auto Loan to the Borrower, AutoBond had
full right to transfer such Auto Loan to the Borrower, and AutoBond
conveyed sole ownership of and good and marketable title to such Auto Loan
to the Borrower; upon assigning such Auto Loan to the Trustee, the
Borrower had full right to assign such Auto Loan to the Trustee;
(vii) such Auto Loan is not a Defaulted Auto Loan on the date of its
transfer and there is no default, breach, violation, or event permitting
acceleration under such Auto Loan, and no event has occurred which, with
notice and the expiration of any grace or cure period or both, would
constitute a default, breach, violation, or event permitting acceleration
under such Auto Loan;
(viii) the Loan File related to such Auto Loan contains each of the
documents required by the AutoBond Program Manual and the contractual
documents contained in such Loan File constitute the entire agreement with
respect to such Auto Loan between the Obligor and the related Dealer and,
with the exception of the related Dealer Agreement, between the Dealer and
AutoBond;
(ix) the down payment described in the Loan File relating to such
Auto Loan was paid to the related Dealer in the manner stated therein at
the time of the origination of such Auto Loan, the proceeds thereof were
fully disbursed; there is no requirement for further advances thereunder;
and all fees and expenses in connection thereof have been paid;
(x) the Financed Vehicle securing the Obligor's obligation to pay
under such Auto Loan has been delivered to and accepted by the Obligor;
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(xi) such Auto Loan is denominated and payable in United States
dollars;
(xii) the documents evidencing such Auto Loan contain customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization of the security afforded by
the related collateral;
(xiii) the Dealer Agreement relating to such Auto Loan is in effect,
whereby the related Dealer warrants delivery of title to such Financed
Vehicle, indemnifies AutoBond or the related Originator against fraud and
misrepresentation by the related Dealer and its employees and represents
and warrants that such Dealer did not accept any side note as any part of
the down-payment portion of the related Obligor's purchase price, and
AutoBond's or the Originator's (as the case may be) rights thereunder with
regard to such Auto Loan have been validly assigned to the Borrower, and
are enforceable against the related Dealer by, the Borrower or its
assignee, along with any other rights of recourse which AutoBond or the
Originator has against the related Dealer;
(xiv) each Auto Loan was acquired by AutoBond or an Originator from
an "Eligible Dealer"; each Auto Loan was acquired by the Borrower from
AutoBond, and the acquisition by AutoBond or an Originator of any Auto
Loan from a Dealer was not an extension of financing to such Dealer but
was acquired in a transaction constituting a "true sale" under applicable
state law;
(xv) AutoBond has no knowledge of any fact which should have led it
to expect at the time of sale of such Auto Loan, that (A) such Auto Loan
was made by the Selling Dealer and sold by such Dealer to AutoBond with
any conduct constituting fraud or misrepresentation on the part of such
Dealer or (B) that such Auto Loan would not be paid in full when due
because of fraud or misrepresentation on the part of the related Obligor;
(xvi) such Auto Loan was not originated in any jurisdiction the laws
of which prohibit the Selling Dealer from transferring such Auto Loan to
AutoBond or an Originator, or prohibit AutoBond from transferring such
Auto Loan to the Borrower, or the Borrower from assigning such Auto Loans
to the Trustee, nor is such Auto Loan subject to the laws of any such
jurisdiction;
(xvii) the Indenture and each related Collateral Assignment
constitutes a valid sale, transfer, assignment set-over and conveyance to
the Trustee of all right, title and interest of the Borrower, AutoBond,
any Originator and the Selling Dealer in and to such Auto Loan now
existing and hereafter created, and upon assignment of such Auto Loan
pursuant to the Loan Sale Agreement, the
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Borrower will have good and marketable title to such Auto Loan free and
clear of any Adverse Claim (other than that of the Trustee) and such Auto
Loan shall be freely transferable by the Borrower without the required
consent of any party (other than the Trustee); each Assignment is in a
form sufficient to (i) convey such Auto Loan to the Borrower under all
applicable law in the state in which the related Financed Vehicles is
located and (ii) permit the assignee or its agents to exercise all rights
granted by the Obligor under such Auto Loan and such other documents and
all rights available under applicable law to the obligee under such Auto
Loan;
(xviii) such Auto Loan does not (A) contravene in any material
respect any state and federal laws, rules or regulations applicable
thereto in connection with the origination of such Auto Loan, including
without limitation, usury, disclosure, truth in lending, equal credit and
similar laws, the Federal Trade Commission Act and applicable state laws
governing motor vehicle installment sale or loan contracts, (but
specifically excluding laws, rules or regulations applicable thereto in
connection with post-origination compliance, including, but not limited
to, laws, rules and regulations applicable thereto in connection with fair
credit billing, fair credit reporting and fair debt collection practices)
or (B) except as required by applicable law, impose any liability or
obligation of the Dealer, AutoBond or the Borrower on the Trustee or its
assignee with respect to such Auto Loan;
(xix) there are no proceedings or investigations pending or, to the
best of the Borrower's or AutoBond's knowledge, threatened before any
Governmental Authority (A) asserting the invalidity of such Auto Loan or
the bankruptcy or insolvency of the related Obligor, (B) seeking the
payment of such Auto Loan or (C) seeking any determination or ruling that
might materially and adversely affect the validity or enforceability of
such Auto Loan;
(xx) the Borrower and AutoBond have duly fulfilled all obligations
on their part to be fulfilled under or in connection with such Auto Loan
and have done nothing to impair the rights of the Trustee in such Auto
Loan or the rights of the Borrower or the Trustee in the proceeds with
respect thereto; the Borrower and AutoBond have paid in full all taxes and
other charges payable in connection with such Auto Loan and the transfer
of such Auto Loan to the Borrower, which could impair or become a lien
prior to the Borrower or Trustee's interest in such Auto Loan; there are
no prior liens for work performed affecting any Financed Vehicle which are
or may become a lien prior to or equal with the security interest granted
in the related Auto Loan;
(xxi) the applicable Sale Assignment has been duly executed and
delivered by AutoBond and the information regarding the Auto Loans in such
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Sale Assignment and Schedules attached thereto is true and correct as of
the Cut-Off Date relating to such Closing Date;
(xxii) the residence of the related Obligor is located within the
borders of the United States of America;
(xxiii) there is only one original of the retail installment sale
contract or promissory note and security agreement evidencing such Auto
Loan, such original has been delivered to the Trustee pursuant to the
Indenture and there are no custodial agreements in effect that would
adversely affect the ability of the Trustee to maintain possession thereof
pursuant to the Indenture;
(xxiv) the Obligor is not a Governmental Authority;
(xxv) the retail installment sale contract or promissory note and
security agreement evidencing such Auto Loan constitute "chattel paper"
within the meaning of the UCC in effect in the States of New York, Texas
and Nevada and all filings required to be made and all actions required to
be taken or performed by any Person in any jurisdiction to give the
Borrower an ownership interest in such Auto Loan have been made, taken or
performed;
(xxvi) each such Auto Loan constitutes and shall continue to
constitute a legal, valid and binding obligation of the Obligor thereunder
and is enforceable in accordance with its terms, except only as such
enforcement may be limited by laws affecting the enforcement of creditors'
rights generally;
(xxvii) at the origination date of each such Auto Loan, the related
Financed Vehicle was covered by a comprehensive and collision insurance
policy (a) in an amount at least equal to the lesser of (1) the actual
cash value of the related Financed Vehicle or (2) the unpaid balance owing
on such Auto Loan and (b) insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage;
(xxviii) no selection procedures believed by AutoBond to be adverse
to the interest of the Lender shall have been utilized in selecting such
Auto Loans for inclusion as Collateral;
(xxix) such Auto Loan shall have a remaining maturity of not more
than 60 months; such Auto Loan shall have an original maturity date not
later than 60 months from its origination date;
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.3 shall survive the sale or contribution
of a Specified Auto
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Loan to the Borrower and any assignment of such Specified Auto Loan by the
Borrower to the Trustee pursuant to the Indenture and shall continue so long as
any such Specified Auto Loan shall remain outstanding until such time as such
Specified Auto Loan is repurchased pursuant to the Indenture.
SECTION 3. CONDITIONS OF OBLIGATION TO MAKE INITIAL ADVANCE ON INITIAL
CLOSING DATE.
The Initial Lender's obligation to make the initial Advance
hereunder on the Initial Closing Date shall be subject to the satisfaction,
prior to or concurrently with the making of such Advance, of the conditions set
forth in Section 4 hereof, as well as the following conditions:
Section 3.1 Other Agreements. The Program Documents and the Note
shall each have been duly authorized by all necessary action. The Borrower and
AutoBond shall have duly executed and delivered the Program Documents to which
they are a party and, in the case of the Borrower, the Note and such Program
Documents are in full force and effect.
Section 3.2 Opinion of Special Counsel. The Initial Lender shall
have received from Jones, Day, Reavis & Pogue, who are acting as special New
York and Texas counsel for AutoBond and the Borrower in connection with the
transactions contemplated by this Agreement, an opinion, dated the Initial
Closing Date, in the form attached hereto as Exhibit B.
Section 3.3 Opinions of Nevada Counsel. The Initial Lender shall
have received from Woodburn & Wedge, who are acting as special Nevada counsel
for Borrower, in connection with the transactions contemplated by this
Agreement, an opinion, dated the Initial Closing Date, in the form attached as
Exhibit C.
Section 3.4 Opinion of Trustee's Counsel. The Initial Lender shall
have received the opinion of counsel to the Trustee, in form and substance
satisfactory to such Initial Lender.
Section 3.5 Organizational and Other Documents. The Initial Lender
shall have received certified copies of the organizational documents of the
Borrower and of AutoBond and of all formalities authorizing the execution,
delivery and performance hereof and of the Program Documents to which each is a
party and, in the case of the Borrower, the Note.
Section 3.6 Necessary Consents. The Lender shall have received a
copy of all consents to, or releases of any lien in respect to any Specified
Auto Loans subject or to be subject hereto, in form and substance satisfactory
to the Lender.
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Section 3.7 Representations True; No Event of Default. The
representations and warranties of the Borrower pursuant to Section 2.1 and of
AutoBond pursuant to Section 2.2 shall be true on and as of such Closing Date.
There shall exist on such Closing Date no Default or Event of Default.
SECTION 4. CONDITIONS OF OBLIGATION TO MAKE ADVANCES ON ANY CLOSING DATE.
The Initial Lender's obligation to make Advances hereunder on any
Closing Date shall be subject to the satisfaction, prior to or concurrently with
the making of such Advances, of the following conditions:
Section 4.1 Performance of Obligations. The Borrower and AutoBond
shall each have performed in all material respects all of their respective
obligations to be performed hereunder prior to or on such Closing Date.
Section 4.2 Representations True; No Event of Default. The
representations and warranties of the Borrower pursuant to Section 2.1 and of
AutoBond pursuant to Section 2.2 shall be true on and as of such Closing Date
and the representations and warranties with respect to the Specified Auto Loans
pursuant to Section 2.3 shall be true on and as of the related Closing Date with
the same effect as though such representations and warranties had been made on
and as of such Closing Date. There shall exist on such Closing Date no Default
or Event of Default.
Section 4.3 No Merger or Change in Control. Neither AutoBond nor the
Borrower shall have dissolved or liquidated or consolidated or merged with, or
been wound up into, or sold, leased or otherwise disposed of all or
substantially all of its Properties to, any Person (other than a merger into a
wholly-owned Subsidiary for the purposes of reincorporation), unless the
surviving or transferee entity has assumed all the obligations of AutoBond or
the Borrower hereunder, as applicable.
Section 4.4 Searches. The Borrower shall have delivered to the
Initial Lender such evidence (including without limitation, Uniform Commercial
Code search certificates, releases and termination statements) as the Initial
Lender may request to establish that there are no financing statements filed
against the Collateral other than with respect to Permitted Liens.
Section 4.5 Consents and Approvals. The Borrower and AutoBond shall
have obtained any necessary consents, waivers, approvals, authorizations,
registrations, filings, licenses and notifications (including, if necessary,
qualifying to do business in, and qualifying under the applicable consumer laws
of, each jurisdiction where the Borrower and AutoBond is then doing business, or
is expected to be doing business utilizing the proceeds of such Advance) and the
same shall be in full force and effect.
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Section 4.6 Proceedings, Instruments, etc. All proceedings and
actions taken on or prior to such Closing Date in connection with the
transactions contemplated by this Agreement, the Program Documents and the Note,
and all instruments incident thereto, shall be in form and substance reasonably
satisfactory to the Initial Lender, and the Initial Lender shall have received
copies of all documents that the Initial Lender may reasonably request in
connection with such proceedings, actions and transactions.
Section 4.7 Other Documents. The Borrower and AutoBond shall have
delivered to the Initial Lender such other documents, instruments, approvals
(and if requested certified duplication of executed copies thereof) and opinions
as the Initial Lender may have reasonably requested. Each of the Program
Documents shall remain in full force and effect.
Section 4.8 Continuance of a Funding Termination Event or an Event
of Default. No Funding Termination Event or Event of Default shall have occurred
and be continuing.
SECTION 5. CERTAIN SPECIAL RIGHTS.
Section 5.1 Home Office Payment. Notwithstanding any provision to
the contrary in the Program Documents, the Trustee, on behalf of the Borrower,
will punctually pay in immediately available funds prior to noon, New York City
time, all amounts payable with respect to the Advances in accordance with the
provisions of this Agreement and the Indenture (without the necessity for any
presentation or surrender thereof or any notation of such payment thereon) in
the manner and at any address as the Lender may from time to time direct in
writing. The Initial Lender agrees that, as promptly as practicable after the
payment or prepayment of any Advance, the Initial Lender will record such
payment or prepayment on the Note. The Borrower will afford the benefits of this
Section 5.1 to any Assignee, each of which, by its receipt and acceptance of a
Note, will be deemed to have made the same agreement relating to the Advances as
the Initial Lender has made in this Section 5.1. The Borrower shall only be
obligated to make payments on any Advance to an Assignee in the manner provided
in this Section 5.1 from and after the time such Assignee provides to the
Borrower and the Trustee written notice of its election to receive payments in
such manner and the address to which payments are to be directed (including the
account number of Assignee's bank account to which payments are to be directed
and the name, address and ABA number of the bank in which such account is
maintained, if payments are to be made to such Assignee by the wire transfer of
immediately available funds).
Section 5.2 Certain Taxes. The Borrower will pay all taxes (other
than income or franchise taxes incurred by the Lender) in connection with the
execution and delivery of this Agreement and the Indenture the issuance of the
Note(s) by the Borrower, the borrowings hereunder and any modification of the
Program Documents or the Note requested or required by the Borrower and will
save the Lender harmless, without limitation as to time, against any and all
liabilities (including, without limitation, any interest or penalty for
nonpayment or
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delay in payment, or any income taxes paid by the Lender or any Assignee in
connection with any reimbursement by the Borrower for the payment by any other
Person of any such taxes) with respect to all such taxes. The obligations of the
Borrower under this Section 5.2 shall survive the payment in full of the
Advances and the termination of the Program Documents.
Section 5.3 Substitution of Initial Lender. The Initial Lender shall
have the right to substitute any of the Initial Lender's Affiliates as the maker
of all or any portion of the aggregate principal amount of Advances to be made
by the Initial Lender, by written notice delivered to the Borrower, which notice
shall be signed by both the Initial Lender and such Affiliate and shall contain
such Affiliate's agreement to be bound by this Agreement. The Borrower agrees
that upon receipt of such notice (a) wherever the word "the Initial Lender" is
used in this Agreement (other than in this Section 5.3) such word shall be
deemed to refer to such Affiliate in addition to or instead of to the Initial
Lender, as the case may be, and (b) the Initial Lender shall, to the extent of
the assumption by such Affiliate of the Initial Lender's obligations hereunder,
be released from its obligations under this Agreement. The Borrower also agrees
that if the Initial Lender, at any time, acquires from any Affiliate all or any
portion of such Affiliate's rights under this Agreement, wherever the word "the
Initial Lender" is used in this Agreement such word shall thereafter be deemed
to refer to the Initial Lender in addition to or instead of to such Affiliate,
as the case may be, and such Affiliate shall, to the extent of the assumption by
the Initial Lender of such Affiliate's obligations hereunder, be released from
all of its obligations under this Agreement. Notwithstanding any other provision
of this Section 5.3, neither the Initial Lender nor any Affiliate thereof shall
be entitled to substitute any other party as the maker of any Advances if as a
result of such substitution the Borrower would be required to register as an
"investment company" under the Investment Company Act of 1940, as amended.
SECTION 6. ADVANCE MATURITY; ADVANCE PREPAYMENTS.
Section 6.1 Advance Maturity. Each Advance shall be due and payable
on the related Maturity Date.
Section 6.2 Mandatory Prepayments. The Borrower shall immediately
prepay, or (in the case of an Exchange) be deemed to have prepaid, the Advances,
without premium, together with interest accrued on the amount to be prepaid to
the date of prepayment and any unpaid fees with respect thereto, (a) to the
extent required on each Payment Date pursuant to Section 13.05 of the Indenture
and (b) upon the occurrence of an Exchange. No prepayment pursuant to this
Section 6.2 shall in and of itself have any effect on the obligation of the
Initial Lender to make Advances under this Agreement nor the right of the
Borrower to reborrow an amount equal to such repayment.
Upon the occurrence of an Event of Default, the Borrower will make
payments on the Advances in accordance with Section 11 hereof and Section 13.05
of the Indenture.
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Section 6.3 Voluntary Prepayments. After the last Advance is made
hereunder, the Borrower may prepay the Advances in full, without premium, at any
time after the outstanding Advances are 10% or less than the aggregate amount of
Advances outstanding on the date of such final Advance.
SECTION 7. ASSIGNMENTS AND PARTICIPATIONS.
Section 7.1 Assignments. (a) The Borrower may not assign its rights
or obligations hereunder or under the Notes without the prior consent of the
Lender in its sole discretion (or, if multiple Lenders, the Lenders in respect
of a majority in aggregate principal amount of Advances outstanding).
(b) Pursuant to the terms of the Indenture, the Lender may assign to
any person or entity who is an accredited investor (as such term is defined in
Rule 501(a) promulgated under the Securities Act) (each, an "Assignee"), all or
any portion of the Advances and the Notes; provided that any assignment of a
portion of the Advances and the Notes shall be in an amount not less than the
Minimum Assignment Denomination. Upon written notice to the Borrower of an
assignment in accordance with the preceding sentence (which notice shall
identify the Assignee and the amount of the Advances and Notes assigned), the
Assignee shall have, to the extent of such assignment (unless otherwise provided
in such assignment), the obligations, rights and benefits of the Lender
hereunder with respect to the Advance(s) assigned to it. For all purposes of
this Agreement, the Assignee shall, so long as the Advance(s) assigned to such
Assignee remain unpaid, be entitled to the rights and benefits of this Agreement
with respect to the Advance(s) assigned to it as if (and the Borrower shall be
directly obligated to such Assignee under this Agreement as if) such Assignee
were the "Lender" for purposes of this Agreement. Accordingly, unless otherwise
provided, whenever any action, waiver, notice or consent is to be provided to or
by the Lender as herein specified, such action, waiver, notice or consent shall
(unless otherwise expressly specified herein) also be provided to or by each
Assignee.
(c) The Lender shall provide notice of each assignment to the
Trustee and AutoBond; provided that failure to provide such notice shall not
affect the validity of any assignment.
(d) Notwithstanding the provisions of this Section 7.1, no
assignment of an interest in an Advance to an entity outside the United States
of America shall be effective unless the prospective Assignee thereof certifies
to the Borrower and AutoBond that payments to it in respect of the Advances will
not be subject to withholding taxes imposed by any Governmental Authority in the
United States of America or any political subdivision or taxing authority
thereof or therein or that if it is subject to such withholding taxes it will
not seek reimbursement or gross-up from the Borrower or AutoBond.
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Section 7.2 Participations. (a) The Lender may sell or agree to sell
to any person or entity who is an accredited investor (as such term is defined
in Rule 501(a) promulgated under the Securities Act) a participation in all or
any part of any Advance held by it or Advances made or to be made by it, but
shall not have any direct rights or benefits under this Agreement or any Note
(the participant's rights against the Lender in respect of such participation to
be those set forth in the agreement executed by the Lender in favor of the
participant). All amounts payable by the Borrower to the Lender under this
Agreement shall be determined as if the Lender had not sold or agreed to sell
any participations in such Advance and as if the Lender were funding all of such
Advance in the same way that it is funding the Advance in which no
participations have been sold.
(b) The Lender may furnish any information concerning the Borrower,
AutoBond or any of their other Affiliates in the possession of the Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided, however, that, prior to receipt of any such
information, and prior to any inspection by a Lender, other than the Initial
Lender, pursuant to Sections 10.1(a) and 10.1(b) hereof, such assignees and
participants or prospective assignees and participants, as the case may be, may
be required by the Borrower to execute a confidentiality agreement in form and
substance reasonably acceptable to the Borrower.
SECTION 8. CERTAIN COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that so long as any Advance shall
remain unpaid:
Section 8.1 Maintenance of Office. The Borrower will maintain at its
office located at its address shown at the head of this Agreement an office
where notices, presentations and demands in respect of this Agreement and the
Note may be given to and made upon it; provided, however, that it may, upon
fifteen (15) Business Days prior written notice to the Lender, move such office
to any other location within the boundaries of the continental United States of
America.
Section 8.2 Existence. The Borrower will take and fulfill, or cause
to be taken and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary to
qualify, and to preserve and keep in full force and effect its qualification, to
do business in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification.
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Section 8.3 General Maintenance of Business, Etc. The Borrower will:
(a) keep proper books of record and accounts in which entries will
be made of its business transactions in accordance with and to the extent
required by generally accepted accounting principles;
(b) enforce (or cause the Servicer or the Trustee, as the case may
be, to enforce) all of its rights under each of the Program Documents to
which it is a party and each other agreement entered into in connection
with the transactions contemplated hereby.
Section 8.4 Inspection. The Borrower will permit, upon reasonable
notice to it, the Lender, by its representatives, agents or attorneys: (a) to
examine all books of account, records, reports and other papers of the Borrower
(including the Loan Files), (b) to make copies and take extracts from any
thereof, (c) to discuss the affairs, finances and accounts of the Borrower with
its respective officers and independent certified public accountants (and by
this provision the Borrower hereby authorizes said accountants to discuss with
the Lender the finances and accounts of the Borrower) and (d) to visit and
inspect, at reasonable times during normal business hours, the properties of the
Borrower. It is understood and agreed by the parties hereto that, so long as no
Default or Event of Default shall have occurred and than be continuing, all
reasonable expenses in connection with any such inspection or discussion
incurred by the Lender or the Borrower, any officers and employees thereof and
the independent certified public accountants therefor shall be expenses payable
by the Person making the inspection or discussion.
Section 8.5 Compliance with Law, etc. The Borrower will not (i)
violate any laws, ordinances, governmental rules or regulations to which it is
or may become subject, or (ii) fail to obtain or maintain any patents,
trademarks, service marks, trade names, copyrights, design patents, licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business, except in each case
to the extent that any such violation or failure could not materially and
adversely affect the business, earnings, prospects, properties or condition
(financial or other) of the Borrower.
Section 8.6 Payment of Taxes and Claims. The Borrower will pay, and
discharge, promptly when due all taxes, assessments and governmental charges and
levies imposed upon it, its income or profits or any of its properties;
provided, however, that the foregoing need not be paid while the same is being
contested in good faith by appropriate proceedings diligently conducted so long
as:
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(b) the right of the Borrower to use the particular property shall
not be materially and adversely affected thereby.
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Section 8.7 Limitations on Indebtedness. The Borrower will not at
any time incur, create, assume or guarantee, or otherwise become or be liable in
any manner with respect to, any Indebtedness, except the Advances.
Section 8.8 Restricted Investments. With respect to amounts on
deposit in the Trust Accounts, the Borrower will not make any Restricted
Investments.
Section 8.9 Nature of Business. The Borrower will not engage in any
business or activity (whether or not pursued for gain or other pecuniary
advantage) other than Dispositions.
Section 8.10 Independence. Until 367 days have elapsed following
payment and satisfaction of all obligations of the Borrower hereunder and under
the Note, the Borrower shall be required to observe the applicable legal
requirements for the recognition of the Borrower as a legal entity separate and
apart from AutoBond and each other Affiliate of AutoBond, including, without
limitation, assuring that each of the following is complied with:
(a) the Borrower shall maintain separate records, books of account
and financial statements (each of which shall be sufficiently full and
complete to permit a determination of the Borrower's assets and
liabilities separate and apart from those of AutoBond and each other
Affiliate of AutoBond and to permit a determination of the obligees
thereon and the time for performance of each of the Borrower's obligations
separate and apart from those of AutoBond and each other Affiliate of
AutoBond) from those of AutoBond and each other Affiliate of AutoBond;
(b) the Borrower shall not commingle any of its assets or funds with
those of AutoBond or any of the other Affiliates of AutoBond;
(c) the Borrower shall maintain a separate board of directors
(including an "independent director" (as such term is defined in the
Borrower's Certificate of Incorporation)) and shall observe all separate
corporate formalities, and all decisions with respect to the Borrower's
business and daily operations shall be independently made by the officers
of the Borrower pursuant to resolutions of its board of directors;
(d) other than payment of dividends and return of capital, no
transactions shall be entered into between the Borrower and AutoBond or
between the Borrower and any of the other Affiliates of AutoBond except
such transactions as are contemplated by the Loan Sale Agreement;
(e) except for such origination, collection and servicing functions
as AutoBond may perform on behalf of the Borrower pursuant to the Program
Documents, the Borrower shall act solely in its own name and through its
own authorized officers and agents and the Borrower will not act as agent
of AutoBond or any other person in any capacity;
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(f) except for any funds received from AutoBond as a capital
contribution, the Borrower shall not accept funds from AutoBond or any of
the other Affiliates of AutoBond; and the Borrower shall not allow
AutoBond or any of the other Affiliates of AutoBond otherwise to supply
funds to, or guarantee any obligation of, the Borrower;
(g) the Borrower shall not guarantee, or otherwise become liable
with respect to, any obligation of AutoBond or any of the other Affiliates
of AutoBond; and
(h) the Borrower shall at all times hold itself out to the public
under the Borrower's own name as a legal entity separate and distinct from
AutoBond and the other Affiliates of AutoBond.
Section 8.11 Other Agreements and Parties. The Borrower will comply
with all terms of the Program Documents to which it is a party. The Borrower
will not (a) enter into any agreements other than the Program Documents to which
it is a party without the consent of the Lender (or, if multiple Lenders, the
Lenders in respect of a majority in aggregate principal amount of Advances
outstanding), such consent not to be unreasonably withheld, (b) except as
otherwise expressly set forth herein and in the Indenture, agree to any
amendment, supplement or modification to or waiver of the terms of the Program
Documents to which it is a party without the consent of the Lender (or, if
multiple Lenders, the Lenders in respect of a majority in aggregate principal
amount of Advances outstanding), such consent not to be unreasonably withheld,
(c) appoint any Successor Servicer, without the consent of the Lender (or, if
multiple Lenders, the Lenders in respect of a majority in aggregate principal
amount of the Advances outstanding) or (d) consent to the appointment of any
Subservicer, without the consent of the Lender (or, if multiple Lenders, the
Lenders in respect of a majority in aggregate principal amount of the Advances
outstanding).
Section 8.12 Investment Company Act. The Borrower will not take any
action which would require it to be registered as an "investment company" under
the Investment Company Act of 1940, as amended.
Section 8.13 Liens. The Borrower will not permit any Lien to exist
on any of its Properties, whether now owned or hereafter acquired, other than
Permitted Liens.
SECTION 9. CERTAIN COVENANTS OF AUTOBOND.
AutoBond covenants and agrees that so long as any Advances shall
remain unpaid:
Section 9.1 Existence. AutoBond will take and fulfill, or cause to
be taken and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary to
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qualify, and to preserve and keep in full force and effect its qualification, to
do business in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification.
Section 9.2 Compliance with Law, etc. AutoBond will not (a) violate
any laws, ordinances, governmental rules or regulations to which it is or may
become subject or (b) fail to obtain or maintain any patents, trademarks,
service marks, trade names, copyrights, design patents, licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its Property or to the conduct of its business.
Section 9.3 Payment of Taxes and Claims. AutoBond will pay and
discharge promptly, as and when due, all taxes, assessments and governmental
charges and levies imposed upon it, its income or profits or any of its
properties; provided, however, that the foregoing need not be paid while the
same is being contested in good faith by appropriate proceedings diligently
conducted so long as:
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(b) the right of AutoBond, as the case may be, to use the particular
property shall not be materially and adversely affected thereby.
Section 9.4 Inspection. AutoBond will permit, upon reasonable notice
to it, the Lender, by its representatives, agents or attorneys, (a) to examine
all books of account, records, reports and other papers of AutoBond relevant to
its role as Servicer (including the Loan Files), (b) to make copies and take
extracts from any thereof, (c) to discuss the affairs, finances and accounts of
AutoBond with its respective officers and independent certified public
accountants (and by this provision AutoBond hereby authorizes said accountants
to discuss with the Lender the finances and accounts of AutoBond), and (d) to
visit and inspect, at reasonable times during normal business hours, the
properties of AutoBond. It is understood and agreed by the parties hereto that
all reasonable expenses in connection with any such inspection or discussion
incurred by the Lender or AutoBond, any officers and employees thereof and the
independent certified public accountants therefor shall be expenses payable by
AutoBond.
Section 9.5 Consolidation and Merger. AutoBond shall not merge or
consolidate with any other Person unless (i) the entity surviving such merger or
consolidation is a corporation organized under the laws of the United States or
any State, (ii) the surviving entity, if not AutoBond, shall execute and deliver
to the Borrower and the Trustee, in form and substance satisfactory to each of
them, (x) an instrument expressly assuming all of the obligations of AutoBond
hereunder and under the Program Documents, and (y) an Opinion of Counsel to the
effect that such Person is a corporation of the type described in the preceding
clause (i), has effectively assumed the obligations of AutoBond hereunder, that
all conditions precedent provided for in this Agreement relating to such
transaction have been complied with,
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and, that in the opinion of such counsel, all UCC financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Borrower and the
Trustee in the Trust Assets, and reciting the details of such filings, or
stating that no such action shall be necessary to preserve and protect such
interest, and (iii) immediately after giving effect to such transaction, no
Event of Default or Default shall have occurred and be continuing. AutoBond and
any surviving entity, if not AutoBond, will keep all of its material assets
within the United States at all times.
Section 9.6 Control. So long as any of the Note remains Outstanding,
AutoBond will not sell, pledge or otherwise transfer any of the capital stock of
the Borrower held by AutoBond.
Section 9.7 Tax Returns. (a) At all times, so long as any of the
Note or the other obligations secured by the Indenture remain outstanding,
AutoBond and the Borrower shall be members of the same affiliated group within
the meaning of Section 1504 of the Code (the "AutoBond Group") and shall join in
the filing of a consolidated return for federal income tax purposes and, to the
extent permitted by law, in the filing of consolidated or combined returns for
state, local and foreign tax purposes.
(b) AutoBond shall promptly pay and discharge, or cause the payment
and discharge of, all the AutoBond Group, or federal income taxes (and all
other material taxes) when due and payable by AutoBond, the Borrower,
except (i) such as may be paid thereafter without penalty or (ii) such as
may be contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in accordance with
GAAP. AutoBond shall promptly notify the Borrower, the Trustee and the
Noteholders of any material challenge, contest or proceeding pending by or
against AutoBond or AutoBond Group before any taxing authority.
Section 9.8 Protection of Right, Title and Interest.
(a) AutoBond shall deliver (or cause to be delivered) to the
Borrower and the Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing. In the event that AutoBond fails to perform its obligations under
this subsection, the Borrower or the Trustee may do so, on AutoBond's
behalf, at the expense of AutoBond. AutoBond hereby grants the Borrower
and the Trustee a power of attorney to effectuate the provisions of the
preceding sentence.
(b) AutoBond shall not change its name identity, or corporate
structure in any manner that would, could, or might make any UCC financing
statement or continuation statement filed by AutoBond in accordance with
paragraph (a) above seriously misleading within the meaning of ss.
9-402(7) of the UCC, unless it shall have given the Borrower and the
Trustee at least five days' prior written notice thereof and
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shall have promptly filed appropriate amendments to all previously filed
UCC financing statements or continuation statements.
(c) AutoBond shall give the Borrower and the Trustee at least 60
days' prior written notice of any relocation of its principal place of
business or chief executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment
of any previously filed UCC financing or continuation statement or of any
new UCC financing statement and shall promptly file any such amendment.
AutoBond shall at all times maintain each office from which it shall
service the Auto Loans and its principal executive office, within the
United States of America. AutoBond shall pay all filing fees or taxes
payable in respect of any UCC financing or continuation statements
required to be filed pursuant to this Section 9.8(c).
(d) AutoBond shall deliver to the Borrower and the Trustee promptly
after the execution and delivery of each amendment hereto, an Opinion of
Counsel either (i) stating that, in the opinion of such counsel, all UCC
financing statements and continuation statements necessary to preserve and
protect fully the interest of the Borrower and the Trustee in the Trust
Property have been filed, or (ii) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest.
(e) Other Liens or Interests. Except for the conveyances under the
Indenture, AutoBond will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on the
Trust Property or any interest therein, and AutoBond shall defend the
right, title, and interest of the Borrower and the Trustee in, to and
under the Trust Property against all claims of third parties claiming
through or under AutoBond; provided however, that AutoBond's obligations
under this Section 9.8 shall terminate upon the repayment in full of the
Note and the expiration of any applicable preference period.
Section 9.9 Further Assurances. AutoBond will promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary in order to give effect to the provisions of the Program
Documents and the transactions contemplated hereby.
Section 9.10 Independence. Until 367 days have elapsed following
payment and satisfaction of all obligations of the Borrower hereunder and in
respect of the Advances, AutoBond shall be required to (and shall assure that
each other Affiliate of AutoBond shall) observe the applicable legal
requirements for the recognition of the Borrower as a legal entity separate and
apart from AutoBond and each other Affiliate of AutoBond, including, without
limitation, assuring that each of the following is complied with:
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(a) AutoBond and each other Affiliate of AutoBond shall maintain
separate records and books of account (each of which shall be sufficiently
full and complete to permit a determination of the assets and liabilities
of AutoBond or such Affiliate, as the case may be, separate and apart from
those of the Borrower and to permit a determination of the obligees
thereon and the time for performance on each of the obligations of
AutoBond or such Affiliate, as the case may be, separate and apart from
those of the Borrower) from those of the Borrower;
(b) neither AutoBond nor any of its other Affiliates shall commingle
any of its assets or funds with those of the Borrower;
(c) the board of directors of AutoBond shall not dictate decisions
with respect to the Borrower's business and daily operations and AutoBond
shall maintain its own corporate formalities and shall otherwise respect
the separate corporate identity of the Borrower;
(d) other than the making of capital contributions and the
transactions contemplated by the Loan Sale Agreement, neither AutoBond nor
any of its other Affiliates shall enter into any transactions with the
Borrower;
(e) neither AutoBond nor any of its other Affiliates shall accept
appointment as, or act as, an agent of the Borrower except, to the extent
AutoBond performs certain servicing and collection functions pursuant to
the Servicing Agreement;
(f) neither AutoBond nor any of its other Affiliates shall advance
funds to the Borrower (except for the making of capital contributions);
and neither AutoBond nor any of its other Affiliates will otherwise supply
funds to, or guarantee any obligation of, the Borrower;
(g) neither AutoBond nor any of its other Affiliates shall
guarantee, or otherwise become liable with respect to, any obligation of
the Borrower;
(h) AutoBond and each of its other Affiliates shall at all times
hold itself out to the public under its respective name as a legal entity
separate and distinct from the Borrower; and
(i) all financial reports prepared by AutoBond and each of its other
Affiliates shall comply with generally accepted accounting principles.
Section 9.11 Other Agreements and Parties. AutoBond will comply with
all terms of the Program Documents to which it is a party. AutoBond will not (a)
except as otherwise expressly set forth herein and in the Indenture, agree to
any amendment, supplement or modification to or waiver of the terms of the
Program Documents to which it is a party without the consent of the Lender (or,
if multiple Lenders, the Lenders in respect of a majority
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in aggregate principal amount of Advances outstanding), (b) appoint any
Successor Servicer, without the consent of the Lender (or, if multiple Lenders,
the Lenders in respect of a majority in aggregate principal amount of the
Advances outstanding), such consent not to be unreasonably withheld or (c)
consent to the appointment of any Subservicer, without the consent of the Lender
(or, if multiple Lenders, the Lenders in respect of a majority in aggregate
principal amount of the Advances outstanding), such consent not to be
unreasonably withheld.
Section 9.12 Servicing Arrangements. AutoBond will take any
necessary action to evidence that the Specified Auto Loans are to be serviced
and administered by the Servicer under the Servicing Agreement. AutoBond will
act as Servicer under the Servicing Agreement and will perform its duties as
Servicer thereunder in accordance with the provisions of the Servicing
Agreement, the AutoBond Program Manual and this Agreement. So long as any
Advances are outstanding, upon the occurrence of an Event of Termination under
the Servicing Agreement, AutoBond agrees to provide prompt notice to the Lender
of such Event of Termination and to thereafter act in accordance with the
instructions of the Lender, including the appointment of a new Servicer.
Section 9.13 Preservation of Quality of Auto Loans. AutoBond will
use its best efforts to prevent a deterioration in the quality of the Specified
Auto Loans and will use its best efforts as Servicer to preserve the credit
quality and collectibility of the Specified Auto Loans.
Section 9.14 Exclusivity. Until the Commitment Termination Date,
AutoBond agrees to finance the acquisition of Auto Loans solely through the
funds provided under the Commitment.
SECTION 10. INFORMATION TO BE FURNISHED TO LENDER.
Section 10.1 Information to be Furnished by the Borrower and
AutoBond.
The Borrower and AutoBond will deliver or cause to be delivered to
the Lender the following:
(a) promptly (and in any event within five (5) days) after any
Executive Officer of the Borrower or AutoBond shall have obtained
knowledge of any Default or Event of Default, an Officer's Certificate
from the Borrower or AutoBond specifying the nature and period of
existence thereof, what action the Borrower or AutoBond has taken or is
taking or proposes to take with respect thereto, and an estimate of the
time necessary to cure such condition or event; and
(b) promptly upon request therefor, such other data, filings and
information as the Lender may from time to time reasonably request.
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SECTION 11. DEFAULTS, REMEDIES AND TERMINATION.
Section 11.1 Events of Default. Events of Default and Remedies
therefor in respect of the Advances and the Notes are as set forth in Sections
6.01, 6.03 and 13.07 of the Indenture.
SECTION 12. INTERPRETATION OF AGREEMENT.
Section 12.1 Definitions. Capitalized terms used herein but not
defined shall have the meaning set forth in the Indenture. Except as the context
shall otherwise require, the following terms shall have the following meanings
for all purposes of this Agreement (the definitions to be applicable to both the
singular and the plural form of the terms defined, where either such form is
used in this Agreement):
The term "Advances" means the advances provided for by Section 1.1.
The term "Affiliate," with respect to any Person (hereinafter "such
Person"), shall mean any other Person which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with, such Person or another Affiliate of such Person. The
term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or
otherwise.
The term "APR" shall mean the annual percentage rate of an Auto Loan
as determined according to the related contractual documents with the
Obligor thereof.
The term "Assignee" shall have the meaning set forth in Section
8.1(b).
The term "Authorized Officer" means, with respect to AutoBond or the
Borrower, any officer of AutoBond or the Borrower, as the case may be, who
is authorized to act for AutoBond or the Borrower, as the case may be, in
matters relating to transactions contemplated by this Agreement.
The term "AutoBond Program Manual" means the AutoBond Program Manual
(including the Credit and Collection Policies), as modified from time to
time, with notice of each such modification to the Servicer, the Trustee
and the Lender.
The term "Auto Loan" means a fixed-rate, fully amortizing,
closed-end installment loan (bearing interest calculable on a simple
interest basis or based upon the Rule of 78s arising from the sale of a
new or used automobiles and light-duty trucks and vans to a consumer which
includes, without limitation, (i) all security interests or liens and
property subject thereto from time to time purporting to secure payment by
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the obligor thereunder, including, without limitation, AutoBond's rights
under the related dealer agreement, (ii) all guarantees, indemnities and
warranties, insurance policies, certificates of title and other agreements
or arrangements of whatever character from time to time supporting or
securing payment of such loan, (iii) all collections and records with
respect to the foregoing and (iv) all proceeds of any of the foregoing.
The term "AutoBond" shall mean AutoBond Acceptance Corporation, a
Texas corporation.
The term "Available Facility Amount," on any date of determination,
shall mean the sum of (a) the Commitment on such date, minus (b) the
aggregate Advances made on or prior to such day.
The term "Board" shall mean, with respect to any Person, its board
of directors or, if it does not have a board of directors, its governing
body which performs the same duties as a board of directors.
The term "Borrowing Notice" shall have the meaning set forth in
Section 1.3 hereof.
The term "Business Day" shall mean any day other than a Saturday or
a Sunday, or another day on which commercial banks in the States of New
York, Texas or Nevada (or in any other state in which the Servicer or any
Agent is located) are required, or authorized by law, to close.
The term "Capital Lease" shall mean any lease or other agreement for
the use of property which is required to be capitalized on a balance sheet
of the lessee or other user of property in accordance with generally
accepted accounting principles.
The term "Closing Date" shall have the meaning set forth in Section
1.2 hereof.
The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute, together with the
rules and regulations thereunder.
The term "Collateral" shall mean that portion of the Trust Estate
allocated to the Note.
The term "Collection Period' shall mean each calendar month.
The term "Commitment" shall mean the obligation of the Initial
Lender to make Advances in an amount equal to 105% of (a) Specified Auto
Loans with an Unpaid Principal Balance of $10,000,000, in the case of the
initial Advance, (b) $80,000,000,
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in the case of all other Advances during the month of June 1998 and (c)
the Unpaid Principal Balance of Specified Auto Loans pledged under the
Indenture pursuant to all other Advances, not to exceed an additional
$20,000,000 in Specified Auto Loans per month in any month following June
1998.
The term "Commitment Termination Date" shall mean May 31, 1999, upon
90 days' prior written notice from the Lender, or if such notice is not
given, May 31, 2000.
The term "Credit and Collection Policies" means written credit
procedures and policies consistent with the requirements of this Agreement
and the Servicing Agreement, in effect from time to time formulated by
AutoBond as to the requirements of certain servicing matters and
comprising part of AutoBond Program Manual.
The term "Cut-off Date" shall have the meaning assigned thereto in
the Indenture.
The term "Dealer" shall mean each automobile dealer with whom
AutoBond has entered into a Dealer Agreement.
The term "Dealer Agreement" shall mean each agreement between
AutoBond and a Dealer, which provides for acquisition of the Auto Loans.
The term "Default" shall mean any event or condition that would
become an Event of Default after notice or passage of time or both.
The term "Defaulted Auto Loan" shall mean an Auto Loan which by its
terms has more than 10% of any installment of principal or interest which
is 60 or more days contractually past due.
The term "Determination Date" shall mean the 10th day of each month
(or the immediately preceding Business Days if such day is not a Business
Day).
The term "Dollars" or "$" shall mean the lawful currency of the
United States of America, and in relation to any payment under this
Agreement, same day or immediately available funds.
The term "Eligible Auto Loan" shall mean any Auto Loan as to which
the representations and warranties set forth in Section 2.3(a) are true
and correct as of the related Closing Date.
The term "Eligible Dealer" shall mean a franchised Dealer (a) duly
licensed and authorized as a dealer in new or used Automobiles by
Governmental Authorities and (b) as to which AutoBond has entered into a
Dealer Agreement.
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The term "Event of Default" shall have the meaning assigned thereto
in the Indenture.
The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
The term "Executive Officer" with respect to a Person shall mean the
Chief Executive Officer, President, Chief Operating Officer or Chief
Financial Officer.
The "fair valuation" of the Properties of any Person shall be
determined on the basis of the amount which may be realized within a
reasonable time, either through collection or sale of such assets at the
regular market value, conceiving the latter as the amount which could be
obtained for the property in question within such period by a capable and
diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions.
The term "Financed Vehicles" shall mean a new or used automobile,
van or light-duty truck, the purchase of the Obligor financed with an Auto
Loan.
The term "Funding Termination Event" means the occurrence of (a) an
Event of Default, (b) if AutoBond is the Servicer, a Triggering Event, (c)
an Event of Default under that certain Note Agreement dated as of June 9,
1998, between AutoBond and the Initial Lender, or (d) a default under that
certain Stock Option Agreement (the "Option Agreement") dated as of June
9, 1998 by and between Dynex Holding, Inc. and Messrs. Adrian Katz,
William O. Winsauer and John S. Winsauer (collectively, the
"Stockholders") by AutoBond or the Stockholders, which materially impairs
the value of the Option (as defined in the Option Agreement).
The term "generally accepted accounting principles" shall mean, as
of the date of any determination with respect thereto, generally accepted
accounting principles as understood and applied in the United States at
the time in question.
The term "Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
The term "Guarantee," with respect to any Person, shall mean all
obligations of such Person guaranteeing or in effect guaranteeing any
Indebtedness (including, without limitation, liability in respect of a
joint venture or a partnership), dividend or other obligation or
Investment of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations incurred through an
agreement, contingent or otherwise, by such Person (a) to purchase such
Indebtedness, obligation or Investment or any property or assets
constituting security therefor, (b) to
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advance or supply funds (i) for the purchase or payment of such
Indebtedness, obligation or Investment or (ii) to maintain working capital
or equity capital, or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness, obligation or Investment, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of such Indebtedness, obligation or Investment of the
ability of the primary obligor to make payment of such Indebtedness,
obligation or Investment, or (d) otherwise to assure the owner of such
Indebtedness, obligation or Investment against loss in respect thereof.
The terms "hereof," "herein," "hereunder" and other words of similar
import shall be construed to refer to this Agreement as a whole and not to
any particular Section or other subsection.
The term "Increased Cost" shall have the meaning set forth in
Section 1.6(d) hereof.
The term "Indebtedness," with respect to any Person, shall mean all
items (other than capital stock, capital surplus, retained earnings and
deferred credits and deferred income taxes), which in accordance with
generally accepted accounting principles would be included in determining
total liabilities as shown on the liability side of a balance sheet as at
the date on which Indebtedness is to be determined. The term
"Indebtedness" shall also include, whether or not so reflected, (a)
indebtedness, obligations and liabilities secured by any Lien on property
of such Person, whether or not the indebtedness secured thereby shall have
been assumed by such Person, (b) all obligations of such Person in respect
of Capital Leases, and (c) all Guarantees.
The term "Indenture" shall have the meaning set forth in the
Preamble hereof.
The term "Independent Accountant" shall have the meaning set forth
in Section 1.7 hereof.
The term "Initial Closing Date" shall have the meaning set forth in
Section 1.2 hereof.
The term "Initial Lender" shall mean Dynex Capital, Inc.
The term "Interest Payment Date" means each Payment Date and each
date upon which Advances are repaid, either in whole or in part.
The term "Interest Period" shall mean, with respect to any Advance,
the period commencing with the date of such Advance to and excluding the
Payment Date occurring in the month following the date of such Advance,
and thereafter, the period commencing with each Payment Date, to and
excluding the following Payment Date;
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provided that the final Interest Period in respect of an Advance shall end
on (but exclude) the Maturity Date or prepayment date in respect of such
Advance.
The term "Interest Rate" shall mean, with respect to an Advance for
any Interest Period, a per annum rate equal to (a) in respect of that
portion of an Advance evidenced by Class A Notes, the corporate bond
equivalent yield on the three-year U.S. Treasury security, based on the
quotation reported by Bloomberg Financial Markets on the Closing Date for
such Advance, plus 2% and (b) in respect of that portion of an Advance
evidenced by Class B Notes, 16%.
The term "Investment" shall mean any loan, advance, extension of
credit (except for accounts and notes receivable for merchandise sold or
services furnished in the ordinary course of business, and amounts paid in
advance on account of the purchase price of merchandise to be delivered to
the payor within one year of the date of the advance), or purchase of
stock, notes, bonds or other securities or capital contribution to any
Person, whether in cash or other property. The amount of any Investment
shall be its cost (the amount of cash or the fair market value of other
property given in exchange therefor).
The term "Lender" shall mean the Initial Lender and any Assignees
thereof.
The term "Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, civil
law, statute, civil code or contract, whether or not such interest shall
be recorded or perfected and whether or not such interest shall be
contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, and including the
lien, privilege, security interest or other encumbrance arising from a
mortgage, deed of trust, hypothecation, cession, transfer, assignment,
pledge, adverse claim or charge, conditional sale or trust receipt, or
from a lease, consignment or bailment for security purposes. The term
"Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting property. For the
purposes of this Agreement, a Person shall be deemed to be the owner of
any property that such Person shall have acquired or shall hold subject to
a conditional sale agreement or other arrangement (including a leasing
arrangement) pursuant to which title to the property shall have been
retained by or vested in some other Person for security purposes.
The term "Loan Acquisition Price" shall mean 105% of the Unpaid
Principal Balance for Specified Auto Loans as of the date of purchase
under the Loan Sale Agreement.
The term "Loan Documents" means, with respect to an Auto Loan (a) a
copy of the retail installment loan contract and security agreement
evidencing such Auto Loan,
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(b) a copy of the credit application, and (c) a copy of an executed
agreement to provide insurance signed by the Obligor or a binder in
respect thereof.
The term "Loan File" means, with respect to any Auto Loan, the
original retail installment loan contract and security agreement
evidencing the Auto Loan and originals or copies of such other documents
and instruments relating to such Auto Loan and the security interest on
the selected Financed Vehicle as specified in the Credit and Collection
Policies.
The term "Loan Purchase Account" shall have the meaning set forth in
the Indenture.
The term "Loan Sale Agreement" shall mean the Loan Sale Agreement
dated as of June 9, 1998 between the Borrower and AutoBond, pursuant to
which the Borrower agrees to acquire Eligible Auto Loans, as from time to
time further amended, supplemented or modified.
The term "Maturity Date" in respect of any Advance shall mean the
date that is 60 months from the date of such Advance.
The term "Minimum Assignment Denomination" shall mean $500,000.
The term "Monthly Servicer Fee" shall have the meaning specified in
the Indenture.
The term "Net Payoff Balance" means, in respect of any Precomputed
Auto Loans, the net payoff less any accrued but unpaid late charges, as
determined in accordance with the worksheet attached hereto as Schedule 2.
The term "Net Principal Balance" means, with respect to any
Precomputed Auto Loan, the Net Payoff Balance as of the due date of the
last full Scheduled Payment, or if more recent, the due date of the last
periodic payment of principal thereon.
The term "Nondefaulted Auto Loan" shall mean an Auto Loan which is
not a Defaulted Auto Loan.
The term "Note(s)" shall have the meaning set forth in Section
1.2(b) hereof and shall include any subdivision of the Note issued in
accordance with Section 1.2(c).
The term "Obligor" shall mean, with respect to any Auto Loan, the
Person primarily obligated to make payments in respect thereto.
The term "Officer's Certificate" (i) with respect to the Trustee,
any duly authorized officer, including any vice president, assistant vice
president, or any officer
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or assistant officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers and
(ii) with respect to AutoBond, the Trustee, the Servicer or the Borrower
shall mean a certificate executed on behalf of such party by the Chairman
of the Board, the President or any Vice President of the relevant entity.
The term "Originator" means any Person, other than AutoBond, that
acquires Auto Loans directly from a Dealer.
The term "Payment Date" shall mean the 15th day of each month (or,
if such day is not a Business Day, the next succeeding Business Day),
commencing July 15, 1998.
The term "Permitted Liens" shall mean:
(a) Liens created under the Indenture;
(b) Liens securing taxes, assessments, governmental charges or
levies not yet due or the payment of which is not then required by
Section 9.3 hereof; and
(c) any Lien which is a mechanics lien assessed against a
Financed Vehicle securing a Specified Auto Loan.
The term "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government (or any agency or
political subsection thereof).
The term "Precomputed Auto Loan" shall mean any Auto Loan under
which earned interest (which may be referred to in the Auto Loan as the
add-on finance charge) and principal is determined according to the sum of
periodic balances or the sum of monthly balances or the sum of the digits
or any equivalent method commonly referred to as the "Rule of 78s".
The term "Program Documents" shall mean this Agreement, the
Indenture, the Servicing Agreement, the Collateral Assignments and the
Note.
The term "Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible.
The term "Repurchase Price" shall mean, with respect to any
Specified Auto Loan which AutoBond is obligated to repurchase, an amount
equal to (a) 105% the Unpaid Principal Balance of such Specified Auto Loan
as of the end of the preceding Collection Period, plus (b) accrued and
unpaid interest in respect thereof calculated at
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the Interest Rate from the last day to which interest has been paid and
credited to the Lockbox or Collateral Account through the date of
repurchase, minus (iii) the amount of any principal deposited in the
Lockbox or the Collection Account in respect of such Auto Loan since the
end of such Collection Period.
The term "Requirement of Law" shall mean, as to any Person, any law,
treaty, rule or regulation, or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject, whether federal, state or local
(including, without limitation, usury laws, the federal Truth in Lending
Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
The term "Restricted Investment" shall mean any Investment other
than a Permitted Investment.
The term "Securities" shall mean, with respect to any Person, any
shares of any class of such Person's capital stock, or any options or
warrants to purchase its capital stock or other security exchangeable for
or convertible into its capital stock.
The term "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
The term "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
The term "Security Interest" shall mean the security interest and
rights created under the Indenture in the Collateral in favor of the
Trustee.
The term "Selling Dealer" shall mean with respect to each Specified
Auto Loan, the Dealer that sold such Specified Auto Loan to AutoBond.
The term "Servicer" means AutoBond.
The term "Servicer Report" shall have the meaning set forth in the
Servicing Agreement.
The term "Servicing Agreement" shall mean the Servicing Agreement,
dated as of June 9, 1998 among AutoBond, the Borrower and the Trustee.
The term "Solvent" shall mean, with respect to any Person, that:
(a) the Properties of such Person, at a fair valuation, exceed
the total liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of such Person;
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(b) based on current projections, which are based on
underlying assumptions which provide a reasonable basis for the
projections and which reflect such Person's judgment based on
present circumstances of the most likely set of conditions and such
Person's most likely course of action for the period projected, such
Person believes it has sufficient cash flow to enable it to pay its
debts as they mature; and
(c) such Person does not have an unreasonably small capital
with which to engage in its anticipated business.
The term "S&P" shall mean Standard & Poor's Ratings Group.
The term "Specified Auto Loan" shall mean each Auto Loan pledged by
the Borrower to the Trustee under the Indenture as security for its
obligations hereunder and under the Indenture.
The term "Subsequent Closing Date" shall have the meaning set forth
in Section 1.2 hereof.
The term "Successor Servicer" shall have the meaning set forth in
the Servicing Agreement.
The term "this Agreement" shall mean this Credit Agreement
(including the annexed Exhibits and Schedules), as it may from time to
time be amended, supplemented or modified in accordance with its terms.
The term "Triggering Event" has the meaning set forth in the
Servicing Agreement.
The term "Trust Accounts" shall have the meaning set forth in the
Indenture.
The term "Trustee" shall have the meaning set forth in Section 1.5
hereof.
The term "Unpaid Principal Balance" means, with respect to any Auto
Loan as of any Determination Date, (i) for an Auto Loan bearing interest
calculable on a simple interest basis, the unpaid principal amount for
such Auto Loan or (ii) for a Precomputed Auto Loan, the Net Principal
Balance, in each case as of the end of the most recent Collection Period.
The term "VSI Policy" means a vendor's single interest insurance
policy insuring against risk of physical damage on the Financed Vehicles.
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Section 12.2 Accounting Terms. All accounting terms used herein that
are not otherwise expressly defined shall have the respective meanings given to
them in accordance with generally accepted accounting principles at the
particular time.
Section 12.3 Governing Law. THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Section 12.4 Headings. The headings of the Sections and other
subsections of this Agreement have been inserted for convenience of reference
only and shall not affect the meaning of this Agreement.
Section 12.5 Independence of Covenants, etc. Each representation,
covenant or Event of Default herein shall be given independent effect so that if
any action or condition would violate any of such covenants, would breach any of
such representations or would constitute any of such Events of Default, the fact
that such action or condition would not violate or breach, any other covenant or
representation or constitute another Event of Default shall not avoid the
violation of such covenant or representation or the occurrence of such Event of
Default.
SECTION 13. MISCELLANEOUS.
Section 13.1 Notices. (a) All communications under this Agreement
shall be in writing and shall be delivered or mailed or sent by facsimile
transmission and confirmed in writing (i) if to the Lender, to the Lender, at
such address as the Lender may have furnished to the Borrower in writing, and
(ii) if to the Borrower, at the address set forth in Section 2.1(b) or at such
other address or facsimile number as it shall have furnished in writing to the
Lender and (iii) if to AutoBond to it at the address set forth in Section 2.2(b)
or at such other address or facsimile number as it shall have furnished in
writing to the Lender.
(b) Any written communication so addressed and mailed by certified
or registered mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof.
Section 13.2 Survival. All representations, warranties and covenants
made by the Borrower herein or by the Borrower in any certificate or other
instrument delivered under or in connection with this Agreement shall be
considered to have been relied upon by the Lender and shall survive regardless
of any investigation made by the Lender or on the Lender's behalf.
Section 13.3 Successors and Assigns. This Agreement shall be binding
upon the parties hereof and their respective successors and assigns, and shall
inure to the benefit of and be enforceable by the parties hereof and their
respective successors and assigns permitted
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hereunder. Whether or not expressly so stated and subject to the restrictions
set forth herein, the provisions of Sections 5 through 13 of this Agreement are
intended to be for the Lender's benefit and shall be enforceable by the Lender;
and, provided further, that the provisions of Sections 6.2 and 11.1 hereof shall
also be for the benefit of, and shall be enforceable by, any Person who shall no
longer be a Lender hereunder but who shall have incurred any expense or been
subjected to any liability referred to therein while, or on the basis of being,
a Lender.
Section 13.4 Amendment and Waiver. (a) This Agreement and the Note
may be amended or supplemented, and the observance of any term hereof or thereof
may be waived, with the written consent of the Borrower, AutoBond and (i) on or
prior to the Initial Closing Date, the Initial Lender, and (ii) after the
Initial Closing Date, the Lender (or, if multiple Lenders, Lenders with respect
to at least 66-2/3% in aggregate unpaid principal amount of the Advances;
provided, however, that no such amendment, supplement or waiver shall, without
the written consent of all Lenders, (a) change, with respect to the Advances,
the amount or time of any required prepayment or payment of principal or premium
or the rate or time of payment of interest, or change the funds in which any
prepayment or payment on the Advances is required to be made; (b) reduce the
percentage of the aggregate principal amount of Advances required for any
amendment, consent or waiver hereunder; or (c) release any material Lien of the
Trustee, held for the benefit of the Lender, on any of the Collateral or affect
the priority thereof.
(b) Any amendment, supplement or waiver effected in accordance with
this Section 15.4 shall be binding upon the Lender, each Assignee and the
Borrower.
(c) The Borrower will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of the
Program Documents or the Note unless the Initial Lender (irrespective of the
amount of Advances made by it) shall be informed thereof by the Borrower and
shall be afforded the opportunity of considering the same and shall be supplied
by the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
effected pursuant to the provisions of this Section 13.4 shall be delivered by
the Borrower to the Lender forthwith following the date on which the same shall
have been executed and delivered by the Lender of the requisite percentage of
Advances.
Section 13.5 Counterparts. This Agreement may be executed and
delivered simultaneously in two (2) or more counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute but one
and the same instrument.
Section 13.6 Reproduction of Documents. This Agreement and all
documents relating hereto (other than the Note), including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Initial Lender at the closing of the Initial Lender's
making of Advances, and (c) financial statements, certificates and other
information heretofore or hereafter furnished to the Lender, may be reproduced
by the Lender by any photographic or other similar process and the Lender may
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destroy any original document so reproduced. The Borrower agrees and stipulates
that, to the extent permitted by applicable law and court or agency rules, any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Lender in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall be admissible in evidence to the same
extent.
Section 13.7 Consent to Jurisdiction and Venue. The Borrower and
AutoBond each hereby irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to the Program Documents or any Note may
be brought in a court of record in the State of New York or in the courts of the
United States of America located in such State, (ii) consents to the
jurisdiction of each such court in any such suit, action or proceeding, and
(iii) waives any objection which it may have to the laying of venue of any such
claim that any such suit, action or proceeding has been brought in an
inconvenient forum and covenants that it will not seek to challenge the
jurisdiction of any such court or seek to oust the jurisdiction of any such
court, whether on the basis of inconvenient forum or otherwise. The Borrower and
AutoBond each irrevocably consent to the service of any and all process in any
such suit, action or proceeding by mail copies of such process to the Borrower
at its address for notices provided in Section 15.1 hereof. The Borrower and
AutoBond each agree that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. All mailings under this Section 15.7
shall be by registered or certified mail, return receipt requested. Nothing in
this Section 15.7 shall affect the Lender's right to serve legal process in any
other manner permitted by law or affect the Lender's right to bring any suit,
action or proceeding against the Borrower or any of its properties in the courts
of any other jurisdiction.
Section 13.8 No Petition. The Lender and each Assignee hereby
covenant and agree that, until the expiration of the date which is one year and
one day after the payment in full of all Notes outstanding and issued pursuant
to the Indenture, it will not institute against the Borrower, or join in any
institution against the Borrower of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any applicable bankruptcy or similar law in connection with any obligations
relating to the Advances or the Program Documents.
Section 13.9 Acts of Lender. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by the Lender may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by the Lender in person or by
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
is or are delivered to the Borrower. Proof of execution of any such instrument
or of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement if made in the manner provided in this Section 13.9.
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(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Borrower deems
sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Lender or any Assignee shall bind the Lender and
such Assignee in respect of anything done, omitted or suffered to be done by the
Borrower in reliance thereon, whether or not notation of such action is made
upon such Note.
Section 13.10 Confidentiality. All non-public information relating
to this Agreement, the Program Documents and the transactions contemplated
thereby will be kept confidential by AutoBond, the Borrower and the Initial
Lender. The Initial Lender agrees to cause each assignee and Participant with
which it is a party to agree to keep such information confidential. The
provisions of this Section 13.10 shall survive the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the day and year first above written.
AUTOBOND MASTER FUNDING
CORPORATION V
By:
---------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION
By:
---------------------------------
Name: William O. Winsauer
Title: Chairman and Chief Executive Officer
DYNEX CAPITAL, INC.
By:
---------------------------------
Name:
Title:
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EXECUTION COPY
================================================================================
SERVICING AGREEMENT
(Funding Notes)
among
AUTOBOND MASTER FUNDING CORPORATION V,
as Issuer
AUTOBOND ACCEPTANCE CORPORATION,
as Servicer
and
DYNEX CAPITAL, INC.,
as Initial Lender
Dated as of June 9, 1998
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION.........................................2
SECTION 1.01. Defined Terms.................................................2
SECTION 1.02. Rules of Interpretation.......................................4
ARTICLE II
SERVICING OF AUTO LOANS......................................................5
SECTION 2.01. Appointment of Servicer.......................................5
SECTION 2.02. Subservicing Agreements Between Servicer and Subservicer......6
SECTION 2.03. Representations and Warranties of the Servicer................7
SECTION 2.04. Duties and Responsibilities of the Servicer...................9
SECTION 2.05. Fidelity Bond, Errors and Omissions Insurance;
Contingent Disaster Relief Protection......................12
SECTION 2.06. Inspection...................................................13
SECTION 2.07. Possession and Payment of Receivables........................13
SECTION 2.08. Monthly Servicing Fee; Servicing Expenses....................13
SECTION 2.09. [RESERVED]...................................................14
SECTION 2.10. Servicer Not to Resign.......................................14
SECTION 2.11. Reliance on the Servicer.....................................14
SECTION 2.12. Events of Servicing Termination..............................15
SECTION 2.13. Appointment of the Successor Servicer........................16
SECTION 2.14. Effect of Service Transfer...................................17
SECTION 2.15. Annual Reports; Statements as to Compliance..................18
SECTION 2.16. Servicer Reports.............................................19
SECTION 2.17. Confidentiality..............................................19
SECTION 2.18. Delivery of Documents........................................20
SECTION 2.20. Standard of Care.............................................20
ARTICLE III
REPOSSESSION AND DISPOSAL...................................................20
SECTION 3.01. Repossession and Disposal....................................20
ARTICLE IV
LIMITATION ON LIABILITY; INDEMNITIES........................................21
SECTION 4.01. Liabilities of Obligors......................................21
SECTION 4.02. Limitation on Liability of the Initial
Lender and the Servicer....................................22
SECTION 4.03. Indemnities of the Servicer..................................22
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ARTICLE V
MISCELLANEOUS...............................................................23
SECTION 5.01. Beneficiaries................................................23
SECTION 5.02. Amendment....................................................23
SECTION 5.03. Notices......................................................23
SECTION 5.04. Severability of Provisions...................................24
SECTION 5.05. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL...................................................24
SECTION 5.06. Counterparts.................................................25
SECTION 5.07. No Proceedings...............................................25
SECTION 5.08. Further Assurance............................................25
SECTION 5.09. Term of Agreement............................................25
EXHIBITS
EXHIBIT A - AUTOBOND PROGRAM MANUAL
EXHIBIT B - FORM OF TRUST RECEIPT
EXHIBIT C - FORM OF MONTHLY SERVICER REPORT
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SERVICING AGREEMENT, dated as of June 9, 1998 (this "Agreement"), among
AUTOBOND MASTER FUNDING Corporation V, a Nevada corporation (the "Issuer"),
AUTOBOND ACCEPTANCE CORPORATION, a Texas corporation, individually ("AutoBond"),
and as servicer (the "Servicer") and DYNEX CAPITAL, INC., as initial lender (the
"Initial Lender").
W I T N E S S E T H:
WHEREAS, the Issuer has purchased, pursuant to the Loan Sale Agreement
dated of June 9, 1998 (the "Sale Agreement"), by and between the Issuer and
AutoBond, certain Auto Loans (as defined herein) and pledged such Auto Loans to
the Trustee pursuant to the Indenture (as defined herein) on behalf of the
holders (the "Noteholders") of the Issuer's Variable Funding Notes (the
"Notes");
WHEREAS, the Trustee has been appointed to hold the Auto Loans conveyed to
it pursuant to the Indenture in trust for the benefit of the Initial Lender and
the Noteholders and to make certain payments with respect thereto;
WHEREAS, the Issuer desires that a servicer be appointed to perform
certain servicing functions in respect of the Auto Loans pledged to the Trustee
on behalf of the Noteholders;
WHEREAS, AutoBond has been requested and is willing to act as the Servicer
hereunder;
WHEREAS, the rights and benefits of the Issuer hereunder (but not the
obligations) have been assigned to the Trustee on behalf of the Noteholders.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.01. Defined Terms. Capitalized terms used herein and not defined
shall have the meaning specified in the Indenture. As used herein, the following
terms shall have the following meanings:
"Administrator" means AutoBond and any permitted successor to such
functions in accordance, and in connection with, the Indenture in its
capacity as Administrator thereunder and, if AutoBond is acting as
Servicer hereunder, also in its capacity as Servicer.
"Adverse Claim" means any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other
type of preferential arrangement having the effect or purpose of creating
a lien or security interest, other than the interests created in favor of
the Trustee and the Noteholders under the Indenture.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" means this Servicing Agreement, as amended or supplemented
from time to time in accordance with the terms hereof, including all
exhibits and schedules hereto.
"AutoBond" means AutoBond Acceptance Corporation, a Texas corporation.
"AutoBond Program Manual" means the AutoBond Program Manual (including the
Credit and Collection Policies) attached hereto as Exhibit A, as modified
from time to time, with notice of each such modification to the Trustee.
"Auto Loan" means a fixed-rate, closed-end consumer installment automobile
loan which finances the purchase of a new or used automobile, light-duty
truck or van, which loan is secured by a lien and security interest in
such financed vehicle.
"Business Day" means any day other than a Saturday or a Sunday, or another
day on which banks in the City of New York, or the City of Buffalo, New
York or in Texas (or such other cities or states in which the Corporate
Trust Office, the principal administrative offices of the Administrator,
Note Registrar and Paying Agent or the principal offices of the Servicer
are subsequently located, as specified in writing by the Administrator to
the other parties hereto) are required, or authorized by law, to close.
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"Closing Date" means June 9, 1998.
"Continuing Errors" has the meaning specified in Section 2.13(e).
"Electronic Ledger" means the electronic master record of the Receivables
maintained by the Servicer.
"Errors" has the meaning specified in Section 2.13(e).
"Event of Administrator Termination" means an Event of Servicing
Termination hereunder.
"Event of Servicing Termination" has the meaning specified in Section 2.12
hereunder.
"Financed Vehicle" means a new or used automobile, van or light-duty
truck, the purchase of which the Obligor financed with an Auto Loan.
"Governmental Authority" means the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
thereof or pertaining thereto.
"Indenture" means the Trust Indenture and any supplements thereto.
"Independent Public Accountant" means any certified public accounting firm
that is independent with respect to the Issuer and the Administrator, the
Servicer and any Subservicer, as the case may be, within the meaning of
the Securities Act of 1933, as amended.
"Initial Lender" means Dynex Capital, Inc.
"Issuer" means AutoBond Master Funding Corporation V, a Nevada
corporation, in its capacity as issuer under the Indenture.
"Noteholder" means any of the registered holders of a Funding Note issued
under the Indenture.
"Notes" means any of the Variable Funding Notes issued under the
Indenture.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Issuer, the Administrator or the Servicer), which opinion
is acceptable to the Trustee.
"Records" means all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights) prepared
and maintained by the Servicer or by or on behalf of the Issuer with
respect to Receivables and the related Obligors.
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"Responsible Officer" means, with respect to any Person, the Person, any
Vice President, any Assistant Vice President, any Assistant Secretary, any
Assistant Treasurer or any other officer of such Person customarily
performing functions similar to those performed by any of the
above-designated officers and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Scheduled Payment" means a payment due on an Auto Loan in accordance with
its terms.
"Service Transfer" has the meaning specified in Section 2.12.
"Servicer" means AutoBond Acceptance Corporation, in its capacity as
servicer under this Agreement and any successor thereto in accordance with
this Agreement.
"Servicer Duties" has the meaning specified in Section 2.04(a).
"Servicer Report" has the meaning specified in Section 2.17.
"Servicing Officer" means any officer or employee of the Servicer involved
in, or responsible for, the administration and servicing of Receivables
whose name appears on a list of servicing officers attached to Officer's
Certificates furnished to the Issuer and the Trustee by the Servicer, as
such list may be amended from time to time by the party furnishing any
such Officer's Certificate.
"Static Pool" means that set of Specified Auto Loans acquired by the
Issuer and pledged under the Indenture during a specified calendar
quarter.
"Subservicer" means any Person with whom the Servicer enters into a
Subservicing Agreement.
"Subservicing Agreement" means any written contract between the Servicer
and any Subservicer, relating to servicing and collection of Receivables.
"Successor Servicer" has the meaning specified in Section 2.13(a)
hereunder.
"Triggering Event" means, for any Static Pool as of a Determination Date,
(a) a Repossession Ratio in excess of 20%, or (b) a Delinquency Ratio in
excess of 7%.
"Trust Indenture" means the Trust Indenture, dated as of June 9, 1998,
among the Issuer, AutoBond and the Trustee, as amended or supplemented
from time to time in accordance with the terms thereof.
SECTION 1.02. Rules of Interpretation. The following rules apply to this
Agreement:
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(a) the singular includes the plural and the plural includes the
singular;
(b) "or" is not exclusive and "include" and "including" are not
limiting;
(c) a reference to any agreement or other contract includes
permitted supplements and amendments;
(d) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder or any law enacted
in substitution or replacement therefor;
(e) a reference to a person includes its permitted successors and
assigns;
(f) a reference to an Article, a Section, an Exhibit or a Schedule
without further reference is to the relevant Article, Section, Exhibit or
Schedule of this Agreement;
(g) any right may be exercised at any time and from time to time;
(h) the headings of the Articles and the Sections are for
convenience and shall not affect the meaning of this Agreement;
(i) words such as "hereunder", "hereto", "hereof" and "herein" and
other words of like import shall, unless the context clearly indicates to
the contrary, refer to the whole of this Agreement and not to any
particular Article, Section, subsection or clause hereof; and
(j) capitalized terms used but not defined herein shall have the
respective meanings assigned thereto in the Indenture.
ARTICLE II
SERVICING OF AUTO LOANS
SECTION 2.01. Appointment of Servicer. The Issuer hereby appoints the
Servicer, and the Servicer accepts such appointment, to perform its obligations
pursuant to this Agreement on behalf of and for the benefit of the Noteholders,
the Issuer and the Initial Lender in accordance with the terms of this
Agreement, the respective Receivables and applicable law and, to the extent
consistent with such terms, in the same manner in which, and with the same care,
skill, prudence and diligence with which it services and administers Auto Loans
of similar credit quality for itself or other portfolios, if any, giving due
consideration to customary and usual standards of practice of prudent
institutional automobile loan servicers of similar credit quality automobile
loans and, in each case, taking into account its other obligations hereunder,
but without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Obligor; or
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(ii) the ownership, or servicing for others, by the Servicer or any
Subservicer, of any other automobile loans or property.
SECTION 2.02. Subservicing Agreements Between Servicer and Subservicer.
(a) Upon the prior written consent of the Initial Lender, the Servicer may
enter into Subservicing Agreements with a Subservicer for the performance of all
or a part of the Servicer Duties with respect to any Receivable. The Initial
Lender shall have no duty to investigate any Subservicer in connection with the
granting or denial of consent to a Subservicing Agreement. References in this
Agreement to actions taken or to be taken by the Servicer in performance of the
Servicer Duties include actions taken or to be taken by a Subservicer on behalf
of the Servicer. Each Subservicing Agreement will be upon such terms and
conditions as are not inconsistent with this Agreement. Without limiting the
first sentence of this Section 2.02(a), the Servicer shall provide written
notice to the Issuer, the Initial Lender and the Trustee promptly upon the
appointment of any Subservicer. For purposes of this Agreement, the receipt by a
Subservicer of any amount with respect to a Receivable (other than amounts
representing servicing compensation) shall be treated as the receipt by the
Servicer of such amount.
(b) Upon the prior written consent of the Initial Lender, the Servicer
shall be entitled to terminate any Subservicing Agreement that may exist in
accordance with the terms and conditions of such Subservicing Agreement and
without any limitation by virtue of this Agreement.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer or a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain directly obligated and directly liable to the Issuer,
the Initial Lender and the Trustee for the servicing and administering of the
Receivables in accordance with the provisions of this Agreement without
diminution of such obligation or liability (including its indemnity obligations
under Section 4.03) by virtue of such Subservicing Agreements or arrangements or
by virtue of indemnification from the Subservicer or the Servicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Receivables. The Servicer shall be entitled
to enter into any agreement with a Subservicer for indemnification of the
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
(d) Any Subservicing Agreement that may be entered into pursuant to this
Agreement and any other transaction or services relating to the Receivables
involving a Subservicer in its capacity as such that is consented to by the
Issuer, the Initial Lender and the Trustee shall be deemed to be between the
Subservicer and the Servicer alone and the Issuer, the Initial Lender and the
Trustee shall not be deemed parties thereto and shall have no obligations,
duties or liabilities with respect to the Subservicer, but the Trustee, the
Initial Lender and the Issuer shall be third-party beneficiaries thereof.
(e) If the Servicer shall for any reason no longer be the Servicer
hereunder (including by reason of any Event of Servicing Termination), the
Servicer shall thereupon terminate each Subservicing Agreement that may have
been entered into, and neither the Issuer, the Initial
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Lender, the Trustee nor the Successor Servicer shall be deemed to have assumed
any liability or obligation thereunder, the Servicer's interest therein or to
have replaced the Servicer as a party to any such Subservicing Agreement.
SECTION 2.03. Representations and Warranties of the Servicer. The Servicer
represents, warrants and covenants to the Issuer, the Initial Lender, the
Trustee and the Noteholders, as follows, as of the date hereof (which
representations and warranties shall be deemed repeated on each date on which a
Servicer Report is due to be delivered hereunder as though made on and as of
such date):
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and is duly qualified to do
business, and is in good standing in every jurisdiction in which the
nature of its business requires it to be so qualified; it or a Subservicer
is or will be in compliance with the laws of each state to the extent
necessary to perform its obligations under this Agreement; and it or a
Subservicer has obtained all necessary licenses with respect to it or such
Subservicer required by law to enable it to perform its duties herein;
(b) It has the power and authority to execute, deliver and perform
this Agreement and the transactions contemplated hereby;
(c) The execution and delivery by it and the performance by it or a
Subservicer of this Agreement, and the execution and delivery by it and
the performance by it or a Subservicer of all other agreements,
instruments and documents which may be delivered by it pursuant hereto,
and the transactions contemplated hereby, (i) have been duly authorized by
all necessary corporate action on the part of it, (ii) do not contravene
or cause it to be in default under (A) its organizational documents, (B)
any contractual restriction, with respect to any Debt of it, or otherwise,
or contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other material agreement or instrument
binding it or its property or (C) any law, rule, regulation, order, writ,
judgment, award, injunction or decree applicable to or binding it or its
property, and (iii) do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties;
(d) This Agreement has been duly executed and delivered on behalf of
it;
(e) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority or any other party is required for the
due execution, delivery and performance by it (either directly or through
a Subservicer) of this Agreement or any other agreement, document or
instrument to be delivered by it hereunder, or if required, has been
obtained;
(f) This Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms;
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(g) There is no pending or threatened action, suit or proceeding,
nor any injunction, writ, restraining order or other order of a material
nature against or affecting it, its officers or directors, or its
property, in any court or tribunal, or before any arbitrator of any kind
or before or by any Governmental Authority (i) asserting the invalidity of
this Agreement or any document to be delivered by it hereunder or (ii)
seeking any determination or ruling that would reasonably be expected to
materially and adversely affect (A) the performance by it of its
obligations under this Agreement, or (B) the validity or enforceability of
this Agreement or any document to be delivered by it hereunder or (iii)
which is inconsistent with the due consummation by it of the transactions
contemplated by this Agreement;
(h) Its facilities, plant, personnel, records and products are
adequate for the performance of its duties hereunder;
(i) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which would reasonably be
expected to have consequences that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or
its properties or would reasonably be expected to have consequences that
would materially and adversely affect its performance hereunder;
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer;
(k) The Financed Vehicle securing each Receivable shall not be
released by the Servicer or a Subservicer in whole or in part from the
security interest granted by the Obligor, except as contemplated herein;
(l) Each certificate and each statement furnished in writing, report
or electronic medium delivered pursuant to the terms hereof or under the
Indenture by the Servicer is accurate and complete in all material
respects with respect to the information purported to be set forth
therein; and
(m) The practices used by the Servicer to monitor collections with
respect to the Receivables and repossess and dispose of the Financed
Vehicles related to the Receivables have been, and will be, in all
material respects, legal, proper and in conformity with the requirements
of all applicable federal and state laws, rules and regulations, VSI
Policy procedures (if applicable) and as set forth with respect to the
Servicer in the AutoBond Program Manual.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03 shall survive the execution of this Agreement. Upon discovery
by either the Initial Lender, the Issuer, the Trustee or the Servicer of a
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give proper written notice to the other parties
hereto and the Noteholders; provided, that the Trustee shall have no duty or
responsibility to
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inquire, investigate, determine or obtain actual knowledge of facts or events
constituting a breach of any such representations or warranties.
SECTION 2.04. Duties and Responsibilities of the Servicer.
(a) The Servicer shall manage, administer, monitor and service the Auto
Loans, including providing data management, payment processing and customer
service. In performing its duties hereunder, the Servicer shall have full power
and authority to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable,
within the terms of this Agreement (the "Servicer Duties"). Prior to a
resignation or termination of the Servicer pursuant to Sections 2.10 or 2.12,
without limitation of the servicing standard set forth in Section 2.01, the
Servicer will provide the following services (together with other activities not
inconsistent with the description below and implicitly necessary to accomplish
the usual and customary activities, of a subprime automobile loan servicer):
(i) Boarding Functions:
(1) Review for receipt of copies of Loan Documents;
(2) Input of new Receivable information into loan accounting
system; and
(3) Preparation and mailing of welcome letters.
(ii) File Maintenance/Document Control Functions:
(1) Retention of copies of the Loan Documents;
(2) Tracking of customer collision insurance on Financed
Vehicles and reporting of exposed Financed Vehicles; and
(3) Determination of Receivables being satisfied in full.
(iii) Customer Service Functions:
(1) Preparation and transmittal of monthly billing
statements to Obligors;
(2) Response to Obligor inquiries;
(3) Research regarding billing statements and Obligor
inquiries;
(4) Maintenance of Obligor information; and
(5) Preparation and mailing of delinquency notices.
(iv) Payment Processing Functions:
(1) Coordination of lockbox procedures; and
(2) Recording of loan payment information, including
instances of non-sufficient funds.
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(v) Reporting Functions:
(1) Preparation and delivery of Servicer's Report and the
other reports described in Section 2.16 hereof.
(vi) Data Processing Functions:
(1) Entry of data;
(2) Operation of data center;
(3) Operation of telecommunications; and
(4) Operation and maintenance of collection system.
(vii) Collection Functions:
(1) receiving, applying and administering collections on the
Auto Loans;
(2) arranging for and administering repossessions of the
Financed Vehicles related to the Auto Loans;
(3) disposing of each Financed Vehicle related to a
Receivable whether following repossession or otherwise;
and
(4) filing of insurance claims and performing the duties of
the named insured under any VSI Policy with respect to
each Auto Loan affected by a repossession or otherwise.
Notwithstanding any other provision in this Agreement, the Servicer
shall administer collections on Auto Loan at all times in such a manner that
each Auto Loan shall remain eligible for coverage under any Insurance Policy.
The Servicer shall take such reasonable action as shall be necessary to permit
recovery on each Auto Loan under any Insurance Policy and may engage such
liquidation agents, skiptracers, remarketers, repossession agents or similar
agents as it deems necessary.
(b) The Servicer shall hold in trust for the benefit of the Trustee and
Noteholders and shall forward to the Collection Account, the Lender Collection
Account or the Lockbox Account, as applicable, within one (1) Business Day
following receipt thereof any payment or partial payment or deposit (including
all proceeds from all sources in respect of the Auto Loans, including proceeds
from any insurance and refunds from "soft" add-ons) with respect to any
Receivable received by the Servicer. The Servicer shall not assert any right of
set-off or any lien with respect to such payment or deposit.
(c) Except as expressly provided herein in connection with its duty to
effect liquidations and repossessions, the Servicer shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create any Adverse
Claim upon or with respect to, any Receivable (or any right to income in respect
thereof), or any account in which any payments with respect to any Receivable
are deposited, or assign any right to receive income in respect of any
Receivable.
(d) The Servicer shall promptly notify the Initial Lender following its
becoming aware that any Financed Vehicle is no longer eligible for coverage
under the Insurance Policy, or
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following its receipt of notice from the Insurer that it has rejected a claim
submitted by the Servicer with respect to any Financed Vehicle or Auto Loan.
(e) Until such time as the Servicer resigns or is removed, the Servicer
shall remain the prior lienholder of record with respect to each Financed
Vehicle relating to the Auto Loans subject to the Lien of the Indenture;
provided that the Servicer shall remain the prior lienholder only in its
capacity as an agent of the Trustee.
(f) In accordance with the standard of care in Sections 2.01 and 2.20, the
Servicer may agree, with the prior consent of the Initial Lender to grant to the
Obligor on any Auto Loan any rebate, refund or adjustment that the Servicer in
good faith believes is required under the Auto Loan or applicable law in
connection with a prepayment or payment in full of the Auto Loan, and, pursuant
to written instructions from the Servicer, the Trustee shall remit the amount of
any such rebate, refund or adjustment to the Servicer to be sent to the
applicable Obligors from the Collection Account. The Servicer may not permit any
rescission or cancellation of any Auto Loan nor may it take any action with
respect to any Auto Loan or Sale Assignment which would invalidate the coverage
afforded by the Insurance Policy to such Receivable or the related Financed
Vehicle, or would impair the rights of the Trustee therein or in the proceeds
thereof.
(g) The Servicer shall not release, and shall not advise the Trustee to
release, the Financed Vehicle securing an Auto Loan from the vehicle lien
granted in connection with such Receivable in whole or in part, except:
(i) when such Auto Loan has been paid in full;
(ii) immediately upon any exchange or substitution of such Financed
Vehicle by the Dealer or manufacturer thereof in settlement of claims as
to defects, breach of warranties, insurance and similar matters, with a
Financed Vehicle of equal or greater collateral value as of the date of
such exchange in the reasonable judgment of the Servicer (subject to all
the terms hereof including the recordation of the lien thereon and the
requirements of the Insurance Policies); or
(iii) in connection with a repossession of a Financed Vehicle; or
(iv) when all Insurance Proceeds with respect to such Financed
Vehicle have been received by the Servicer on behalf of the Trustee and
the Issuer.
The Servicer shall not extend or otherwise amend the terms of any Receivable,
except in accordance with the provisions of Section 2.04(f) of this Agreement.
(h) The Servicer agrees to monitor and track each Financed Vehicle for
maintenance of required physical damage insurance and to notify the Issuer and
the Initial Lender as soon as practicable but not later than 30 days after
becoming initially aware, of circumstances that would lead a reasonable person
to believe that the insurance on any Financed Vehicle is not being or will not
be maintained in accordance with applicable law and the terms of the applicable
retail installment sales contract.
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(i) Except as expressly provided herein, the Servicer shall not sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create any
Adverse Claim upon or with respect to, any Receivable (or any right to income in
respect thereof), or any account in which any payments with respect to any
Receivable are deposited, or assign any right to receive income in respect of
any Receivable.
(j) The Servicer shall instruct each Obligor by written notice that all
payments on Receivables shall be mailed to the Lockbox, and, so long as AutoBond
is serving as the Servicer and the Administrator hereunder, that such payments
shall be made payable to the order of "AutoBond Acceptance Corporation," in its
capacity as Servicer.
SECTION 2.05. Fidelity Bond, Errors and Omissions Insurance; Contingent
Disaster Relief Protection.
(a) The Servicer shall maintain, at its own expense, professional
liability insurance, with broad coverage with responsible insurers on all
officers, employees or other Persons acting on behalf of the Servicer in any
capacity with regard to the Receivables to handle funds, money, documents and
papers relating to the Receivables. Any such insurance shall protect and insure
the Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such Persons and shall be maintained
in a form that would meet the requirements of prudent institutional servicers of
similar auto loans, and in the amount of $5,000,000. No provision of this
Section 2.05(a) requiring such insurance shall diminish or relieve the Servicer
from its duties and obligations as set forth in this Agreement. The Servicer
shall be deemed to have complied with this provision with respect to itself if
one of its respective Affiliates has such coverage and, by the terms of such
policy, the coverage afforded thereunder extends to the Servicer. The Servicer
shall cause each and every Subservicer for it to maintain a policy of insurance
which would meet such requirements. Upon request of the Issuer or the Trustee,
the Servicer shall cause to be delivered to the Issuer and the Trustee a
certification evidencing coverage under the Servicer's or any Subservicer's
policy. The Trustee shall have no obligation to request any such certification
or upon receipt of any such certification or of any notice provided for in this
Section 2.05(a), to approve, consent to, or determine its compliance with, the
requirements of this Section 2.05(a). Any such insurance policy shall (i) not be
canceled without the Servicer giving prior written notice to the Issuer, the
Initial Lender and the Trustee immediately following the giving or receipt of
such notice as is required or allowed under the terms of such fidelity bond or
insurance policy, as the case may be and (ii) not be modified in a materially
adverse manner without ten days' prior written notice by the Servicer to the
Issuer, the Initial Lender and the Trustee.
(b) The Servicer currently maintains, at its own expense, a computer
disaster recovery plan and computer disaster recovery procedures in forms
consistent with industry standards of prudent institutional receivables
servicers and shall continue to maintain, at its own expense, such a plan and
such procedures as are consistent with such standards and shall not materially
modify, amend or revoke such procedures without giving prior written notice
thereof to the Trustee. No provision of this Section 2.05(b) requiring such a
plan and such procedures shall diminish or relieve the Servicer from its duties
and obligations as set forth in this Agreement.
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SECTION 2.06. Inspection.
(a) At all times during the term hereof, the Servicer shall afford the
Issuer, the Initial Lender, the Trustee, and each Noteholder owning a Note
evidencing at least 25% of the unpaid principal amount of Notes of such Series,
together with each of their authorized agents (including auditors), upon
reasonable notice, reasonable access (subject to the security rules and
regulations of the Servicer) during normal business hours to its records
relating to the Receivables and will cause its personnel to assist in any
examination of such records by any of such Persons; provided, that the foregoing
shall not require any of such Persons to conduct any inspection. The examination
referred to in this Section 2.06(a) will be conducted in a manner which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations or require the Servicer to disclose or expose confidential
information related to its services to its other clients or its other areas of
its operations. Without otherwise limiting the scope of the examination, the
Issuer, the Initial Lender, the Trustee, and each such Noteholder may, using
generally accepted auditing standards, verify the status of each Receivable and
review the copies of the Loan Documents, Electronic Ledger and records relating
thereto for conformity to reports prepared pursuant to Section 2.17 and
compliance with the standards represented or required to exist as to each
Receivable in this Agreement. Nothing in this section shall affect the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and failure of the Servicer to provide
access to information as a result of such obligation shall not constitute a
breach of this Section 2.06.
(b) All information obtained by the Issuer, the Initial Lender, the
Trustee, such Noteholders or their respective agents regarding the Obligors and
the Receivables, whether upon exercise of their respective rights under this
Section 2.06 or otherwise, shall be maintained by the Issuer, the Initial
Lender, the Trustee, such Noteholders and their respective agents in confidence
and shall not be disclosed to any other Person other than the Noteholders,
except as otherwise required by applicable law or regulation.
SECTION 2.07. Possession and Payment of Receivables. The Servicer shall
determine when a Receivable has been paid in full. The Servicer shall notify the
Trustee in writing monthly as to each Receivable in connection with which such a
determination has been made. If the Servicer requires possession of any Loan
Documents or any documents related thereto in order to perform its duties or
obligations hereunder, prior to taking possession of any such Receivable or
documents, the Servicer shall deliver to the Trustee a trust receipt
substantially in the form attached hereto as Exhibit B. The Servicer agrees to
promptly return any such Receivable and documents, possession of which the
Servicer takes in accordance with this Section 2.07, after its need for
possession thereof ceases, unless satisfied in full.
SECTION 2.08. Monthly Servicing Fee; Servicing Expenses.
(a) On each Payment Date the Servicer shall be entitled to receive by wire
transfer of immediately available funds to an account designated in writing by
the Servicer to the Initial Lender or the Trustee from the funds on deposit in
the Lender Collection Account or the Collection Account, as the case may be, an
amount equal to the Monthly Administrator Fee as of such Payment Date in
accordance with Section 13.05 of the Indenture.
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(b) The Servicer shall be required to pay for all expenses incurred by it
in connection with its activities hereunder (including any payments to
accountants, counsel, Subservicers, or any other Person) out of the compensation
paid to it pursuant to Section 2.08(a) above, and shall not be entitled to any
extra payment or reimbursement therefor; provided, however, that the Servicer
shall be entitled to reimbursement by wire transfer of immediately available
funds to an account designated in writing by the Servicer to the Trustee for the
amount of any (x) Reimbursable Administrator Expenses under the Indenture and
(y) other expenses incurred with the prior written consent of the Initial Lender
and the Trustee. No later than ten Business Days prior to each Payment Date, the
Servicer shall provide the Issuer and the Trustee with a list of items eligible
for reimbursement pursuant to the immediately preceding sentence, in such
reasonable detail as the Issuer and the Trustee may request, together with its
certification by a Servicing Officer that all such items are eligible for
reimbursement hereunder.
Any reimbursement to the Servicer for fees or costs pursuant to this
Section 2.08(b) shall be limited to the extent of the funds available for
reimbursement of Servicer and Administrator fees and expenses under the
Indenture.
(c) The Issuer covenants and agrees that upon a Responsible Officer
obtaining actual knowledge of the occurrence of an Event of Default under the
Indenture, it shall promptly give notice thereof to the Servicer.
(d) The Issuer agrees that, without the written consent of the Servicer,
it will not amend the Indenture (i) to change the source and/or priority of the
payment of the Monthly Administrator Fee or (ii) to materially change the
rights, duties and obligations under this Agreement of the Servicer.
SECTION 2.09. [RESERVED]
SECTION 2.10. Servicer Not to Resign.
The Servicer shall not resign from the obligations and duties hereby
imposed on it hereunder, except upon its determination that (i) the performance
of its duties hereunder has become impermissible under applicable law and (ii)
there is no reasonable action which the Servicer could take to make the
performance of its duties hereunder permissible under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to the
Issuer, the Initial Lender and the Trustee before any such resignation and as to
clause (ii) by an Officer's Certificate to such effect delivered to the Issuer,
the Initial Lender and the Trustee before any such resignation.
SECTION 2.11. Reliance on the Servicer. The Issuer and the Initial Lender
have entered into this Agreement with the Servicer in reliance upon its ability
to perform the servicing duties, if necessary, without any delegation thereof;
the adequacy of its plant, personnel, records and procedures; its integrity,
reputation and financial standing and the continuance of each of the foregoing.
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SECTION 2.12. Events of Servicing Termination. If any of the following
events (each, an "Event of Servicing Termination") shall occur and be
continuing:
(a) Any failure by the Servicer to forward to the Lender Collection
Account, the Collection Account or the Lockbox, as applicable, any payment
or partial payment or deposit identified with respect to any Receivable
received by the Servicer and the continuance of such failure for a period
of one Business Day after the date upon which such payment or deposit is
so identified by the Servicer; or
(b) Failure on the part of the Servicer to observe or perform any
term, covenant or agreement in this Agreement, including the Servicer
Duties, which failure continues unremedied for 10 Business Days after
discovery by the Servicer or the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Issuer, the Initial Lender or by the Trustee; or
(c) Any proceeding shall be instituted against the Servicer (or, if
the Servicer is actively contesting the merits thereof, such proceeding is
not dismissed within 60 days) seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or any
of its Debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or for
any substantial part of its property) shall occur; or
(d) The commencement by the Servicer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Servicer or of any substantial
part of its property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability to pay
its Debts generally as they become due, or the taking of corporate action
by the Servicer in furtherance of any such action; or
(e) The Servicer shall fail to deliver a report at the time, in the
form and containing the information expressly required by this Agreement,
which failure continues for a period of 5 Business Days; or
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(f) There is a breach of any of the representations and warranties
of the Servicer set forth in Section 2.03 and such breach shall not have
been cured in all material respects within 10 Business Days or such longer
period as may be agreed to by the Servicer and the Initial Lender after
receipt of written notice thereof by the Servicer (if notice is given by
the Initial Lender or the Issuer) or upon discovery by the Servicer;
(g) A Triggering Event shall have occurred; or
(h) An Event of Default shall have occurred and be continuing under
the Indenture;
then, and in any such event, either the Issuer or the Initial Lender may,
by delivery to the Servicer (and to the Initial Lender, the Trustee or the
Issuer, as applicable) of a written notice specifying the occurrence of
any of the foregoing events, terminate the rights and responsibilities of
the Servicer hereunder, without demand, protest or further notice of any
kind, all of which are hereby waived by the Servicer (such termination and
any termination of the Servicer pursuant to Section 2.10 hereby called a
"Service Transfer"); provided, that in the event any of the events
described in subsections (c) or (d) of this Section 2.12 shall have
occurred, termination of the duties and responsibilities of the Servicer
shall automatically occur, without, demand, protest, or further notice of
any kind, all of which are expressly waived by the Servicer.
SECTION 2.13. Appointment of the Successor Servicer.
(a) Upon the effectiveness of termination of the Servicer's
responsibilities under this Agreement pursuant to Section 2.10 or Section 2.12,
the Initial Lender shall immediately succeed to the duties of the Servicer as a
successor Servicer (the "Successor Servicer"), unless and until another
Successor Servicer has been appointed by the Initial Lender (which may be the
Initial Lender). The Initial Lender shall give the Noteholders not less than 30
days' prior written notice of its intent to appoint a Successor Servicer
pursuant to this Section 2.13(a). Such appointment shall become effective
following the expiration of such 30-day period (or such shorter period agreed to
by the Initial Lender) on a date to be specified by the Initial Lender. Such
Successor Servicer shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement;
provided, that such Successor Servicer shall have no responsibility for any
actions of the Servicer prior to the date of the appointment of such Successor
Servicer as Servicer. Such Successor Servicer shall be authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination and to perform the duties of the Servicer hereunder (including its
duties as Successor Servicer hereunder but excluding its duty to indemnify
pursuant to Sections 4.03(a) and (b)). The Initial Lender shall have the right
to appoint as its agent a third party to perform the duties and obligations of
the Initial Lender as Successor Servicer hereunder. The Initial Lender shall not
be responsible for compensating the Issuer for any increase in the Monthly
Servicing Fee associated with a Successor Servicer.
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(b) Any Successor Servicer appointed by the Initial Lender hereunder shall
be entitled to reasonable compensation (including the estimated termination
costs of such servicing and a reasonable profit) which shall be determined by
the Initial Lender; provided, however, that the Initial Lender, when acting as
Successor Servicer hereunder, shall receive compensation that is no less than
was being received by the Servicer at the time of its termination. Any Successor
Servicer appointed by a court of competent jurisdiction or any agent of the
Initial Lender as Successor Servicer upon becoming the Successor Servicer
pursuant to Section 2.13 (a) or subservicer to the Successor Servicer, shall be
entitled to compensation (including the estimated costs of servicing and a
reasonable profit) equal to the prevailing market rate for such services.
(c) The outgoing Servicer, the Initial Lender and the Successor Servicer
shall take such action, consistent with this Agreement and the Indenture, that
shall be reasonably necessary to effectuate any such succession, including,
without limitation, (i) the express assumption by such Successor Servicer of the
duties and obligations of the outgoing Servicer hereunder (except as to the
Initial Lender as the Successor Servicer, the Servicer's indemnification
obligation under Section 4.03(a) and (b) shall not apply), (ii) notifying
Obligors in writing of the existence of the Successor Servicer, and (iii)
providing such Successor Servicer with all Records maintained or held by the
outgoing servicer as Servicer hereunder, including all paper files and all
electronic files and the Servicer shall be reimbursed for related expenses in
accordance with Section 2.08(b).
(d) Upon appointment, any Successor Servicer shall be successor in all
respects to the outgoing Servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all responsibilities,
duties and liabilities relating thereto placed upon the Servicer by the terms
and provisions hereof (subject to the same limitations as are contained in this
Section 2.13 with respect to a succession to the outgoing Servicer by the
Initial Lender).
(e) Upon an assumption by a Successor Servicer, or in the event of
transfer of servicing of any Auto Loans to the Successor Servicer from a prior
servicer (including after the execution of this Agreement), the Successor
Servicer is authorized to accept and rely on all of the accounting, records and
work of the prior servicer without any audit or other examination thereof, and
the Successor Servicer shall have no duty, responsibility, obligation or
liability to any Person for any acts or omissions of the prior servicer. If any
error, inaccuracy or omission (collectively, "Errors") exists in any information
received from the prior servicer and such Errors should cause or materially
contribute to the Successor Servicer making, or continuing to make, any Errors
(collectively, "Continuing Errors"), the Successor Servicer shall have no
liability to any Person for such Continuing Errors. In the event the Successor
Servicer becomes aware of any Errors or Continuing Errors, which in the opinion
of the Successor Servicer impair its ability to perform its services hereunder,
the Successor Servicer may with prior written notice to the Issuer and the
Trustee, undertake such data or records reconstruction as it deems appropriate
to correct such Errors and Continuing Errors and to prevent future Continuing
Errors, and the Successor Servicer's reasonable expenses incurred in connection
therewith shall be deemed expenses owing to the Successor Servicer hereunder for
purposes of the Indenture.
SECTION 2.14. Effect of Service Transfer.
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(a) Prior to any Service Transfer, the outgoing Servicer shall notify (or,
to the extent that such Servicer provided such notice pursuant to Section
2.13(c), confirm the notice to) Obligors of the existence of the Successor
Servicer.
(b) After any Service Transfer, the outgoing Servicer shall have no
further obligations with respect to the management, servicing, custody or
monitoring of the collection of the Receivables and the Successor Servicer shall
have all of such obligations.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including, but not limited to, the obligations and
indemnities of the outgoing Servicer pursuant to Article IV) other than those
relating to the management, servicing, custody or monitoring of the collection
of the Receivables by the Successor Servicer.
SECTION 2.15. Annual Reports; Statements as to Compliance.
(a) On or before ninety (90) days after the end of each fiscal year of the
Servicer, the Servicer shall deliver to the Issuer, the Initial Lender and the
Trustee and each Noteholder, a copy of the financial statements of the Servicer
containing a report of a firm of Independent Public Accountants to the effect
that such firm has examined certain books and records of the Servicer and that,
on the basis of such examination conducted substantially in compliance with
generally accepted audit standards, such financial statements accurately reflect
the financial condition of the Servicer. In the event such firm of Independent
Public Accountants requires the Trustee to agree to the procedures performed by
such firm of Independent Public Accountants, the Servicer shall direct the
Trustee in writing to so agree; it being understood and agreed that the Trustee
will deliver such letter of agreement in conclusive reliance upon the direction
of the Servicer, and the Trustee has not made any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
(b) The Servicer shall deliver to the Trustee, the Initial Lender and each
Noteholder by the close of business on the Determination Date of each month the
Officer's Certificate contemplated in Section 2.17, which shall state as to each
signer thereof, that (a) a review of the activities of the Servicer (and each
Subservicer) during the preceding calendar month and of performance under this
Agreement has been made under such officer's supervision and (b) to the best of
such officer's knowledge, based on such review, each of the Servicer and any
Subservicer has fulfilled all its respective obligations under this Agreement
throughout such month, or, if there has been an Event of Servicing Termination
or if an event has occurred that with notice or lapse of time or both would
become an Event of Servicing Termination, specifying each such Event of
Servicing Termination or event known to such officer and nature and status
thereof, and remedies therefor being pursued. Notwithstanding the obligation to
deliver such certificates, the Servicer shall promptly (but in any event within
five Business Days) notify the Issuer, the Initial Lender, the Noteholders and
the Trustee upon receiving actual knowledge of any event which constitutes an
Event of Servicing Termination or would constitute an Event of Servicing
Termination but for the requirement that notice be given or time elapse or both.
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SECTION 2.16. Servicer Reports.
(a) The Servicer shall furnish by close of business on the day prior to
each Payment Date (or the next succeeding Business Day if such day is not a
Business Day), to the Trustee, the Initial Lender and each Noteholder an
Officer's Certificate, substantially in the form attached hereto as Exhibit C
(the "Servicer Report"), which Servicer Report shall contain all information
necessary for the Administrator to prepare the report allowing the Trustee to
make the distributions from, and transfers among, the accounts required by the
Indenture or in such other form as is mutually acceptable to the Servicer, the
Initial Lender and the Trustee. In addition, the Servicer shall provide the
Initial Lender and the Trustee with such additional written information and
certifications as the Initial Lender or the Trustee may request in order for the
Trustee to make the distributions from, and transfers among, the various
accounts required by this Agreement and the Trust Indenture on a daily, or
other, basis. Each of the parties hereto shall provide to the Noteholders
evidencing a Percentage of not less than 50% such additional information as they
may reasonably request in order to assist such Noteholders evidencing a
Percentage of not less than 50% in their ongoing monitoring and assessment of
the performance of the Receivables, including the related computer files.
(b) The Servicer Report shall include a certification (i) that the
information contained in such certificate is accurate, (ii) that no Event of
Servicing Termination, or event that with notice or lapse of time or both would
become an Event of Servicing Termination, has occurred, or if an Event of
Servicing Termination or such event has occurred and is continuing, specifying
the Event of Servicing Termination or such event and its status and (iii) that
the representations and warranties of the Servicer contained in Section 2.03 of
this Agreement are true and correct as though made on and as of the date of such
certificate.
SECTION 2.17. Confidentiality. Each of the Issuer and the Initial Lender
acknowledges the proprietary nature of certain of the software, software
procedures, software development tools, know-how, methodologies, processes and
technologies of the Servicer ("Confidential Material") and agrees (i) that it
shall use the same means as it uses to protect its own confidential information,
but in no event less than reasonable means, to avoid disclosure, by it or its
agents or employees, to any third party of any confidential or proprietary
information of the Servicer identified as such by the Servicer to it, except to
the extent that any such person may be required to disclose any such information
(x) by law or any legal process or proceeding, including, without limitation, in
connection with an examination or audit by any governmental regulatory agency,
in which case such person shall give notice of such event to the Servicer or (y)
in connection with its duties and obligations hereunder and under the other
transaction documents, and (ii) that all such confidential or proprietary
software, software procedures, software development tools, know-how,
methodologies, process and technologies that are based upon trade secrets or
proprietary information of the Servicer identified as such by the Servicer to it
shall be and remain the property of the Servicer and that each of the Issuer and
the Initial Lender will have no ownership interest therein or ownership claim
thereto. Each of the Issuer and the Initial Lender shall confine the knowledge
and use of the Confidential Material only to its employees who require such
knowledge and use in the ordinary course and scope of their employment. Upon any
expiration or termination of this Agreement, each of the Issuer and the
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Initial Lender shall promptly return to the Servicer all property or information
which is covered by this section.
SECTION 2.18. Delivery of Documents.
On the date hereof the Servicer shall have delivered to the Issuer, the
Initial Lender and the Trustee in form and substance satisfactory to the Issuer
an Officer's Certificate from the Servicer certifying that (i) the
representations and warranties of the Servicer contained in Section 2.03 of this
Agreement are true and correct as though made on and as of such date and (ii) no
Event of Servicing Termination, or event that with notice or lapse of time or
both would become an Event of Servicing Termination, has occurred.
SECTION 2.20. Standard of Care. In performing its duties and obligations
hereunder and in administering, tracking and enforcing the insurance policies
maintained by obligors relating to the Receivables pursuant to this Agreement,
the Servicer will follow the standard of care set forth in Section 2.01;
provided, however, that notwithstanding the foregoing, the Servicer shall not,
except pursuant to a judicial order from a court of competent jurisdiction, or
as otherwise required by applicable law or regulation, release or waive the
right to collect the unpaid balance on any Receivable. In performing its duties
and obligations hereunder, the Servicer shall comply with all applicable federal
and state laws and regulations, shall maintain all state and federal licenses
and franchises necessary for it to perform its servicing responsibilities
hereunder, and shall not impair the rights of the Issuer or the Trustee in the
Receivables.
ARTICLE III
REPOSSESSION AND DISPOSAL
SECTION 3.01. Repossession and Disposal.
(a) The Servicer agrees to use its best efforts to arrange with a third
party for the repossession or other conversion of ownership of any Financed
Vehicle by a professional repossession service within 90 days after the related
Auto Loan becomes past due and agrees not to discriminate among Financed
Vehicles in its performance of its duties hereunder based on its right, if any,
to receive bonus or increased compensation with respect to the repossession and
disposal of certain Financed Vehicles, and otherwise in accordance with the
AutoBond Program Manual, in order to maximize collections.
(b) If requested in writing by the Issuer or the Initial Lender, the
Servicer is authorized and empowered by the Issuer and the Initial Lender to
execute and deliver, on behalf of itself, the Issuer, the Initial Lender and the
Trustee, as the case may be, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to the Financed Vehicles related to the Receivables,
all in accordance with the standard of care set forth in Section 2.20. Without
limiting the generality of the foregoing, the Issuer and the Trustee shall, upon
the receipt of a written request of the Servicer, execute and deliver to the
Servicer any limited powers of attorney and other documents prepared by the
Servicer and reasonably necessary or appropriate (as certified in such written
request) to
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enable the Servicer to carry out its duties hereunder (including, without
limitation, matters relating to the certificates of title with respect to the
Financed Vehicles), and neither the Issuer nor the Trustee shall be held
responsible for any negligence by the Servicer in its use of such limited powers
of attorney.
(c) The Servicer shall forward the proceeds of any disposition of a
Financed Vehicle related to a Receivable upon receipt thereof to the Lockbox,
the Lender Collection Account or the Collection Account. If subsequent to the
disposal of a Financed Vehicle related to a Receivable in accordance herewith
and, as required by this Agreement, with the AutoBond Program Manual, the
transaction disposing of such Financed Vehicle is rescinded or adjusted, through
arbitration or otherwise, due to any condition affecting such Financed Vehicle,
then the Servicer shall be entitled to reimbursement from the Lender Collection
Account or the Collection Account (out of available funds) for any amount which
the Servicer pays in connection with such rescission or adjustment which amount
shall be the "Post-Sale Adjustment".
(d) The Servicer represents and warrants to the Issuer, the Initial
Lender, the Trustee and the Noteholders and shall be deemed to continuously
represent and warrant to the Issuer, the Trustee and the Noteholders, with
respect to each Financed Vehicle assigned to the Servicer pursuant hereto, that
the Servicer will comply in all material respects with all applicable federal,
state and local regulations pertaining to its services hereunder, including
disclosure requirements, required to be complied with in conjunction with such
services. The Servicer shall defend, indemnify and hold the Issuer, the Initial
Lender, the Noteholders and the Trustee harmless from and against any claim,
suit, loss, cost or liability, direct or indirect, including reasonable
attorney's fees, arising out of any breach of any representation or warranty
made by the Servicer in the immediately preceding sentence.
(e) Except as expressly provided herein, in the Indenture and in the
AutoBond Program Manual, the Servicer shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create any Adverse Claim upon or
with respect to, any Financed Vehicle related to any Receivable (or any right to
income in respect thereof), or assign any right to receive income in respect of
any such Financed Vehicle.
ARTICLE IV
LIMITATION ON LIABILITY; INDEMNITIES
SECTION 4.01. Liabilities of Obligors. No obligation or liability of any
Obligor under any of the Receivables is intended to be assumed by the Issuer,
the Initial Lender, the Servicer, the Trustee or any Noteholder under or as a
result of this Agreement and the transactions contemplated hereby and, to the
maximum extent permitted and valid under mandatory provisions of law, the
Issuer, the Initial Lender, the Servicer, and the Trustee or any Noteholder
expressly disclaim such assumption.
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SECTION 4.02. Limitation on Liability of the Initial Lender and the
Servicer.
(a) The Initial Lender and the Servicer shall each have no liability in
connection with this Agreement except to the extent of the obligations
specifically imposed by this Agreement, it being understood that no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or shall otherwise exist against the Initial Lender
or the Servicer.
(b) None of the Trustee, the Initial Lender or the Servicer nor any of the
directors, officers, employees or agents thereof shall be under any liability to
the Issuer, to each other or to any other Person for any action taken, or for
refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer, the Initial Lender, the Trustee or any such
Person against any breach of warranties, representations or covenants made
herein or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Servicer,
the Initial Lender, the Trustee and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind which, prima facie,
is properly executed and submitted by any appropriate Person respecting any
matters arising hereunder.
(c) Except to the extent resulting from the Servicer's willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of reckless disregard of its obligation or duties hereunder, the Servicer
shall not be liable to any party indemnified under this Agreement, for any
liability, cost, expenses or financial loss which may arise as a result of the
economic performance of the Receivables or other assets.
SECTION 4.03. Indemnities of the Servicer.
(a) The Servicer agrees to indemnify the Issuer, the Trustee, the Initial
Lender and the Noteholders and any of their respective directors, officers,
employees or agents from, and hold each of them harmless against, any and all
losses, liabilities, damages (other than incidental or indirect damages), claims
or expenses (including reasonable attorneys' fees and expenses) proximately
caused by the Servicer's acts or omissions in violation of this Agreement,
except to the extent the Issuer's, the Trustee's, the Initial Lender's, the
Noteholders' or the directors, officers, employees or agents thereof, as the
case may be, own bad faith, willful misconduct or negligence contributes to the
loss, liability, damage, claim or expense. Except to the extent otherwise
constituting bad faith, willful misconduct or negligence, the Servicer shall not
be liable to any person for any action taken or for refraining from the taking
of any action in good faith pursuant to this Servicing Agreement or for errors
in judgment.
(b) The Servicer agrees to indemnify the Issuer, the Trustee, and the
Noteholders and any of their respective directors, officers, employees or agents
from, and hold each of them harmless against, any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees and expenses)
arising as a result of the use, ownership or operation by the Servicer or any
agent thereof of any Financed Vehicle.
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(c) Each of the Servicer, the Issuer and the Initial Lender agrees to
promptly notify the indemnifying party hereunder in writing of the commencement
of any action with respect to which indemnification may be owed to it pursuant
to this Section 4.03 promptly after receipt by such party of notice of
commencement thereof, but the omission so to notify such indemnifying party
hereunder will not relieve the indemnifying party from any liability which it
may have hereunder except to the extent the indemnifying party is prejudiced
thereby.
(d) This Section 4.03 shall survive the termination of this Agreement and
the resignation or removal of the Servicer. This Agreement shall also survive
the resignation or removal of the Trustee in respect of rights accrued to it
prior to such resignation or removal.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Beneficiaries. This Agreement will inure to the benefit of
and be binding upon the parties hereto, the Trustee, the Noteholders and their
respective successors and permitted assigns. The Trustee and the Noteholders are
intended as, and shall be, third party beneficiaries of this Agreement. No other
Person will have any right or obligation hereunder. The Servicer may not assign
any of its respective rights and obligations hereunder or any interest herein,
without the prior written consent of the Issuer and the Initial Lender.
SECTION 5.02. Amendment. This Agreement may be amended from time to time
by the parties hereto only by a written instrument executed by all such parties,
and provided, further, that notice of any such amendment and a copy thereof
shall be given in writing promptly after the execution thereof to the Trustee.
SECTION 5.03. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, notices and other communications required or permitted to
be given or made under the terms hereof shall be in writing. Any such
communication or notice shall be deemed to have been duly made or given (i) when
delivered personally, (ii) in the case of mail delivery, upon receipt, refusal
of delivery or return for failure of the intended recipient to retrieve such
communication or (iii) in the case of transmission by facsimile, upon telephone
and return facsimile confirmation and, in each case, if addressed to the
intended recipient as follows (subject to the next sentence of this Section
5.03):
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If to the Issuer:
AutoBond Master Funding Corporation V
300 South Fourth Street, Suite 620
Las Vegas, Nevada 89101
If to the Servicer:
AutoBond Acceptance Corporation
301 Congress Avenue
Austin, Texas 70701
Attention: William O. Winsauer
Facsimile Number: (512) 472-1548
Telephone Number: (512) 472-3600
If to the Initial Lender:
Dynex Capital, Inc.
10900 Nuckols Road, Third Floor
Glen Allen, Virginia 23060
Attention: Master Servicing Department
Facsimile Number: 804 217-5935
Telephone Number: 804 217-5800
Each party hereto may from time to time designate by notice in writing to the
other parties hereto a different address for communications and notices.
SECTION 5.04. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement.
SECTION 5.05. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
NEW YORK.
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(b) THE ISSUER, THE SERVICER, AND THE INITIAL LENDER HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY. THE
ISSUER, THE SERVICER AND THE INITIAL LENDER EACH HEREBY WAIVES ANY OBJECTION
BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
PARTIES HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF ANY OF THEN TO BRING ANY ACTION OR PROCEEDING IN THE COURTS
OF ANY OTHER JURISDICTION.
(c) THE ISSUER, THE SERVICER AND THE INITIAL LENDER EACH HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 5.06. Counterparts. This Agreement may be executed in counterparts
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
SECTION 5.07. No Proceedings. Each of the Servicer and the Initial Lender
hereby agrees that it will not, directly or indirectly, institute, or cause to
be instituted, against the Issuer any proceeding of the type described in
connection with the Servicer in Section 2.12(c) so long as there shall not have
elapsed one year plus one day since the Notes issued by the Issuer have been
paid in full in cash. The foregoing covenant shall not limit the right of the
Servicer or the Initial Lender, as the case may be, to institute legal
proceedings of a type other than those described in connection with the Servicer
in Section 2.12(c) against the Issuer for any breach by the Issuer of its
obligations hereunder.
SECTION 5.08. Further Assurance. The Servicer shall cause to be promptly
and duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as the Issuer, the Initial Lender or the Trustee from
time to time may reasonably request in order to carry out more effectively the
intent and purposes of this Agreement and the transactions contemplated hereby.
SECTION 5.09. Term of Agreement. The term of this Agreement shall begin on
the Closing Date and shall continue until the day after the date on which the
Noteholders have been paid in full under the Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this Servicing
Agreement to be executed by their respective officers thereunto duly authorized.
AUTOBOND MASTER FUNDING Corporation V,
as Issuer
By:
-----------------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION
as Servicer
By:
-----------------------------------------
Name:
Title:
DYNEX CAPITAL, INC.
By:
-----------------------------------------
Name:
Title:
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EXHIBIT B
TRUST RECEIPT
[DATE]
________________________, as Trustee
[Address]
Re: Servicing Agreement, dated as of June 9, 1998 (the "Servicing
Agreement"), among AutoBond Master Funding Corporation V,
AutoBond Acceptance Corporation, and Dynex Capital, Inc.
Ladies and Gentlemen:
In accordance with Section 2.07 of the Servicing Agreement, the
undersigned hereby certifies that it has taken possession of the items set forth
on Annex I hereto with respect to the Receivables identified below. The
undersigned (i) confirms that it holds such items in trust for the benefit of
the Trustee as trustee for AutoBond Master Funding Corporation V and its
Noteholders and (ii) agrees to promptly return such items to the Trustee after
its need for possession of them ceases, except for title and security
instruments which the undersigned is required under applicable law to otherwise
deal with in furtherance of its duties under the Servicing Agreement.
Receivables:
AUTOBOND ACCEPTANCE CORPORATION, as
Servicer
By:
------------------------------------------
Name:
Title:
B-1
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EXHIBIT C
FORM OF MONTHLY STATEMENT
Payment Date: ________________
Due Period: __________ - ___________
Under the Servicing Agreement dated as of June 9, 1998 by and among
AutoBond Acceptance Corporation, as Servicer, AutoBond Master Funding
Corporation V, a Nevada corporation, as Issuer, Dynex Capital, Inc., as Initial
Lender, the Servicer is required to prepare certain information each month
regarding the performance of the assets held in trust during the previous month
and payments due on the Issuer's Funding Notes. The information which is
required to be prepared with respect to the Payment Date and Due Period listed
above is set forth below.
Beginning Principal Balance:
Non-Cash Adjustments:
Loans Paid in Full:
Principal Collections:
Defaulted and other Excluded Loans:
Ending Principal Balance:
Interest Collections:
Miscellaneous Fee Collections:
Interest Due on Funding Notes:
Principal Due on Funding Notes:
Cash contributions to Collection Account:
Dated: __________ AUTOBOND ACCEPTANCE CORPORATION
By:
-----------------------------------------
Name:
Title:
C-1
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EXECUTION COPY
================================================================================
AUTOBOND MASTER FUNDING CORPORATION V,
as Company
AUTOBOND ACCEPTANCE CORPORATION,
as Administrator
and
DYNEX CAPITAL, INC.,
as Trustee
-------------
TRUST INDENTURE
Dated as of June 9, 1998
-------------
Automobile Loan-Backed Notes
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS Page
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION......................................................2
SECTION 1.01 General Definitions...........................................2
SECTION 1.02 Compliance Certificates and Opinions.........................15
SECTION 1.03 Form of Documents Delivered to Trustee.......................15
SECTION 1.04 Acts of Noteholders, etc.....................................16
SECTION 1.05 Notice to Noteholders; Waiver................................17
SECTION 1.06 Effect of Headings and Table of Contents.....................17
SECTION 1.07 Successors and Assigns.......................................17
SECTION 1.08 GOVERNING LAW................................................18
SECTION 1.09 Legal Holidays...............................................18
SECTION 1.10 Execution in Counterparts....................................18
SECTION 1.11 Inspection...................................................18
SECTION 1.12 Survival of Representations and Warranties...................19
SECTION 1.13 Security Forms...............................................19
ARTICLE 2.
THE NOTES..................................................................19
SECTION 2.01 General Provisions...........................................19
SECTION 2.02 Execution, Authentication, Delivery, and Dating..............22
SECTION 2.03 Transfer and Exchange........................................22
SECTION 2.04 Mutilated, Destroyed, Lost and Stolen Notes..................24
SECTION 2.05 Payment of Interest and Principal; Rights Preserved..........24
SECTION 2.06 Persons Deemed Owners........................................25
SECTION 2.07 Cancellation.................................................25
SECTION 2.08 Noteholder Lists.............................................25
SECTION 2.09 Treasury Notes...............................................25
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS.............................................26
SECTION 3.01 Trust Accounts; Investments by Trustee.......................26
SECTION 3.02 Establishment and Administration of the Lockbox
and the Collection Accounts................................28
SECTION 3.03 Establishment and Administration of Cash Reserve Accounts....29
SECTION 3.04 Distributions................................................29
SECTION 3.05 Reports to Noteholders.......................................30
SECTION 3.06 Returned Payments............................................30
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Page
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ARTICLE 4.
THE TRUST ESTATE...........................................................30
SECTION 4.01 Acceptance by Trustee and Agreement to Act as Custodian......30
SECTION 4.02 Subsequent Transfers.........................................32
SECTION 4.03 Conditions Precedent to All Transfers........................32
SECTION 4.04 Grant of Security Interest; Tax Treatment....................33
SECTION 4.05 Further Action Evidencing Assignments........................34
ARTICLE 5.
SERVICING OF TRUST ASSETS..................................................35
SECTION 5.01 Appointment of Servicer......................................35
SECTION 5.02 Appointment of Administrator; Monthly Administration Fee.....35
SECTION 5.03 Duties and Responsibilities of the Administrator.............35
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES................................................36
SECTION 6.01 Events of Default............................................36
SECTION 6.02 Acceleration of Maturity; Rescission and Annulment...........38
SECTION 6.03 Remedies.....................................................39
SECTION 6.04 Trustee May File Proofs of Claim.............................40
SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.......40
SECTION 6.06 Application of Money Collected...............................41
SECTION 6.07 Limitation on Suits..........................................41
SECTION 6.08 Unconditional Right of Noteholders to Receive
Principal and Interest....................................41
SECTION 6.09 Restoration of Rights and Remedies...........................42
SECTION 6.10 Rights and Remedies Cumulative...............................42
SECTION 6.11 Delay or Omission Not Waiver.................................42
SECTION 6.12 Control by Noteholders.......................................42
SECTION 6.13 Waiver of Events of Default..................................43
SECTION 6.14 Undertaking for Costs........................................43
SECTION 6.15 Waiver of Stay or Extension Laws.............................44
SECTION 6.16 Sale of Trust Estate.........................................44
ARTICLE 7.
THE TRUSTEE................................................................45
SECTION 7.01 Certain Duties...............................................45
SECTION 7.02 Notice of Events of Default..................................46
SECTION 7.03 Certain Matters Affecting the Trustee........................46
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SECTION 7.04 Trustee Not Liable for Notes or Receivables..................47
SECTION 7.05 Trustee May Own Notes........................................48
SECTION 7.06 The Administrator to Pay Trustee's Fees and Expenses.........48
SECTION 7.07 Eligibility Requirements for Trustee.........................48
SECTION 7.08 Resignation or Removal of Trustee............................48
SECTION 7.09 Successor Trustee............................................49
SECTION 7.10 Merger or Consolidation of Trustee...........................50
ARTICLE 8.
COVENANTS .................................................................51
SECTION 8.01 Payment of Principal and Interest............................51
SECTION 8.02 Maintenance of Office or Agency; Chief Executive Office......51
SECTION 8.03 Money for Payments to Noteholders to be Held in Trust........51
SECTION 8.04 Corporate Existence; Merger; Consolidation, etc..............52
SECTION 8.05 Protection of Trust Estate; Further Assurances...............52
SECTION 8.06 Servicing Agreement..........................................53
SECTION 8.07 Additional Covenants.........................................53
SECTION 8.08 Taxes........................................................54
ARTICLE 9.
SUPPLEMENTAL INDENTURES....................................................55
SECTION 9.01 Supplemental Indentures Without Consent of Noteholders.......55
SECTION 9.02 Supplemental Indentures with Consent of Noteholders..........55
SECTION 9.03 Execution of Supplemental Indentures.........................56
SECTION 9.04 Effect of Supplemental Indentures............................57
SECTION 9.05 Reference in Notes to Supplemental Indentures................57
ARTICLE 10.
SATISFACTION AND DISCHARGE.................................................57
SECTION 10.01 Satisfaction and Discharge of Indenture.....................57
SECTION 10.02 Application of Trust Money..................................58
SECTION 10.03 Trust Termination Date......................................58
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
..........................................................................59
SECTION 11.01 Representations and Warranties of the Company...............59
SECTION 11.02 Representations and Warranties as to Each Receivable .......61
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Page
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SECTION 11.03 Repurchases and Transfers...................................62
ARTICLE 12.
MISCELLANEOUS..............................................................63
SECTION 12.01 Indemnities of the Administrator............................63
SECTION 12.02 Officers' Certificate and Opinion of Counsel as to
Conditions Precedent......................................63
SECTION 12.03 Statements Required in Certificate or Opinion...............63
SECTION 12.04 Notices.....................................................64
SECTION 12.05 Notices and Reports to be Delivered to the Rating Agencies..65
SECTION 12.06 No Proceedings..............................................65
ARTICLE 13.
VARIABLE FUNDING NOTE......................................................65
SECTION 13.01 Designation.................................................65
SECTION 13.02 Certain Definitions.........................................66
SECTION 13.03 Establishment and Maintenance of Lockbox and Trust
Accounts..................................................69
SECTION 13.04 Required Deposits to the Accounts...........................70
SECTION 13.05 Application of Funds in the Trust Accounts..................70
SECTION 13.06 Exchanges for New Series....................................72
SECTION 13.07 Additional Events of Default; Remedies......................73
SECTION 13.08 Resignation or Removal of Trustee...........................73
SCHEDULES
Schedule 1 - List of Trust Assets allocated to each Series.
EXHIBITS
EXHIBIT A - AutoBond Program Manual
EXHIBIT B - Form of Collateral Assignment
EXHIBIT C-1 - Form of Variable Funding Note
EXHIBIT C-2 - Form of Variable Funding Note
EXHIBIT D - Form of Rule 144A Transferee Letter
EXHIBIT E - Form of Investor Letter
EXHIBIT F - Form of Administrator Report (See Servicing Agreement or Series
Supplement)
EXHIBIT G - Form of Repurchase Assignment
EXHIBIT H - Form of Lockbox Agreement
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TRUST INDENTURE
This TRUST INDENTURE dated as of June 9, 1998, is among AUTOBOND
MASTER FUNDING CORPORATION V, a Nevada corporation (the "Company"), AUTOBOND
ACCEPTANCE CORPORATION, a Texas corporation, as Administrator (the
"Administrator") and individually ("AutoBond"), and DYNEX CAPITAL, INC., as
trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company is a bankruptcy-remote corporation formed for
the sole purpose of acquiring from AutoBond and its Affiliates certain
automobile finance contracts ("Auto Loans") acquired by AutoBond and certain
other rights and properties pertaining thereto;
WHEREAS, the Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its
debentures, notes or other evidences of indebtedness (herein called the
"Notes"), to be issued in one or more Series as in this Indenture provided;
WHEREAS, the Company intends that the Trustee, on behalf of the
Trust Estate (as defined herein) for the benefit of the Noteholders and the
Company, will take assignment of the Auto Loans and related rights and benefits,
including those under any collateral security agreement, insurance, guarantees
and dealer agreements from the Company simultaneously with the acquisition of
such Auto Loans by the Company; and
WHEREAS, the Administrator has been requested and is willing to
direct the Trustee to make certain distributions of funds to the Noteholders,
the Company and certain creditors in connection with amounts received as
proceeds from the Trust Estate and to otherwise perform certain administrative
functions in connection with the transactions contemplated hereby.
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of all Noteholders and the Company, as follows:
GRANTING CLAUSE
The Company hereby Grants to the Trustee for inclusion in the Trust
Estate on each Assignment Date, for the benefit and security of the Noteholders,
all of the Company's right, title and interest in and to (a) the Transferred
Assets specified in each Collateral Assignment, including the Company's security
interests in the Financed Vehicles; (b) all moneys from time to
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time on deposit in any Trust Accounts, including all investments and income from
the investment of such moneys, and (c) all income or payments received with
respect to any of the foregoing and the proceeds of the conversion, whether
voluntary or involuntary, of any of the foregoing into cash or other property.
Such Grant is made in trust to secure (i) the payment of all amounts due on the
Notes of each Series, (ii) the payment of all other sums payable under this
Indenture with respect to the Notes and (iii) compliance with the provisions of
this Indenture with respect to the Notes.
The Trustee acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof, and agrees to perform the duties herein
required to the best of its ability and to the end that the Trust Estate and the
interests of the Noteholders and the Company may be adequately and effectively
protected as hereinafter provided.
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01 General Definitions.
Except as otherwise specified or as the context may otherwise
require, the following terms have the meanings set forth below for all purposes
of this Indenture, and the definitions of such terms are applicable to the
singular as well as to the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
Act: with respect to any Noteholder, as defined in Section 1.04.
Administrator: AutoBond and any permitted successor to such
functions in accordance, and in connection with, this Indenture in its capacity
as Administrator hereunder, and if AutoBond is acting as Servicer and/or
Collection Agent under a Servicing Agreement, also in its capacity as Servicer
and/or Collection Agent.
Administrator Duties: specified in Section 5.03.
Administrator Order: a written order or request delivered to the
Trustee and signed in the name of the Administrator by an Authorized Officer.
Adverse Claim: any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the interests created under this Indenture in
favor of the Trustee and the Noteholders.
Affiliate: of any specified Person, means any other Person which
directly or indirectly controls, or is controlled by, or is under common control
with, such specified Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause
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the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
APR: the annual percentage rate of an Auto Loan as determined
according to the related contractual documents with the Obligor thereof.
Assignment: collectively, with respect to any Receivable, the
related Sale Assignment and any Collateral Assignment.
Assignment Date: each date when Auto Loans are transferred to the
Trust Estate.
Authorized Officer: with respect to any corporation or partnership,
the Chairman of the Board, the President, any Vice President, the Secretary, the
Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation or the general partner of such partnership
specifically authorized in resolutions of the Board of Directors of such
corporation to sign agreements, instruments or other documents in connection
with this Indenture on behalf of such corporation or partnership, as the case
may be.
AutoBond: AutoBond Acceptance Corporation, a Texas corporation, and
its successors and permitted assigns.
AutoBond Program Manual: the AutoBond Program Manual (including the
Credit and Collection Policies) attached hereto as Exhibit A, as modified from
time to time.
Auto Loan: set forth in the recitals hereto.
Automobile Loan Sale Agreement: any agreement under which AutoBond
purchases Auto Loans from an Originator.
Board of Directors: either the board of directors of the Company or
any duly authorized committee of that board.
Board Resolution: a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
Business Day: any day other than a Saturday or a Sunday, or another
day on which banks in the City of New York, or in Texas (or such other cities
and states in which the Corporate Trust Office, the principal administrative
offices of the Administrator, Note Registrar and Transfer Agent and Paying Agent
or the principal offices of the Servicer or the Administrator are subsequently
located, as specified in writing by the Administrator to the other parties
hereto) are required, or authorized by law, to close.
Cash Reserve Account: the account or accounts, if any, so
designated, established and maintained by the Trustee pursuant to Section 3.03.
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Class: with respect to a Series of Notes, each class of Notes so
designated within such Series.
Collateral Assignment: a certificate of assignment by the Company to
the Trustee substantially in the form of Exhibit B giving notice of, and
evidencing, the pledge of Auto Loans and the related Transferred Assets by the
Company to the Trustee on behalf of the Trust Estate.
Collection Account: the account or accounts by that name established
and maintained by the Trustee pursuant to Section 3.02.
Collection Agent: means the entity designated as such.
Commission: the Securities and Exchange Commission.
Company: the Person named as the "Company" in the first paragraph of
this instrument.
Company Order or Company Request: a written order or request
delivered to the Trustee and signed in the name of the Company by an Authorized
Officer.
Corporate Trust Office: the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Indenture is located at the
address set forth in Section 12.04.
Credit and Collection Policies: written credit procedures and
policies consistent with the requirements of this Indenture and each Servicing
Agreement, in effect from time to time, as formulated by the Administrator and
comprising part of AutoBond Program Manual.
Cut-Off Date: with respect to the Receivables specified in any
Transfer, the date specified in the related Assignment.
Dealer: each automobile dealer with whom AutoBond or an Originator
has entered into a Dealer Agreement.
Dealer Agreement: each agreement between a Dealer and either
AutoBond or an Originator which provides for, among other things, origination of
the Receivables.
Debt: for any Person, (a) indebtedness of such Person for borrowed
money or credit extended, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such Person
to pay the deferred purchase price of property or services, (d) obligations of
such Person as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (e) obligations secured by any lien or
other charge upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations, (f)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
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obligations of others of the kinds referred to in clauses (a) through (e) above,
and (g) liabilities in respect of unfunded vested benefits under plans covered
by ERISA. For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire Debt of any other Person, or to purchase, sell
or lease, as lessee or lessor, property or services, in any such case primarily
for the purpose of enabling another Person to make payment of Debt, or to make
any payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with Debt of such Person.
Defaulted Auto Loan: an Auto Loan (a) which by its terms has more
than 10% of any installment of principal or interest which is 60 or more days
contractually past due and (b) which is not a Liquidated Receivable.
Defaulted Receivable: as of the end of any Due Period, (a) a
Defaulted Auto Loan, (b) a Receivable as to which the proceeds of the sale of
the related Financed Vehicle have been received by the Administrator or (c) a
Receivable as to which the Administrator has determined (or should have
determined in accordance with the Credit and Collection Policies) that no
further proceeds other than from the Insurance Policies are expected to be
received or that such Receivable is uncollectible and such determination was
made at or prior to the last day of such Due Period.
Default: any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
Deposit Date: the Business Day immediately preceding each related
Payment Date.
Depositary: with respect to Notes of any Series issuable in whole or
in part in the form of one or more Global Notes, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such Notes as
contemplated by Section 2.01.
Determination Date: the 10th day of each month (or the preceding
Business Day, if such day is not a Business Day), or as otherwise specified for
a Series.
Due Period: as specified for each Series.
Eligible Account: a segregated account, which may be an account
maintained with the Trustee, which is either (a) maintained with a depository
institution or trust company (including the Trustee) whose short term unsecured
debt obligations are rated at least P-1 by Moody's or A-1 by Standard & Poor's
and whose long term unsecured debt obligations are rated at least A by Standard
& Poor's and at least A3 by Moody's; provided, that if only Moody's rates such
institution, such single rating shall suffice, or (b) a segregated trust account
or similar account maintained with a federally or state chartered depository
institution with corporate trust powers, subject to regulations regarding
fiduciary funds on deposit substantially similar to 12
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C.F.R. ss.9.10(b) and with a long term debt rating of at least A3 by Moody's or
A by Standard & Poor's.
Eligible Investments: any of the following:
(i) Aaa-rated obligations of, or guaranteed as to the full and
timely payment of principal and interest by, the United States or obligations of
any agency or instrumentality thereof, when such obligations are backed by the
full faith and credit of the United States;
(ii) short-term repurchase agreements on obligations specified in
clause (a) having a maturity no greater than the next Payment Date; provided,
that the short-term debt obligations of the party agreeing to repurchase are
rated no less than A-1 by Standard & Poor's or P-1 by Moody's;
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company incorporated under the laws of the United States or
any state; provided, that the short-term obligations of such depository
institution or trust company are rated no less than A-1 by Standard & Poor's or
P-1 by Moody's;
(iv) commercial paper (having original maturities of not more than
30 days) of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition are rated no less than A-1 by
Standard & Poor's or P-1 by Moody's;
(v) securities of money market funds rated in the highest investment
category by Standard & Poor's or Moody's; and
(vi) such other investment grade investments as shall be acceptable
to any applicable Rating Agency and to the holders of at least 75% in aggregate
Outstanding principal amount of the Notes of each affected Series, upon prior
written approval.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Event of Administrator Termination: as specified in the designated
Servicing Agreement.
Event of Default: as defined in Section 6.01, as supplemented with
respect to any Series.
Event of Servicing Termination: as specified in the designated
Servicing Agreement.
Exchange Act: the Securities Exchange Act of 1934, as amended.
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Financed Vehicle: a new or used automobile, van or light-duty truck,
the purchase of which the Obligor financed with an Auto Loan.
GAAP: generally accepted accounting principles as in effect in the
United States, consistently applied, as of the date of such application.
Global Note: a Note that evidences all or part of the Notes of any
Series and bears such legend as may be specified as contemplated by Section 2.01
for such Notes.
Grant: grant, bargain, sell, convey, assign, transfer, mortgage,
pledge, create and grant a security interest in and right of set-off against,
deposit, set over and confirm. The Grant of the Trust Estate effected by this
Indenture shall include all rights, powers, and options (but none of the
obligations) of the Company with respect thereto, including, without limitation,
the immediate and continuing right to claim for, collect, receive, and give
receipts for Payments in respect of the Auto Loans and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
judicial proceedings in the name of the Company or otherwise, and generally to
do and receive anything that the Company is or may be entitled to do or receive
thereunder or with respect thereto.
Governmental Authority: the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
Holder: a Person in whose name a Note is registered in the Note
Register.
Indenture: this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular Series of Notes
established as contemplated by Section 2.01.
Insurance Policies: the insurance policies, if any issued by each of
the Insurers to AutoBond (the benefits of which have been assigned to the Trust
Estate as security for the Notes of a designated Series) and listed on Schedule
2 (as modified from time to time), in the case of the Variable Funding Notes,
and otherwise as specified with respect to a Series.
Insurers: each of the insurance companies named in the Insurance
Policies.
Intended Tax Characterization: as specified in Section 4.04(b).
Interest Payment Date: as specified with respect to a Series.
Interest Payments: as defined in Section 2.01(d).
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Issuance Date: as specified with respect to a Series.
Liquidated Receivable: as specified with respect to a Series.
List of Receivables: a list containing the Required Information with
respect to each Receivable delivered to the Trustee, the Series to which such
Receivable is allocated and certified by a duly authorized officer of the
Company, which is attached hereto as Schedule 1 (as supplemented from time to
time).
Loan Documents: with respect to an Auto Loan (a) the fully executed
original retail installment loan contract and security agreement evidencing such
Auto Loan, including the assignment to AutoBond, (b) the original confirmation
of title, copy of the application for title or letter of guaranty from the
applicable Dealer, as the case may be, for the related Financed Vehicle, (c) a
copy of the credit application, and (d) a copy of an executed agreement to
provide insurance signed by the Obligor, a binder in respect thereof or the
original confirmation of payment of premiums required under the VSI Policy.
Loan File: with respect to any Auto Loan, the original retail
installment loan contract and security agreement evidencing the Auto Loan and
originals or copies of such other documents and instruments relating to such
Auto Loan and the security interest on the selected Financed Vehicle as
specified in the Credit and Collection Policies.
Lockbox: the lockbox established and maintained pursuant to the
Lockbox Operations Agreement.
Lockbox Account: the account at the Lockbox Bank designated for
AutoBond Master Funding Corporation V and any Series and maintained pursuant to
the Lockbox Operations Agreement.
Lockbox Bank: as designated with respect to a Series.
Lockbox Operations Agreement: the agreement so designated with
respect to a Series.
Maturity: with respect to any installment of principal of or
interest on any Note, the date on which such installment is due and payable as
therein or herein provided, whether at the Stated Maturity, by declaration of
acceleration, or otherwise.
Monthly Trustee Fee: for any Payment Date with respect to a Series,
an amount equal to the sum of (A) the product of (i) the aggregate Unpaid
Principal Balance of Receivables allocated to such Series at the beginning of
the related Due Period, (ii) the Trustee Fee Rate and (iii) 1/12, plus (B)
amounts payable to the Trustee under Section 7.06 but not paid by the
Administrator.
Moody's: Moody's Investors Service, Inc. and any successors thereto.
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Net Payoff Balance: in respect of any Precomputed Receivables, the
net payoff less any accrued but unpaid late charges.
Net Principal Balance: with respect to any Precomputed Receivable,
the Net Payoff Balance as of the due date of the last full Scheduled Payment, or
if more recent, the due date of the last periodic payment of principal thereon.
Noteholder: at any time, any Person in whose name a Note is
registered in the Note Register.
Note Rate: the weighted-average interest rate with respect to the
Notes of a Series.
Note Register: as defined in Section 2.03.
Notes: as set forth in the Recitals to this Indenture.
Obligor: with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
Officer's Certificate: with respect to any Person, a certificate
signed by the Chairman of the Board, Vice Chairman of the Board, the President,
a Vice President, the Treasurer, the Secretary, an Assistant Secretary, or the
manager of such Person.
Opinion of Counsel: a written opinion, which shall be satisfactory
in form and substance to the Trustee, of counsel who may, except as otherwise
expressly provided in this Indenture, be inside or outside counsel for the
Company and who shall be satisfactory to the Trustee and any applicable Rating
Agencies.
Original Principal Balance: the Net Principal Balance of a
Precomputed Receivable and otherwise the outstanding Principal Balance of a
Receivable, in each case as of the related Cut-Off Date prior to its assignment
to the Trust Estate.
Originator: any Person, from which AutoBond acquires Auto Loans.
Outstanding: with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore irrevocably deposited with the Trustee in
trust for the holders of such Notes; and
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(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Trustee is presented that any such Notes are held by a Person in whose
hands the Note is a valid obligation; provided, however, that in determining
whether the holders of the requisite percentage of the Outstanding Principal
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent, or waiver hereunder, Notes owned by the Company or any
Affiliate of the Company shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, or
waiver, only Notes that a Responsible Officer of the Trustee actually knows to
be so owned shall be so disregarded.
Outstanding Principal Amount: the aggregate unpaid principal amount
of the Notes of any Series Outstanding at any time.
Paying Agent: the Trustee, unless otherwise specified for a Series.
Payment Date: the 15th day (or, if such day is not a Business Day,
the next succeeding Business Day) of each month, commencing as so designated
with respect to a Series and ending with the Stated Maturity of such Series.
Payments: for any Receivable for any Due Period, all amounts
received with respect to such Receivable during such Due Period, including,
without limitation, payments (including prepayments) from the relevant Obligor
(including principal, interest, late fees and other charges), payments from
Dealers and warranty rebates, proceeds from any insurance policy, including the
Insurance Policies (other than proceeds applied to the restoration or repair, or
in certain circumstances, replacement, of the related Financed Vehicle),
including amounts which constitute Recoveries on Receivables.
Percentage: means, with respect to a particular Note within a Class,
the percentage obtained by dividing the outstanding principal amount of the
related Note by the aggregate Outstanding Principal Amount of all Notes in such
Class, or with respect to Notes of a Class within a Series, the percentage
obtained by dividing the aggregate outstanding principal amount of the related
Notes of such Class, by the aggregate Outstanding Principal Amounts of such
Series.
Person: any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
Precomputed Receivable: any Auto Loan under which earned interest
(which may be referred to in the Auto Loan as the add-on finance charge) and
principal is determined according to the sum of periodic balances or the sum of
monthly balances or the sum of the digits or any equivalent method commonly
referred to as the "Rule of 78s".
Predecessor Notes: with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the
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purpose of this definition, any Note authenticated and delivered under Section
2.04 in lieu of a lost, destroyed or stolen Note (or a mutilated Note
surrendered to the Trustee) shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note (or a mutilated Note surrendered to the Trustee).
Principal: with respect to a Note, the amount designated as such.
Principal Balance: of an Auto Loan means, on any date of
determination, the Original Principal Balance minus that portion of all payments
made on or prior to such date allocable to principal; provided that, for every
Due Period following the Due Period with respect to which an Auto Loan is
repurchased by the Administrator in accordance with the provisions of Section
11.03 or as to which the Net Unrealized Amount equals the Unpaid Principal
Balance, the Principal Balance shall be deemed to be zero.
Principal Charge-offs: with respect to any Due Period, the aggregate
Net Unrealized Amount experienced for Auto Loans which have become Liquidated
Receivables during such Due Period.
Principal Payments: as defined in Section 2.01(c).
Rating Agency: any nationally recognized statistical organization
rating the Notes of any Series at the request of the Company as specified in the
related Supplement.
Receivable: a fixed rate fully amortizing closed-end consumer
installment Auto Loan (upon which interest is calculated based upon either a
simple interest basis or the Rule of 78s) arising from the sale of a Financed
Vehicle and assigned to the Trustee by the Company as part of the Trust Estate,
and includes, without limitation, (a) the related Assignment, (b) all security
interests or liens and property subject thereto from time to time purporting to
secure payment by the Obligor thereunder, including, without limitation, the
Financed Vehicle, AutoBond's or an Originator's rights under the related Dealer
Agreement, AutoBond's rights under an Automobile Loan Sale Agreement and the
Company's rights under the Sale Agreement, (c) all guarantees, indemnities and
warranties, proceeds of insurance policies (including the Insurance Policies),
certificates of title or other title documentation and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Auto Loan, (d) all collections and all related Loan Documents,
Loan Files and records with respect to the foregoing, and (e) all proceeds of
any of the foregoing.
Record Date: with respect to any Payment Date, the last day of the
calendar month immediately preceding such Payment Date.
Records: all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Collection Agent, the Servicer or by or on behalf of the
Company with respect to Receivables and the related Obligors.
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Recoveries on Receivables: for any Due Period, all amounts received
by the Servicer, the Administrator, the Company or the Trustee on behalf of the
Trust Estate during such Due Period with respect to (a) Defaulted Receivables
from any source, including, without limitation, net proceeds from the
repossession and liquidation of Financed Vehicles and proceeds of insurance
(including insurance maintained by Obligors and the Insurance Policies), and (b)
the Repurchase Price of Receivables repurchased by AutoBond pursuant to Section
11.03.
Reimbursable Administrator Expenses: with respect to any Payment
Date, all reasonable and customary out-of-pocket fees and expenses of third
parties incurred by the Administrator (including fees and expenses of the
Trustee paid by the Administrator under Section 7.06 or otherwise, and expenses
related to financing statements and titles required to be paid by the
Administrator) in connection with their respective repossession and liquidation
activities, including, without limitation, fees of attorneys, appraisers, third
party collateral managers and others (who shall have been retained by the
Administrator, in accordance with the Servicing Agreement) for the Due Period
immediately preceding such Payment Date, but not including expenses paid net of
recoveries.
Related Documents: with respect to any Series each Sale Assignment,
each Collateral Assignment, any Automobile Loan Sale Agreement, the Sale
Agreement, each Acquisition Agreement, the Insurance Policies, the Servicing
Agreement and all documents and instruments required to be delivered hereunder
or thereunder.
Repurchase Price: specified with respect to each Series.
Required Information: with respect to a Receivable as of the related
Cut-Off Date, (a) the name of the Obligor and a description of the Financed
Vehicle, (b) the Original Principal Balance and original term, (c) the maturity
date of such Receivable, (d) the APR, (e) the state of origination, (f) the
dollar amount and the number of Scheduled Payments and (g) whether such
Receivable calculates interest based upon a simple interest basis or the Rule of
78s.
Sale Agreement: the Loan Sale and Contribution Agreement, dated as
of June 9, 1998 between AutoBond and the Company, providing for the sale or
contribution of the Receivables to the Company.
Sale Assignment: each assignment executed by AutoBond or an
Affiliate in favor of the Company from time to time pursuant to the Sale
Agreement conveying Receivables to the Company.
Scheduled Payment: a payment due on an Auto Loan in accordance with
its terms.
Series: each Series of Notes designated as such pursuant to this
Indenture.
Securities Act: the Securities Act of 1933, as amended.
Servicer: the servicer designated as such, under the Servicing
Agreement and any successor thereto in accordance with this Indenture and the
Servicing Agreement.
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Servicer Duties: specified in Section 2.04(a) of the Servicing
Agreement.
Servicer Order: a written order or request delivered to the Trustee
and signed in the name of the Servicer by an Authorized Officer.
Servicing Agreement: as designated with respect to a Series.
Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
Stated Maturity: the date on which the entire remaining unpaid
Outstanding Principal Amount of a Class of Notes is due and payable.
Subservicer: any Person with whom the Servicer enters into a
Subservicing Agreement.
Subservicing Agreement: any written contract between the Servicer
and any Subservicer, relating to servicing and collection of Receivables, in
such form as has been approved pursuant to the Servicing Agreement.
Subsidiary: as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
Successor Servicer: specified in Section 2.13(a) of the Servicing
Agreement.
Target Reserve Percentage: as so designated with respect to a
Series.
Tax or Taxes: all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, profits, withholding,
excise, property, sales, use, occupation and franchise taxes (including, in each
such case, any interest, penalties or additions attributable to or imposed on or
with respect to any such taxes, charges, fees or other assessments) imposed by
the United States, any state or political subdivision thereof, any foreign
government or any other jurisdiction or taxing authority.
Title Document: with respect to any Auto Loan and the related
Financed Vehicle, either (a) the certificate of title for, or other evidence of
a security interest in (including, without limitation, dealer guaranty or proof
of application for notice of lien), such Financed Vehicle or (b) with respect to
any jurisdiction in which the certificate of title or other evidence of
ownership is not issued to the holder of a lien, evidence of the security
interest in the Financed Vehicle, in each case issued by the department of motor
vehicles or other appropriate Governmental Authority in the jurisdiction in
which such Financed Vehicle or the Obligor is located.
Transfer: as specified in Section 4.02(a).
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Transfer Notice: as specified in Section 4.02(b).
Transferred Assets: the Receivables, all monies due or paid in
respect of the Receivables after the related Cut-off Date, all rights under each
Insurance Policy in respect of the Receivables (but not the obligation to make
any payment thereunder to the Insurer or for taxes on premiums paid or payable
thereon), all rights of the Company under the Servicing Agreement, each Sale
Assignment and the Sale Agreement, including AutoBond's assigned rights under
the Dealer Agreements and any Automobile Loan Sale Agreement, all documents
contained in the Loan Files relating to the Receivables, all monies due or to
become due and all amounts received with respect thereto and all related rights
and benefits (but not obligations) and all proceeds of the foregoing.
Trust Accounts: the Collection Account, the Cash Reserve Account and
any other account so designated with respect to such Series.
Trust Estate: all money, instruments and other property and rights
subject to the lien of this Indenture, including all proceeds thereof.
Trustee: the Person named as the "Trustee" in the first paragraph of
this instrument or in an indenture supplemental hereto with respect to a Series,
in each case until a successor Person shall have become the Trustee pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Person; provided, that the provisions of Section 7.07, as
applicable to any Person at any time serving as Trustee hereunder, shall survive
the termination of such Person's status as Trustee hereunder and the succession
of any other Person to such status.
Trustee Fee Rate: 0.05% per annum.
UCC: the Uniform Commercial Code as in effect in the relevant state.
Unpaid Principal Balance: with respect to any Auto Loan as of any
Determination Date, (a) for an Auto Loan bearing interest calculable on a simple
interest basis, the unpaid principal amount for such Auto Loan or (b) for a
Precomputed Receivable, the Net Principal Balance, in each case as of the end of
the most recent Due Period; provided that, for any Auto Loan where the Net
Unrealized Amount equals the Unpaid Principal Balance, such Unpaid Principal
Balance shall thereafter equal zero (other than for purposes of calculating the
Repurchase Price, Net Unrealized Amounts and other items designated for such
Series).
VSI Policy: any Vendor's Single Interest Insurance Policy issued by
an Insurer, as listed on Schedule 2 (as modified from time to time) and
delivered to the Trustee, insuring against risk of physical damage on the
Financed Vehicles, and designated as applicable for a particular Series.
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SECTION 1.02 Compliance Certificates and Opinions.
Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by the Company to the Trustee to take
any action under any provision of this Indenture, other than any request that
(a) the Trustee authenticate the Notes specified in such request, (b) the
Trustee invest moneys in any of the Trust Accounts pursuant to the written
directions specified in such request, or (c) the Trustee pay moneys due and
payable to the Company hereunder to the Company's assignee specified in such
request, the Trustee shall require the Company to furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of satisfaction of the
conditions precedent thereto is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
SECTION 1.03 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company delivered to
the Trustee may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such officer's certificate or
opinion and any Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company as to such factual matters unless such
officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any Opinion of Counsel may be based on the written opinion of
other counsel, in which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Company shall
deliver any document as a condition of
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the granting of such application, or as evidence of compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Company to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Trustee's right to rely
upon the truth and accuracy of any statement or opinion contained in any such
document as provided in Section 7.01(b).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default, Event of
Administrator Termination or Event of Servicing Termination is a condition
precedent to the taking of any action by the Trustee at the request or direction
of the Company, then, notwithstanding that the satisfaction of such condition is
a condition precedent to the Company's right to make such request or direction,
the Trustee shall be protected in acting in accordance with such request or
direction if it does not have knowledge of the occurrence and continuation of
such Default or Event of Default, Event of Administrator Termination or Event of
Servicing Termination. For all purposes of this Indenture, the Trustee shall not
be deemed to have knowledge of any Default or Event of Default, Event of
Administrator Termination or Event of Servicing Termination nor shall the
Trustee have any duty to monitor or investigate to determine whether a default
has occurred (other than an Event of Default of the kind described in Section
6.01(a)), Event of Administrator Termination or Event of Servicing Termination
unless a Responsible Officer of the Trustee shall have actual knowledge thereof
or shall have been notified in writing thereof by the Company, the Servicer, or
any Noteholder.
SECTION 1.04 Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 7.01) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
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(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the holder of any Note shall bind every future holder of
the same Note and the holder of every Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder and the revisions
pursuant hereto for the benefit of such Noteholder; provided that nothing
contained in this Section 1.04(d) shall be deemed to confer upon the Trustee any
duty or power to vote on behalf of the Noteholders with respect to any matter on
which the Noteholders have a right to vote pursuant to the terms of this
Indenture.
SECTION 1.05 Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any
event, or the mailing of any report to Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy to each Noteholder
affected by such event or to whom such report is required to be mailed, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to Noteholders
is mailed, neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed, to any particular Noteholder shall affect the
sufficiency of such notice or report with respect to other Noteholders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
(b) In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.05(a), of any event or any report to
Noteholders when such notice or report is required to be delivered pursuant to
any provision of this Indenture, then such notification or delivery as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.
SECTION 1.06 Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 1.07 Successors and Assigns.
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All covenants and agreements in this Indenture by each of the
Company, the Administrator or the Trustee shall bind its respective successors
and permitted assigns, whether so expressed or not.
SECTION 1.08 GOVERNING LAW.
THIS TRUST INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. UNLESS MADE
APPLICABLE IN A SUPPLEMENT HERETO, THIS TRUST INDENTURE IS NOT SUBJECT TO THE
TRUST INDENTURE ACT OF 1939 AND SHALL NOT BE GOVERNED THEREBY AND CONSTRUED IN
ACCORDANCE THEREWITH.
SECTION 1.09 Legal Holidays.
In any case where any Payment Date or the Stated Maturity or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) such payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such Payment Date, Stated Maturity, or other date on which principal of
or interest on any Note is proposed to be paid, provided that no interest shall
accrue for the period from and after such Payment Date, Stated Maturity, or any
other date on which principal of or interest on any Note is proposed to be paid,
as the case may be, until such next succeeding Business Day.
SECTION 1.10 Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 1.11 Inspection.
The Company agrees that, on reasonable prior notice, it will permit
the representatives of the Trustee or any Noteholder holding Notes evidencing at
least 25% of the Outstanding Principal Amount of the Notes of any Series, during
the Company's normal business hours, to examine all of the books of account,
records, reports and other papers of the Company, to make copies thereof and
extracts therefrom, and to discuss its affairs, finances and accounts with its
officers, employees and independent accountants (and by this provision the
Company hereby authorizes its accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing or evaluating the
financial condition or affairs of the Company or the performance of and
compliance with the covenants and undertakings of the Company and the
Administrator in this Indenture, the Sale Agreement and the Servicing Agreement
or any of the other documents referred to herein or therein. Any expense
incident to the exercise by the Trustee at any time or any Noteholder during the
continuance of any Default or Event of Default,
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of any right under this Section 1.11 shall be borne by the Company. Nothing
contained herein shall be construed as a duty of the Trustee to perform such
inspection.
SECTION 1.12 Survival of Representations and Warranties.
The representations, warranties and certifications of the Company
made in this Indenture or in any certificate or other writing delivered by the
Company pursuant hereto shall survive the authentication and delivery of the
Notes hereunder.
SECTION 1.13 Security Forms.
The Notes of each Series shall be in such form as shall be
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. If the form of Notes of any Series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 2.03 for the
authentication and delivery of such Notes.
The definitive Notes shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Notes, as evidenced by their execution of such
Notes.
ARTICLE 2.
THE NOTES
SECTION 2.01 General Provisions.
(a) Amount Unlimited; Issuable in Series; Denominations. The
aggregate principal amount of Notes which may be authenticated and delivered
under this Indenture is unlimited.
The Notes may be issued in one or more Series. Pursuant to an
Exchange permitted under Section 13.06, there shall be established in one or
more indentures supplemental hereto, prior to the issuance of Notes of any
Series (other than the Variable Funding Notes established pursuant to Article
13):
(i) the title of the Notes of the Series (which shall distinguish
the Notes of the Series from Notes of any other Series) and the
designation of each Class, if any, within such Series;
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(ii) any limit upon the aggregate principal amount of the Notes of
the Series which may be authenticated and delivered under this Indenture
(except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes of the Series
pursuant to Sections 2.04, 2.05 or 9.05 and except for any Notes which,
pursuant to Section 2.02, are deemed never to have been authenticated and
delivered hereunder);
(iii) the Person to whom any interest or principal on a Note of the
Series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Notes) is registered at the close of
business on the Record Date for such interest;
(iv) the Payment Date or Dates on which the principal of any Notes
of the Series is payable and the amount of principal payable on such date
or dates;
(v) the rate or rates at which any Notes of the Series shall bear
interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable;
(vi) the designation of the Lockbox Account and Trust Accounts
specific to such Series;
(vii) the designation of Trust Assets allocable to such Series and
the Cutoff Date or Dates applicable thereto;
(viii) any form of credit enhancement, including surety bonds,
letters of credit, derivative contracts, guarantees or cash reserve
accounts applicable to such Series (as required by the applicable Rating
Agencies);
(ix) the priority of payments to Noteholders of such Series and to
the Trustee, the Servicer, the Collection Agent, any providers of credit
enhancement, liquidity or hedging contracts, the Company and any other
party with an interest in the proceeds of the allocated Trust Assets;
(x) the applicable Servicing Agreement and the Servicer and
Collection Agent thereunder, if other than AutoBond;
(xi) the Trustee;
(xii) representations and warranties of the Company with respect to
the allocated Trust Assets, as customarily required for such Series;
(xiii) the place or places where the principal of and any premium
and interest on any Notes of the Series shall be payable;
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(xiv) if other than denominations of $100,000 and any integral
multiple of $1,000 in excess thereof, the denominations in which any Notes
of the Series shall be issuable;
(xv) the forms of the Notes of such Series;
(xvi) if applicable, that any Notes of the Series shall be issuable
in whole or in part in the form of one or more Global Notes and, in such
case, the respective Depositaries for such Global Notes, the form of any
legend or legends which shall be borne by any such Global Security and any
circumstances in which any such Global Security may be exchanged in whole
or in part for Notes registered, and any transfer of such Global Security
in whole or in part may be registered, in the name or names of Persons
other than the Depositary for such Global Security or a nominee thereof;
(xvii) any addition to or change in the Events of Default which
applies to any Notes of the Series and any change in the right of the
Trustee or the requisite Holders of such Notes to declare the principal
amount thereof due and payable pursuant to Section 6.02 or to liquidate
all or a portion of the Trust Estate (in each case, only to the extent
customarily required for such a Series);
(xviii) any addition to or change in the covenants which applies to
Notes of the Series (in each case, only to the extent customarily required
for such a Series); and
(xix) any other terms of the Series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.02).
(b) Denominations. The Notes of each Series shall be issuable only
in registered form without coupons and only in such denominations as shall be
specified as contemplated by Section 2.01(a).
(c) Principal Payments; Clean-up Call. For each Payment Date,
payments of principal (the "Principal Payments") on the Notes will be made in
accordance with Sections 3.04 or 6.06, as applicable. Except as otherwise
provided in Section 6.02, no part of the principal of any Note shall be paid
prior to the Payment Date on which such principal is due in accordance with the
preceding provisions of this Section 2.01(b), except that, upon the
Administrator's direction, the Company may redeem the Notes of any Series in
their entirety, without premium, as of any Payment Date on which the sum of the
Outstanding Principal Amount of the Notes of such Series is less than or equal
to ten percent (10%) of the initial Outstanding Principal Amount of the Notes of
such Series (after giving effect to all Principal Payments on such Payment
Date). The Administrator will give notice of any such redemption to each
Noteholder and the Trustee at least 30 days before the Payment Date fixed for
such prepayment by certified mail return receipt requested, hand delivery or
overnight courier. Notice of such prepayment having been so given, the remaining
unpaid principal as of the Payment Date fixed for prepayment together with all
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interest accrued and unpaid to such Payment Date, shall become due and payable
on such Payment Date.
(d) Interest Payments. For each Payment Date, the interest due and
payable (the "Interest Payments") with respect to any Series of Notes will be
the interest that has accrued on the Notes during the previous Due Period, plus
unpaid interest from prior Due Periods, at the designated interest rates.
Interest Payments will be made in accordance with Sections 3.04 and 6.06, as
applicable. Interest will be calculated as designated with respect to a Series.
SECTION 2.02 Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the Company by
its Chairman, President or Vice Chairman.
(b) Any Note bearing the signature of an individual who was at the
time of execution thereof a proper officer of the Company shall bind the
Company, notwithstanding that such individual ceases to hold such office prior
to the authentication and delivery of such Note or did not hold such office at
the date of such Note.
(c) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Each Note shall be dated the date of
its authentication.
(d) The Notes may from time to time be executed by the Company and
delivered to the Trustee for authentication together with a Company Request to
the Trustee directing the authentication and delivery of such Notes and
thereupon the same shall be authenticated and delivered by the Trustee in
accordance with such Company Request.
SECTION 2.03 Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust Office
a register (the "Note Register") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
No transfer of any Note may be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act and an
effective registration or a qualification under applicable state securities
laws, or is made in a transaction that does not require such registration or
qualification because the transfer satisfies one of the following: (i) such
transfer is in compliance with Rule 144A under the Securities Act, to a person
who the transferor reasonably believes is a Qualified Institutional Buyer (as
defined in Rule 144A) that is purchasing for its own account or for the account
of a Qualified Institutional Buyer and to whom
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notice is given that such transfer is being made in reliance upon Rule 144A
under the Securities Act as certified by such transferee in a letter in the form
of Exhibit D hereto; (ii) after the appropriate holding period, such transfer is
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 under the Securities Act; (iii) such transfer is to a transferee who is
an accredited investor in a transaction exempt from the registration
requirements of the Securities Act, in each case in accordance with any
applicable securities laws of any State of the United States or (iv) such
transfer is otherwise exempt from the registration requirements of the
Securities Act. The Trustee will require, in order to assure compliance with
such laws, that the Noteholder's prospective transferee referred to in the
preceding clauses (iii) or (iv) deliver an investment letter certifying to the
Company and the Trustee as to the facts surrounding such transfer in the form of
Exhibit E hereto. Except in the case of a transfer of Notes to a transferee
referred to in the preceding clause (i) or, in general, a transfer that is to be
made after two years from the Issuance Date, the Administrator shall require an
opinion of counsel satisfactory to it to the effect that such transfer may be
made pursuant to an exemption from the Securities Act without such registration
(which opinion of counsel shall not be an expense of the Trustee, the
Administrator or the Company). None of the Company, the Administrator or the
Trustee is obligated to register or qualify the Notes under the Securities Act
or any other securities law or to take any action not otherwise required under
this Indenture to permit the transfer of any Note without registration.
Neither the Trustee nor the Note Registrar shall effect the
registration of transfer of any Note, if after giving effect to such transfer,
the Notes of such Series would be held by more than ninety-eight Noteholders.
(b) Subject to Section 2.03(a), upon surrender for registration of
transfer of any Note at the office of the Company designated pursuant to Section
8.02 for such purpose, the Company shall execute and the Trustee upon request
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate original principal amount.
(c) Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer
or exchange of Notes, but the Company or the Trustee may require payment by the
transferor of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Notes, other than exchanges pursuant to Section 9.05 not involving any
transfer.
(e) The Administrator agrees to cause the Company, and the Company
agrees, to provide such information as required under Rule 144A under the Act so
as to allow resales of Notes to Qualified Institutional Buyers in accordance
herewith.
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SECTION 2.04 Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefore a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless then, in the absence of actual notice
to the Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Company in its discretion may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this Section,
the Company or the Trustee may require the payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed as
a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section 2.04 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
(f) The provisions of this Section 2.04 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.05 Payment of Interest and Principal; Rights Preserved.
(a) Any installment of interest or principal, payable on any Note
that is punctually paid or duly provided for by or on behalf of the Company on
the applicable Payment Date shall be paid to the Person in whose name such Note
was registered at the close of business on the Record Date for such Payment Date
by check mailed to the address specified in the Note Register, or upon the
request of a holder of more than $1,000,000 original principal amount of Notes,
by wire transfer of federal funds to the account and number specified in the
Note Register, in each case on such Record Date for such Person (which shall be,
as to each original purchaser of the Notes, the account and number specified by
such purchaser to the Trustee in writing, or, if no such account or number is so
specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date).
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(b) All reductions in the principal amount of a Note effected by
payments of installments of principal made on any Payment Date shall be binding
upon all holders of such Note and of any Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof, whether or not
such payment is noted on such Note. All payments on the Notes shall be paid
without any requirement of presentment but each holder of any Note shall be
deemed to agree, by its acceptance of the same, to surrender such Note at the
Corporate Trust Office against payment of the final installment of principal of
such Note.
SECTION 2.06 Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee, and any agent of the Company or the Trustee may treat the
registered Noteholder as the owner of such Note for the purpose of receiving
payment of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee, nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION 2.07 Cancellation.
All Notes surrendered for registration of transfer or exchange or
following final payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it. The
Company may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes held by the Trustee may be
disposed of in the normal course of its business or as directed by a Company
Order.
SECTION 2.08 Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. In the event the Trustee no longer serves as the Note Registrar,
the Company (or any other obligor upon the Notes) shall furnish to the Trustee
at least five Business Days before each interest payment date (and in all events
in intervals of not more than 6 months) and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Noteholders.
SECTION 2.09 Treasury Notes.
In determining whether the Noteholders of the required Outstanding
Principal Amount of the Notes have concurred in any direction, waiver or
consent, Notes held or redeemed by the Company or any other obligor upon the
Notes or held by an Affiliate of the Company shall be considered as though not
outstanding, except that for the purposes of determining whether the
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Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a corporate trust officer of the Trustee knows are so owned
shall be so disregarded.
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS
SECTION 3.01 Trust Accounts; Investments by Trustee.
(a) On or before the Issuance Date for any Series, the Trustee shall
establish in the name of the Trustee for the benefit of the Noteholders of such
Series and the Company to the extent of their interests therein as provided in
this Indenture and in the Servicing Agreement, the Trust Accounts designated for
such Series, which accounts shall be Eligible Accounts maintained at the
Corporate Trust Office.
Subject to the further provisions of this Section 3.01(a), the Trustee shall,
upon receipt or upon transfer from another account, as the case may be, deposit
into such accounts all amounts received by it which are required to be deposited
therein in accordance with the provisions of this Indenture. All such amounts
and all investments made with such amounts, including all income and other gain
from such investments, shall be held by the Trustee in such accounts as part of
the Trust Estate as herein provided, subject to withdrawal by the Trustee in
accordance with, and for the purposes specified in the provisions of, this
Indenture.
(b) The Trustee shall hold in trust but shall not be required to
deposit in any account specified pursuant to Section 3.01(a) any payment
received by it until such time as the Trustee shall have identified to its
reasonable satisfaction the nature of such payment and, on the basis thereof,
the proper account or accounts into which such payment is to be deposited. In
determining into which of the accounts, if any, referred to above any amount
received by the Trustee is to be deposited, the Trustee may conclusively rely
(in the absence of bad faith on the part of the Trustee) on the advice of the
Administrator. Unless the Trustee is advised differently in writing by the
Administrator, the Trustee shall assume that any amount remitted to it is to be
deposited into the designated Collection Account pursuant to Section 3.03. The
Trustee may establish from time to time such deadline or deadlines as it shall
determine are reasonable or necessary in the administration of the Trust Estate
after which all amounts received or collected by the Trustee on any day shall
not be deemed to have been received or collected until the next succeeding
Business Day.
(c) None of the Administrator, the Trustee nor the institution then
acting as Trustee shall have any right of set-off with respect to any Lockbox
Account or any Trust Account, or any investment therein.
(d) So long as no Event of Default shall have occurred and be
continuing, all or a portion of the amounts in any Trust Account shall be
invested and reinvested by the Trustee pursuant to an Administrator Order in one
or more Eligible Investments. Subject to the
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restrictions on the maturity of investments set forth in Section 3.01(f), each
such Administrator Order may authorize the Trustee to make the specific Eligible
Investments set forth therein, to make Eligible Investments from time to time
consistent with the general instructions set forth therein, or to make specific
Eligible Investments pursuant to instructions received in writing or by
telegraph or facsimile transmission from the employees or agents of the
Administrator, as the case may be, identified therein, in each case in such
amounts as such Administrator Order shall specify.
(e) In the event that either (i) the Administrator shall have failed
to give investment directions to the Trustee by 9:30 A.M., New York City time on
any Business Day on which there may be uninvested cash or (ii) an Event of
Default shall be continuing, the Trustee shall promptly invest and reinvest the
funds then in the designated Trust Account to the fullest extent practicable in
one or more Eligible Investments, in accordance with Section 3.02(d). All
investments made by the Trustee shall mature no later than the maturity date
therefore permitted by Section 3.01(f) unless the Trustee shall have received
written confirmation from each Rating Agency that the liquidation of such
Eligible Investments prior to their respective maturity dates will not result in
the reduction or withdrawal of such Rating Agency's then-current rating of the
Notes of such Series.
(f) No investment of any amount held in any Trust Account shall
mature later than the Deposit Date preceding the Payment Date which is scheduled
to occur immediately following the date of investment. All income or other gains
(net of losses) from the investment of moneys deposited in any Trust Account
shall be deposited by the Trustee in such account immediately upon receipt.
(g) Any investment of any funds in any Trust Account and any sale of
any investment held in such accounts, shall be made under the following terms
and conditions:
(i) each such investment shall be made in the name of the Trustee or
in the name of a nominee of the Trustee, in each case in such manner as
shall be necessary to maintain the identity of such investments as assets
of the Trust Estate;
(ii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Trustee or its agent and the Trustee
shall have sole possession of such instrument, and all income on such
investment; and
(iii) the proceeds of any sale of an investment shall be remitted by
the purchaser thereof directly to the Trustee for deposit in the account
in which such investment was held.
(h) If any amounts are needed for disbursement from any Trust
Account and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of an Administrator Order for the
liquidation of investments held therein in an amount sufficient to provide the
required funds, the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such accounts.
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(i) The Trustee shall not in any way be held liable by reason of any
insufficiency in any Trust Account resulting from losses on investments made in
accordance with the provisions of this Section 3.01 (but the institution serving
as Trustee shall at all times remain liable for its own debt obligations, if
any, constituting part of such investments). The Trustee shall not be liable for
any investment made by it in accordance with this Section 3.01 on the grounds
that it could have made a more favorable investment or a more favorable
selection for sale of an investment. The Trustee may trade with itself or an
Affiliate in the purchase or sale of Eligible Investments.
SECTION 3.02 Establishment and Administration of the Lockbox and the
Collection Accounts. (a) The Administrator shall cause to be established and
maintained at all times a Lockbox and related Lockbox Account pursuant to the
designated Lockbox Agreement for such Series, of which such Lockbox and Lockbox
Account shall be in the name of, and shall be maintained on behalf of the
Trustee, for the benefit of the allocated Trust Estate. Each Collection Account
shall be an Eligible Account initially established at the office of the Trustee,
bearing a designation clearly indicating that the funds deposited therein are
held solely for the benefit of the Series. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in each Lockbox
Account and each Collection Account and in all proceeds thereof. Each Lockbox
Account and each Collection Account shall be under the sole dominion and control
of the Trustee for the benefit of the Noteholders as their interests appear in
the designated Trust Estate. The Administrator or Servicer agrees to cause the
Lockbox Bank to sweep funds from each Lockbox to the related Lockbox Account on
a daily basis and from each Lockbox Account to the related Collection Account at
least once each week. The Administrator agrees to require, and to cause the
Servicer to require, that all Payments by Obligors on Auto Loans be made to the
Lockbox (and that only Payments on Receivables will be received in the Lockbox
Account and no other funds other than funds in which the Trust Estate has an
interest hereunder will be commingled therein). If, at any time, the Collection
Account ceases to be an Eligible Account, the Administrator and the Trustee
shall within 5 Business Days establish a new Collection Account which shall be
an Eligible Account, transfer any cash and/or any investments to such new
Collection Account and from the date such new Collection Account is established,
it shall be the "Collection Account".
(b) The Administrator shall cause the Servicer to deposit into the
applicable Collection Account, as soon as practicable, but in no event later
than the close of business on the second Business Day after the date of receipt
thereof (i) all amounts representing Payments (net of insufficient fund fees and
overpayment credits), if any, collected by the Servicer or anyone else and (ii)
all Recoveries on Receivables received by the Servicer during such Due Period.
(c) Each of the Administrator and the Company shall immediately
deposit and pay directly into the applicable Lockbox Account any Payments it may
receive, all Recoveries on Receivables and the Repurchase Price of Receivables
repurchased by it pursuant to Section 11.03 hereof, with a written notice to the
Servicer of such remittance.
(d) The Administrator shall direct the Trustee in writing to invest,
and the Trustee shall so invest, the amounts in each Collection Account in
specified Eligible Investments that mature not later than the next succeeding
Deposit Date; provided, that any Eligible Investment as
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to which the Trustee is the obligor in its individual capacity may mature not
later than such Payment Date. If the Trustee receives no such direction, such
amounts shall be invested in mutual funds maintained by the Trustee (or an
Affiliate of the Trustee), provided such mutual funds constitute Eligible
Investments; and provided, further, that such mutual funds maintain at all times
a net asset value of $1 per share. The Trustee may trade with itself or an
Affiliate in the purchase or sale of Eligible Investments. The Trustee shall not
be liable for any losses suffered on amounts invested hereunder so long as such
investments are Eligible Investments satisfying the timing requirements
specified in the first sentence of this Section 3.02(d).
(e) The Administrator shall instruct the Trustee in writing to make
withdrawals and payments from each Collection Account for the purposes of
carrying out the Administrator's and the Trustee's duties hereunder.
SECTION 3.03 Establishment and Administration of Cash Reserve
Accounts. If so designated with respect to a Series, on or prior to each
Issuance Date, the Administrator shall cause to be established and maintained at
all times a Cash Reserve Account on behalf of and in the name of the Trustee for
the benefit of the Trust Estate allocated to such Series. Each Cash Reserve
Account shall be an Eligible Account initially established at the offices of the
Trustee. If, at any time, the Cash Reserve Account ceases to be an Eligible
Account, the Administrator on behalf of the Trustee shall within 5 Business Days
establish a new Cash Reserve Account which shall be an Eligible Account,
transfer any cash and/or any investments to such new Cash Reserve Account and
from the date such new Cash Reserve Account is established, it shall be the
"Cash Reserve Account" in the name of the Trustee for the benefit of the Trust
Estate. If applicable for such Series, on the Issuance Date, the Company shall
deposit an amount equal to the Initial Cash Reserve Account Deposit into the
Cash Reserve Account which amounts shall be allocated in the manner provided
herein.
(a) The Administrator shall deliver or cause to be delivered to the
Trustee no later than the Business Day following any applicable Determination
Date a written notice (a "Cash Reserve Account Withdrawal Notice") requesting
the withdrawal and application of funds in each Cash Reserve Account in
accordance with the terms of the designated Series, and the Trustee shall so
withdraw and allocate such funds.
(b) Funds on deposit in the Cash Reserve Account shall be invested
in accordance with Section 3.01.
SECTION 3.04 Distributions.
(a) Distributions from that portion of Trust Assets allocated to
such Series will be made by the Trustee in accordance with the terms of such
Series.
(b) On the first Business Day following the Payment Date on which
all Noteholders of a given Series have been paid in full, all amounts held in
the applicable Trust Accounts, if any, shall be disbursed to the Company and all
interests of the Trust Estate in all Receivables allocated to such Series which
have an outstanding balance shall be reconveyed by the Trustee to the Company.
Such disbursement and reconveyance shall constitute the final
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payment to which the Company is entitled with respect to its Company Interest
pursuant to the terms of this Indenture.
SECTION 3.05 Reports to Noteholders. On each Payment Date,
concurrently with the distribution or allocation to the Noteholders, the Trustee
shall furnish to the Noteholders (with a copy to each Rating Agency), a report
(which the Administrator covenants to timely prepare and deliver to the Trustee
at least one Business Day prior to such Payment Date) prepared by the
Administrator substantially in the form designated for such Series. Such report
shall include a certification (i) that the information contained in such report
is accurate, (ii) that no Event of Administrator Termination, or event that with
notice or lapse of time or both would become an Event of Administrator
Termination, has occurred, or if an Event of Administrator Termination or such
event has occurred and is continuing, specifying the Event of Administrator
Termination or such event and its status and (iii) that the representations and
warranties of the Administrator contained in the Servicing Agreement are true
and correct as though made on and as of the date of such certificate.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall have no duty or obligation with respect to the information
provided via the monthly computer tape or diskette, including, without
limitation, to verify, monitor or otherwise supervise or administer the
performance of the Servicer or the Administrator.
SECTION 3.06 Returned Payments. If the principal amount of any Note
or any other amount payable under any Note (including interest) shall have been
reduced by any distribution or allocation of any portion of collections or other
Payments on Receivables, and thereafter such distribution or allocation is
rescinded or must otherwise be returned by or on behalf of the recipient thereof
to the Company, the Trust Estate or any other creditor of the Company for any
reason, such principal or other amount distributed or allocated in respect of
such Note shall be increased by the amount of such distribution or allocation to
the extent so returned, all as though such distribution or allocation had not
been made.
ARTICLE 4.
THE TRUST ESTATE
SECTION 4.01 Acceptance by Trustee and Agreement to Act as
Custodian. (a) Pursuant to each Collateral Assignment, the Trustee will
acknowledge the conveyance of the Transferred Assets and the receipt of Loan
Documents and other Transferred Assets conveyed by the Company pursuant to such
Collateral Assignment and the Trustee will hold such Receivables, the Loan
Documents and all other Trust Assets comprising the Trust Estate, to the extent
allocated to a Series, in trust for the benefit of the Noteholders of such
Series subject to the terms and provisions hereof.
(b) The Trustee shall perform its duties under this Section 4.01 and
hereunder on behalf of the Trust Estate and for the benefit of the Noteholders
in accordance with the terms of this Indenture and applicable law and, in each
case, taking into account its other obligations hereunder, but without regard
to:
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(i) any relationship that the Trustee or any Affiliate of the
Trustee may have with the related Obligor;
(ii) the ownership of any Note by the Trustee or any Affiliate of
the Trustee;
(iii) the Trustee's right to receive compensation for its services
hereunder or with respect to any particular transaction; or
(iv) the ownership, or holding in trust for others, by the Trustee
of any other automobile loans or property.
(v) The Trustee shall promptly report to the Administrator, each
Rating Agency and the Noteholders any failure by it to hold the Loan
Documents as herein provided and shall promptly take appropriate action to
remedy any such failure but shall be liable therefor only to the extent
(i) any such failure is caused by the acts or omissions of the Trustee and
(ii) such remedial action is or was at the time of such failure otherwise
within its capabilities or control. As custodian, the Trustee shall have
and perform the following powers and duties:
(A) hold the Loan Documents for the benefit of the Noteholders
of the allocated Series, maintain accurate records pertaining to
each Receivable to enable it to comply with the terms and conditions
of this Indenture, and maintain a current inventory thereof;
(B) implement policies and procedures in accordance with the
Trustee's normal business practices with respect to custody of the
Loan Documents so that the integrity and physical possession of the
Loan Documents will be maintained; and
(C) attend to all details in connection with maintaining
custody of the Loan Documents on behalf of the Trust Estate.
(vi) In acting as custodian of the Loan Documents and as Trustee
hereunder, the Trustee agrees further that it does not and will not have
or assert any interest in the Trust Assets in its individual capacity.
Promptly upon the Trustee's receipt thereof, the Trustee on behalf of the
Trust Estate shall mark the Loan Documents and its master data processing
records to reflect that the Trust Estate has been assigned the Receivables
and that such Receivables have been allocated to a particular Series as
provided herein and in the applicable supplemental indenture.
(vii) The Trustee agrees to maintain the related Loan Documents at
its office located in Glen Allen, Virginia or at such other offices of the
Trustee or its agent as shall from time to time be identified by prior
written notice to the Administrator and the Noteholders; provided that
prior to relocating any Loan Documents at any of such other offices, the
Trustee shall have obtained an Opinion of Counsel as to the Trustee's
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perfected security interest in the Auto Loans. Subject to the foregoing,
the Trustee may temporarily move individual Loan Documents or any portion
thereof without notice as necessary to conduct collection and other
servicing activities.
SECTION 4.02 Subsequent Transfers. (a) On each Assignment Date the
Company shall request that the Trust Estate acquire and the Trust Estate shall
so acquire Receivables (each, a "Transfer") from the Company on the terms and
subject to the conditions of this Indenture; provided, however, that the
conditions specified in Section 4.03 shall have been satisfied; and provided,
further, that the Administrator may cause the Company to contribute (i), if
applicable, Receivables that satisfy Section 11.02(a) to the Trust Estate as
allocated to a Series on any Payment Date and (ii) funds for deposit in a Cash
Reserve Account at any time.
(b) On any Business Day which is an Assignment Date after the
Issuance Date for a Series, the Company shall give the Administrator, the
Trustee and the Servicer written notice of each Transfer (in each case, a
"Transfer Notice") specifying the Unpaid Principal Balance of each Receivable
transferred thereby to the Trust Estate on such Assignment Date. The
Administrator shall independently confirm and hereby represents and warrants as
to, and the Trustee may, without any duty to make any independent investigation
with respect thereto, rely on, the facts set forth in such Transfer Notice.
(c) On each Assignment Date following its delivery of a Transfer
Notice, the Company will complete, execute and deliver a Collateral Assignment
to the Administrator and the Trustee. The Administrator and the Trustee, as
custodian for and on behalf of the Trust Estate, shall thereupon execute such
Collateral Assignment and deliver executed copies thereof to each other and to
the Company and the Noteholders.
(d) Following delivery of a duly executed Collateral Assignment,
subject to the satisfaction of the conditions set forth in Sections 4.02(a) and
4.03, all Receivables specified in such Collateral Assignment (including all
Payments allocable to principal and interest received after the related Cut-off
Date) will be assigned to the Trustee on behalf of the Trust Estate and such
Receivables shall become Trust Assets and part of the Trust Estate, as allocated
to a particular Series.
SECTION 4.03 Conditions Precedent to All Transfers.
Each Transfer shall be subject to the conditions precedent that:
(a) On the related Assignment Date (including the initial Transfer
on the date hereof), the Company (with respect to itself and the Receivables)
and the Administrator shall have certified and are deemed to have represented
and warranted hereunder and shall so represent and warrant in the related
Collateral Assignment that:
(i) the representations and warranties (A) of the Company and
AutoBond set forth in Sections 11.01 and 11.02 hereof and (B) of the
Administrator set forth in the applicable Servicing Agreement, are true
and correct on and as of such date, before and after giving effect to such
Transfer, as though made on and as of such date;
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(ii) no event has occurred, or would result from such Transfer or
from the application of the proceeds therefrom, which constitutes an Event
of Default or would constitute an Event of Default but for the requirement
that notice be given or time elapse or both;
(iii) each of the Company and AutoBond is in material compliance
with each of its covenants set forth herein and in all Related Documents;
(iv) no event has occurred which constitutes an Event of Servicing
Termination or would constitute an Event of Servicing Termination but for
the requirement that notice be given or time elapse or both; and
(v) no event has occurred which constitutes an Event of
Administrator Termination or would constitute an Event of Administrator
Termination but for the requirement that notice be given or time elapse or
both.
(b) The Company shall have delivered to the Trustee (with a copy to
each Rating Agency and the Noteholders of the applicable Series) as custodian
for and on behalf of the Trust Estate an executed copy of the related Collateral
Assignment and an Officer's Certificate stating and representing and warranting
(and hereby represents and warrants) that all conditions precedent to the
effectiveness thereof as specified herein shall have been satisfied;
(c) The Trustee shall have confirmed receipt of the Loan Documents
with respect to the Receivables subject to such Transfer; and
(d) No Responsible Officer of the Trustee has actual knowledge that
any conditions to such Transfer have not been fulfilled and no Noteholder shall
have notified the Trustee of the same, and the Trustee shall have received such
other documents, opinions, certificates and instruments as any Noteholder or the
Trustee may request.
SECTION 4.04 Grant of Security Interest; Tax Treatment. (a) For
purposes of legal form and the Intended Tax Characterization, it is the
intention of the parties hereto that this Indenture and each related Collateral
Assignment shall constitute a security agreement under applicable law, and that
the Company has granted to the Trustee on behalf of the Trust Estate for the
benefit of the Noteholders, the Company and other creditors of the Trust Estate,
a first priority perfected security interest in all of the Company's right,
title and interest in, to and under the Transferred Assets and the other Trust
Assets. The Trustee shall treat the Trust Estate as a security device for tax
purposes and shall not file tax returns or obtain an employer identification
number on behalf of the Trust Estate; provided, however, that if any Class of
Notes is recharacterized as equity interests in the Trust Estate for tax
purposes, the parties hereto agree to treat the Trust Estate (for tax purposes
only) as a partnership under the New York Uniform Partnership Act in which the
Company was a general partner and each such recharacterized Noteholder was a
limited partner. The provisions of this Indenture shall be construed in
furtherance of the foregoing intended tax treatment. The conveyance by the
Company of the Transferred Assets to the Trustee on behalf of the Trust Estate
on each Assignment Date shall not
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constitute and are not intended to result in an assumption by the Trustee or any
Noteholder (other than the Company or any Affiliate of any obligations at the
Trust Estate or of the Company) of any obligation of the Company or the
Administrator to the Obligors, the insurers under any insurance policies
including the VSI Policies, or any other Person in connection with the
Transferred Assets.
(b) It is the intention of the parties hereto that, with respect to
all Taxes, the Notes will be treated as indebtedness of the Company to the
Noteholders secured by the Transferred Assets (the "Intended Tax
Characterization"). The Company, the Administrator and the Trustee, by entering
into this Agreement, and each Noteholder by the purchase of a Note, agree to
report such transactions for purposes of all Taxes in a manner consistent with
the Intended Tax Characterization.
(c) The Company and the Administrator shall take no action
inconsistent with the Trustee's interest in the Transferred Assets and shall
indicate or shall cause to be indicated in its books and records held on its
behalf that each Receivable and the other Transferred Assets has been assigned
to the Trustee on behalf of the Trust Estate and the Noteholders.
SECTION 4.05 Further Action Evidencing Assignments. (a) The Company
and the Administrator each agrees that, from time to time, at its respective
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Administrator, the Servicer or the Trustee or Noteholders of a Series
with a Percentage greater than 50% may reasonably request, in order to perfect,
protect or more fully evidence the security interest in the Transferred Assets
allocated to such Series or to enable the Trustee to exercise or enforce any of
its rights hereunder, and under any Collateral Assignment. Without limiting the
generality of the foregoing, the Company will, without the necessity of a
request and upon the request of the Administrator or the Trustee, execute and
file (or cause to be executed and filed) such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate including, without
limitation, recording and filing UCC-1 financing statements, amendments or
continuation statements with the office of the Secretary of State of the state
of Nevada (and other locations): (i) each Assignment Date, and (ii) prior to the
effective date of any change of the name, identity or structure or relocation of
its chief executive office or any change that would or could affect the
perfection pursuant to any financing statement or continuation statement or
assignment previously filed or make any UCC-1 or continuation statement
previously filed pursuant to this Agreement seriously misleading within the
meaning of applicable provisions of the UCC (and the Company shall give the
Trustee at least 10 Business Days prior notice of any circumstance in (ii)
before the same occurs). The Company shall deliver promptly to the Trustee
file-stamped copies of any such filing.
(b) (i) The Company hereby grants to each of the Administrator and
the Trustee a power of attorney to execute all documents on behalf of the
Company as may be necessary or desirable to effectuate the foregoing and (ii)
AutoBond hereby grants to the Trustee a power of attorney to execute all
documents on behalf of AutoBond as may be necessary or desirable to effectuate
the foregoing; provided, however, that such grant shall not create a duty on the
Trustee
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to file, prepare, record or monitor or any responsibility for the contents or
adequacy of any such documents.
ARTICLE 5.
SERVICING OF TRUST ASSETS
SECTION 5.01 Appointment of Servicer. For each Series hereunder,
there shall be designated a Servicing Agreement for the servicing,
administration and collection of the Receivables and the Trustee shall enforce
the provisions thereof on behalf of the Noteholders.
SECTION 5.02 Appointment of Administrator; Monthly Administration
Fee. (a) AutoBond agrees to act as the Administrator under this Indenture and
the Noteholders by their acceptance of Notes consent to AutoBond acting as
Administrator subject to the terms and conditions hereof. AutoBond shall cease
to act as the Administrator hereunder with respect to any Series, in each case
after the determination of the Trustee or the holders of more than 50% of the
principal amount of the affected Notes upon the occurrence of an Event of
Administrator Termination under the related Servicing Agreement, whereupon the
Trustee shall assume the Administrator's duties hereunder (but not including
collection agent duties under the Servicing Agreement and the duties specified
in Section 5.03(a)(i)-(vi), which shall remain duties of AutoBond until a
successor to such duties is appointed) as additional Trustee duties. The
Administrator shall have no right to voluntarily resign from its duties and
obligations hereunder.
(b) The Administrator shall conduct the duties specified herein and
as specified in each Servicing Agreement (together, the "Administrator Duties")
in accordance with (i) customary and prudent business practices for the
performance of similar activities, all applicable laws, rules and regulations
and contracts with respect to it, its business and properties and all
Receivables, Insurance Policies, and other Trust Assets with respect thereto
and, (ii) to the extent consistent with the foregoing, in the same manner in
which, and the same care, skill, prudence and diligence with which, it performs
similar management and administrative services for its own account or on behalf
of other Persons giving due consideration to customary and prudent business
practices.
(c) As compensation for its services hereunder and under the
Servicing Agreement, subject to the terms and conditions hereof and thereof, the
Trustee shall remit to the Administrator such fees as may be designated from
time to time in respect of a particular Series.
SECTION 5.03 Duties and Responsibilities of the Administrator. (a)
In addition to the other duties specified in this Indenture and in the Servicing
Agreement, the Administrator Duties shall, on behalf of the Trust Estate,
consist of: (i) administering collections on the Receivables; (ii) arranging for
and administering repossessions of the Financed Vehicles related to the
Receivables; (iii) disposing of each Financed Vehicle related to a Receivable
whether following repossession or otherwise; (iv) maximizing collections of
Receivables, and filing of insurance claims under and in accordance with the
Insurance Policies (if any) with respect to each Auto Loan affected by a
repossession or otherwise; (v) delivering to the Trustee and to any
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Noteholder with a Percentage of at least 50% in respect of a Series upon the
request of such Noteholder the List of Receivables allocated to such Series as
amended from time to time, on each Assignment Date; and (vi) formulating the
Credit and Collection Policies, from time to time.
(b) Other than in connection with its duty as Collection Agent or
Servicer to effect liquidations of Financed Vehicles and its obligation to make
repurchases of Receivables hereunder, AutoBond shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon or written respect to, any Receivable (or any right
to receive income in respect thereof), or any Collection Account.
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01 Events of Default.
"Event of Default," wherever used herein with respect to Notes of
any Series, means any one of the following:
(a) (i) default in the making of Principal Payments or Interest
Payments in respect of any Note of that Series when such become due and payable,
and continuance of such default for one Business Day; or (ii) failure to make
any deposit when due hereunder or under the applicable Servicing Agreement and
continuance of such default for one Business Day; or
(b) failure of AutoBond to repurchase pursuant to Section 11.03 any
Auto Loans allocated to such Series, and such failure continues for 30 days; or
(c) default in the performance, or breach, of any covenant of the
Company or the Administrator in this Indenture and applicable to such Series
(other than a covenant dealing with a default in the performance of which or the
breach of which is specifically dealt with elsewhere in this Section 6.01) and
continuance of such default or breach for a period of 30 days after the earliest
of (i) any officer of the Company or the Administrator first acquiring knowledge
thereof, (ii) the Trustee's giving written notice thereof to the Company or
(iii) the holders of a majority of the then Outstanding Principal Amount of the
Notes of such Series giving written notice thereof to the Company and the
Trustee; or
(d) if any representation or warranty of the Company or the
Administrator made in this Indenture and applicable to such Series shall prove
to be incorrect in any material respect as of the time when the same shall have
been made, and such breach is not remedied within 30 days after notice of breach
from the Trustee or the holders of a majority of Outstanding Principal Amount of
the Notes of such Series; provided, however, that a breach of any representation
or warranty made by the Company or the Administrator in Section 11.02 with
respect to any of the Auto Loans or the interests in the Financed Vehicles shall
not constitute an Event of Default if the Company or the Administrator
repurchases such Receivables in accordance with Section 11.03(a); or
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(e) the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or similar official of the Company or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the Company's failure to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action; or
(g) an Event of Administrator Termination under the Servicing
Agreement applicable to such Series shall have occurred and be continuing; or
(h) any Transfer shall for any reason (other than pursuant to the
terms hereof) cease to create a valid and perfected first priority security
interest (within the meaning of the UCC) in the Auto Loans taken as a whole and
the related security and collections with respect thereto in favor of the
Trustee on behalf of the Trust Estate, or the applicable Note shall for any
reason cease to be entitled to the benefits of security interest (within the
meaning of the UCC) in the Receivables and related security and other
Transferred Assets allocated to such Series, to the extent of such Note's
purported interest therein; or
(i) AutoBond shall at any time cease to own, directly or indirectly,
at least 100% of the outstanding shares of common stock of the Company; or
(j) a judgment or judgments aggregating in excess of $250,000 shall
be entered against the Company and shall not be paid, stayed or dismissed within
30 days thereof; or
(k) any other Event of Default provided with respect to Notes of
that Series.
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SECTION 6.02 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default of the kind specified in Section 6.01(e)
or Section 6.01(f) occurs, the unpaid principal amount of the Notes of each
Series shall automatically become due and payable at par together with all
accrued and unpaid interest thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company. If an Event
of Default (other than an Event of Default of the kind described in Section 6.01
(e) or Section 6.01(f)) with respect to Notes of any Series occurs and is
continuing, then and in every such case the Trustee shall, if so directed by the
holders of Notes evidencing at least 66-2/3% of the then Outstanding Principal
Amount of the most senior Class of such Series (or if the Notes of such Class
are no longer Outstanding, the holders of Notes evidencing at least 66-2/3% of
the then Outstanding Principal Amount of the next most senior Class, and so on),
or the holders of at least 66-2/3% of the then Outstanding Principal Amount of
Notes of such Series may, declare the unpaid principal amount of all the Notes
of such Series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Noteholders), and upon any such
declaration such principal amount shall become immediately due and payable
together with all accrued and unpaid interest thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company.
(b) At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the holders of
a like percentage of Notes of such Series by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all Principal Payments on any Notes of such Series which
have become due otherwise than by such declaration of acceleration
and interest thereon from the date when the same first became due
until the date of payment or deposit at the appropriate Note
Interest Rate plus two percent (2%) per annum,
(B) all Interest Payments due with respect to any Notes of
such Series and, to the extent that payment of such interest is
lawful, interest upon overdue interest from the date when the same
first became due until the date of payment or deposit at a rate per
annum equal to the appropriate Note Interest Rates, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements, and advances of
each of the Trustee, the Servicer and the Administrator, its agents
and counsel;
and
(ii) all Events of Default with respect to Notes of that Series,
other than the non-payment of the Outstanding Principal Amount of the
Notes of such Series which
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become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 6.03 Remedies.
(a) If an Event of Default with respect to Notes of any Series
occurs and is continuing of which a Responsible Officer has actual knowledge,
the Trustee shall immediately give notice to each Noteholder of such Series as
set forth in Section 7.02 and shall solicit such Noteholders for advice. The
Trustee shall then take such action as so directed by the holders of at least
66-2/3% of the Outstanding Principal Amount of the Notes of such Series, subject
to the provisions of this Indenture.
(b) Following any acceleration of the Notes of any Series, the
Trustee shall have all of the rights, powers and remedies with respect to the
Trust Estate allocated to such Series as are available to secured parties under
the UCC or other applicable law, subject to subsection (d) below. Such rights,
powers and remedies may be exercised by the Trustee in its own name as trustee
of an express trust.
(c) (i) If an Event of Default specified in Section 6.01(a) occurs
and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the
whole amount of principal and interest remaining unpaid with respect to
the affected Series of Notes.
(ii) If an Event of Default occurs and is continuing, the Trustee
may in its discretion, and at the instruction of an aggregate Percentage
of greater than 50% of the Noteholders of each affected Series shall,
proceed to protect and enforce its rights and the rights of the
Noteholders of such Series by such appropriate judicial or other
proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy. The Trustee
shall notify the Company, the Administrator, the Servicer, the Noteholders
of such Series and each applicable Rating Agency of any such action.
(d) If (i) the Trustee shall have received instructions within 90
days from the date notice pursuant to Section 6.03(a) is first given from
holders of each Class of Notes of such Series evidencing more than 50% of the
aggregate unpaid principal amount of such Class of Notes, to the effect that
such Persons approve of or request the liquidation of the Trust Assets allocated
to such Series and do not wish to continue such Trust Estate pursuant to the
terms of this Indenture or (ii) upon an Event of Default set forth in Section
6.01(e) or (f), the Trust Estate allocated to such Series shall be terminated
and, the Trustee shall to the extent lawful, promptly sell, dispose of or
otherwise liquidate the Trust Assets allocated to such Series in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids; provided, however, that, upon an Event of
Default set forth in Section 6.01(e) or (f), to the
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extent holders of the Notes evidencing more than 50% of the aggregate principal
amount of each Class of Notes of such Series notify the Trustee that they wish
to reconstitute the Trust Estate, such liquidation shall not occur and the
parties hereto agree that the Trust Estate allocated to such Series shall be
reconstituted pursuant to a new indenture or amendment hereto on applicable
terms identical hereto. The Trustee may obtain a prior determination from any
such conservator, receiver or liquidator of the Company that the terms and
manner of any proposed sale, disposition or liquidation are commercially
reasonable.
SECTION 6.04 Trustee May File Proofs of Claim. (a) In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company, or any other obligor upon the Notes, or the
property of the Company, or such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes or any amounts owing on
the Receivables or the other Trust Assets and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee and any predecessor Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel) and of the
Noteholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee and to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee and any predecessor Trustee under Section
7.06.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, agreement, adjustment or composition
affecting the Notes or the rights of any Noteholder thereof or affecting the
Receivables or the other Trust Assets or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Agreement, the Notes, the Receivables
or the other Trust Assets may be prosecuted and enforced by the Trustee without
the possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provisions for the payment of the reasonable compensation,
expenses,
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disbursements and advances of the Trustee and any predecessor Trustee, their
agents and counsel, be for the benefit of the Noteholders in respect of which
such judgment has been recovered, and pursuant to the priorities contemplated by
Section 3.04.
SECTION 6.06 Application of Money Collected. Any money collected by
the Trustee pursuant to this Article 6 shall be deposited in the applicable
Collection Account or Accounts for disbursement in accordance with the
provisions of Article 3.
SECTION 6.07 Limitation on Suits. No Noteholder of any Series shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture or for any other remedy hereunder, unless:
(a) there is a continuing Event of Default with respect to such
Series and such Noteholder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) within 30 days after notice, the Noteholders holding an
aggregate Percentage of greater than 50% of such Series shall not have objected
to such Noteholder's written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(c) such Noteholder or Noteholders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(d) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Noteholders of at least
66-2/3% in aggregate principal amount of the Outstanding Notes of such Series;
it being understood and intended that no one or more of such Noteholders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Noteholders, or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided and for the ratable benefit of all such Noteholders.
It is further understood and intended that so long as any portion of the Notes
remains Outstanding, AutoBond shall not have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture (other than
for the enforcement of Section 3.04) or for the appointment of a receiver or
trustee (including without limitation a proceeding under the Bankruptcy Code),
or for any other remedy hereunder. Nothing in this Section 6.07 shall be
construed as limiting the rights of otherwise qualified Noteholders to petition
a court for the removal of a Trustee pursuant to Section 7.09 hereof.
SECTION 6.08 Unconditional Right of Noteholders to Receive Principal
and Interest.
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Notwithstanding any other provision in this Indenture, other than
the provisions hereof limiting the right to recover amounts due on the Notes to
recoveries from the property of the allocated Trust Estate, the holder of any
Note shall have the absolute and unconditional right to receive payment of the
principal of and interest on such Note on the Maturities for such payments,
including the Stated Maturity, and such right shall not be impaired without the
consent of such Noteholder.
SECTION 6.09 Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Noteholder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders
continue as though no such proceeding had been instituted.
SECTION 6.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph of
Section 2.04, no right or remedy herein conferred upon or reserved to the
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 6.12 Control by Noteholders.
Except as may otherwise be provided in this Indenture, until such
time as the conditions specified in Sections 10.01(a)(i) and (ii) have been
satisfied in full, the holders of at least 66-2/3% of the then Outstanding
Principal Amount of the Notes of any Series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Notes of such Series. Notwithstanding the foregoing,
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(i) no such direction shall be in conflict with any rule of law or
with this Indenture;
(ii) the Trustee shall not be required to follow any such direction
which the Trustee reasonably believes might result in any personal
liability on the part of the Trustee for which the Trustee is not
adequately indemnified; and
(iii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with any such direction; provided that
the Trustee shall give notice of any such action to each Noteholder of
such Series.
SECTION 6.13 Waiver of Events of Default.
(a) The holders of at least 66-2/3% of the then Outstanding
Principal Amount of the Notes of any Series may, by one or more instruments in
writing, waive any Event of Default on behalf of all Noteholders of such Series
hereunder and its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or interest on any
Note (which may only be waived by the holder of such Note), or
(ii) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
holder of each Outstanding Note affected (which only may be waived by the
holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by the Company to the Trustee and each Noteholder. Upon any such
waiver, such Event of Default shall cease to exist and shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Event of Default or impair any right consequent
thereon.
SECTION 6.14 Undertaking for Costs.
All parties to this Indenture agree (and each holder of any Note by
its acceptance thereof shall be deemed to have agreed) that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the then Outstanding Principal Amount
of the Notes of any Series, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or interest on
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any Note on or after the Maturities for such payments, including the Stated
Maturity as applicable.
SECTION 6.15 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted allocated to a Series of
Notes.
SECTION 6.16 Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust Estate
allocated to a Series of Notes pursuant to Section 6.03 shall not be exhausted
by any one or more sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate so allocated shall
have been sold or all amounts payable on the Notes of such Series shall have
been paid. The Trustee may from time to time, upon directions in accordance with
Section 6.12, postpone any public sale by public announcement made at the time
and place of such sale.
(b) To the extent permitted by applicable law, the Trustee shall not
sell to a third party the Trust Estate, or any portion thereof except as
permitted under Section 6.03(d).
(c) In connection with a sale of all or any portion of the Trust
Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale may
hold, retain, and possess and dispose of such property, without further
accountability, and any Noteholder may, in paying the purchase money
therefore, deliver in lieu of cash any Outstanding Notes or claims for
interest thereon for credit in the amount that shall, upon distribution of
the net proceeds of such sale, be payable thereon, and the Notes, in case
the amounts so payable thereon shall be less than the amount due thereon,
shall be returned to the Noteholders after being appropriately stamped to
show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Trust Estate
in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Company to transfer and convey its interest in any
portion of the Trust Estate in connection with a sale thereof, and to take
all action necessary to effect such sale; and
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(iv) no purchaser or transferee at such a sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(d) The method, manner, time, place and terms of any sale of all or
any portion of the Trust Estate shall be commercially reasonable.
ARTICLE 7.
THE TRUSTEE
SECTION 7.01 Certain Duties. (a) The Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee (including, without limitation, the duties
referred to in each Servicing Agreement during the continuance of an Event of
Servicing Termination, or an Event of Administrator Termination resulting in the
appointment of the Trustee as Successor Servicer under any Servicing Agreement).
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(c) In case an Event of Default, an Event of Servicing Termination
(resulting in the appointment of the Trustee as Successor Servicer under any
Servicing Agreement) or an Event of Administrator Termination (resulting in the
appointment of the Trustee as successor Administrator under any Servicing
Agreement) has occurred and is continuing with respect to any Series, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs; provided, however, that no provision in this
Indenture shall be construed to limit the obligations of the Trustee to provide
notices under Section 7.02.
(d) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(e) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
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(i) this Section shall not be construed to limit the effect of
Section 7.01(a) and (b);
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it shall be proved that the
Trustee shall have been negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
written direction of the holders of the requisite principal amount of the
outstanding Notes, or in accordance with any written direction delivered
to it under Section 6.02(a), relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
(f) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
(g) The Trustee makes no representations or warranties with respect
to the Trust Assets or the validity or sufficiency of any assignment of the
Receivables to the Company or to the Trust Estate.
SECTION 7.02 Notice of Events of Default. The Trustee shall promptly
(but in any event within five Business Days) notify the applicable Rating
Agencies, the Administrator, the Servicer and the Noteholders of any Series upon
a Responsible Officer obtaining actual knowledge of any event which constitutes
an Event of Default, an Event of Servicing Termination, or an Event of
Administrator Termination or would constitute an Event of Default, an Event of
Servicing Termination, or an Event of Administrator Termination but for the
requirement that notice be given or time elapse or both, in each case with
respect to such Series, unless such default shall have been cured or waived;
provided, further, that this Section 7.02 shall not limit the obligations of the
Trustee to provide notices expressly required by this Indenture.
SECTION 7.03 Certain Matters Affecting the Trustee. Subject to the
provisions of Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) Any request or direction of any Noteholders, the Administrator,
the Company, or the Servicer mentioned herein shall be in writing;
(c) Whenever in the performance of its duties hereunder the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action
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hereunder, the Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an Officer's Certificate
or Opinion of Counsel;
(d) The Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be deemed authorization in respect of
any action taken, suffered, or omitted by it hereunder in good faith and in
reliance thereon;
(e) Prior to the occurrence of an Event of Default, an Event of
Servicing Termination, or an Event of Administrator Termination, or after the
curing of all Events of Default, Events of Servicing Termination or Events of
Administrator Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by Noteholders of any affected Series holding an
aggregate Percentage of more than 50%; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
reasonable opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid by
the Administrator or, if paid by the Trustee, shall be reimbursed by the
Administrator upon demand; and
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian (which may be Affiliates of the Trustee) and the
Trustee shall not be liable for any acts or omissions of such agents, attorneys
or custodians appointed with due care by it hereunder.
SECTION 7.04 Trustee Not Liable for Notes or Receivables. (a) The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or any Related Document, the Notes (other than the authentication
thereof) or of any Receivable. The Trustee shall not be accountable for the use
or application by the Company of funds paid to the Company in consideration of
conveyance of the Receivables to the Trust Estate.
(b) Except with respect to the Trustee in its capacity as Successor
Servicer pursuant to the Servicing Agreement, the Trustee shall have no
responsibility or liability for or with respect to: the validity of any security
interest in any Financed Vehicle; the existence or validity of any Receivable,
the validity of the assignment of any Receivable to the Trust Estate or of any
intervening assignment; the review of any Receivable, any Loan File or the
Electronic Ledger as defined in the Servicing Agreement, the completeness of any
Loan File, the receipt by it or its custodian of any Receivable or Loan File (it
being understood that the Trustee has not reviewed and does not intend to review
such matters); the performance or enforcement of any Receivable; the compliance
by the Administrator, the Company or the Servicer with any covenant or the
breach by the Administrator or the Company of any warranty or representation
made hereunder or in any related document or the accuracy of any such warranty
or representation; the acts or omissions of the Administrator, the Servicer or
any Obligor or Dealer; or any action of the Administrator or the Servicer taken
in the name of the Trustee.
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SECTION 7.05 Trustee May Own Notes. The Trustee in its individual or
any other capacity may become the owner or pledgee of Notes with the same rights
as it would have if it were not Trustee.
SECTION 7.06 The Administrator to Pay Trustee's Fees and Expenses.
The Administrator agrees to reimburse the Trustee upon its request for all
agreed-upon third-party expenses, disbursements and advances incurred or made by
the Trustee in its capacity as such in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursement of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith. The
obligations of the Administrator under this Section 7.06 shall survive the
termination of this Indenture and the resignation or removal of the Trustee.
SECTION 7.07 Eligibility Requirements for Trustee. Other than the
initial trustee, the Trustee hereunder shall at all times (a) be a corporation,
depository institution, or trust company organized and doing business under the
laws of the United States of America or any state thereof authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $250,000,000, (b) be subject to supervision or examination by
federal or state authority, (c) be capable of maintaining an Eligible Account
and (d) have a long-term unsecured debt rating of not less than Baa2 from
Moody's and BBB+ from S&P or such other rating as may be acceptable to the
Rating Agencies, and shall be acceptable to Noteholders of each Series with a
Percentage of more than 50%. If such institution publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section 7.07,
the combined capital and surplus of such institution shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.07, the Trustee shall resign
immediately in the manner and with the effect specified in Section 7.08.
SECTION 7.08 Resignation or Removal of Trustee. (a) The Trustee may
at any time resign and be discharged with respect to the Notes of one or more
Series by giving 90 days' written notice thereof to the Administrator, the
Servicer, the Company, the Noteholders of such Series and the Rating Agencies.
Upon receiving such notice of resignation, the Administrator shall promptly
appoint a successor Trustee not objected to by Noteholders of such Series with a
Percentage of more than 50% within 30 days after prior written notice, by
written instrument, in quintuplicate, one counterpart of which instrument shall
be delivered to each of the Company, the Servicer, the successor Trustee and the
predecessor Trustee. A copy of such instrument shall be delivered to the Rating
Agencies. If no successor Trustee shall have been so appointed and have accepted
appointment within 90 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.07 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any
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public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Administrator or Noteholders of each Series with a Percentage greater than 50%
may direct, and the Administrator shall follow such direction and remove the
Trustee. If it removes the Trustee under the authority of the immediately
preceding sentence, the Administrator shall promptly appoint a successor Trustee
not objected to by Noteholders of each Series with a Percentage of more than
50%, within 30 days after prior written notice, by written instrument, in
quintuplicate, one counterpart of which instrument shall be delivered to each of
the Company, the Servicer, the Noteholders, the successor Trustee and the
predecessor Trustee. Copies of such instrument shall also be delivered by the
Administrator to each of the Rating Agencies.
(c) The Trustee may be removed by the Administrator at any time by
giving written notice thereof to the Trustee and each of the holders of the
Notes then outstanding. Such removal by the Administrator will become effective
unless the holders of at least 51% of the principal amount of the Notes of each
Series then outstanding deliver a written statement to the Administrator
opposing such removal within 30 days following receipt of such notice of removal
from the Administrator.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 7.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 7.09.
SECTION 7.09 Successor Trustee. (a) Any successor Trustee appointed
as provided in Section 7.08 shall execute, acknowledge and deliver to each of
the Administrator, the Company, the Servicer, the Noteholders and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to the
successor Trustee or its custodian any related documents and statements held by
it or its custodian hereunder; and the Administrator and the Company and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for the full and certain vesting and
confirmation in the successor Trustee of all such rights, powers, duties and
obligations.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Notes of one or more (but not all) Series, the Company, the
retiring Trustee and each successor Trustee with respect to the Notes of one or
more Series shall execute and deliver an indenture supplemental hereto wherein
each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Notes of that or those Series to
which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Notes, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Notes of
that or those Series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee,
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and (3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the Trust Estate
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same allocated trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Notes of that or those Series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Notes of that or those Series to which the appointment of such
successor Trustee relates.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in the preceding paragraph.
(c) No successor Trustee shall accept appointment as provided in
this Section 7.09 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 7.07.
(d) Upon acceptance of appointment by a successor Trustee as
provided in this Section 7.09, the Administrator shall mail notice of the
succession of such Trustee hereunder to each Noteholder of each affected Series
at its address as shown in the Note Register and to the Rating Agencies. If the
Administrator fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Company and the Administrator.
SECTION. 7.10 Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 7.07, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
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ARTICLE 8.
COVENANTS
SECTION 8.01 Payment of Principal and Interest.
The Company will cause the due and punctual payment of the principal
of and interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 8.02 Maintenance of Office or Agency; Chief Executive
Office.
(a) The Company will maintain at the Corporate Trust Office an
office or agency where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands.
(b) The Company will not change the location of its principal place
of business without giving the Trustee and the Rating Agencies at least 30 days'
prior written notice thereof.
SECTION 8.03 Money for Payments to Noteholders to be Held in Trust.
(a) All payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Trust Accounts
pursuant to Section 3.04 or Section 6.06 shall be made on behalf of the Company
by the Trustee, and no amounts so withdrawn from the applicable Collection
Account for payments of Notes shall be paid over to the Company under any
circumstances except as provided in this Section 8.03, in Section 3.04 or
Section 6.06.
(b) In making payments hereunder, the Trustee will hold all sums
held by it for the payment of amounts due with respect to the Notes in trust for
the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided.
(c) Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Noteholders
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will hold all sums held by it for the payment of the principal
of or interest on Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided.
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(d) Except as required by applicable law, any money held by the
Trustee in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for three years after such amount has become due and payable
to the Noteholder shall be discharged from such trust and, subject to applicable
escheat laws, and so long as no Event of Default has occurred and is continuing,
paid to the Company upon request; otherwise, such amounts shall be redeposited
in the Collection Account as available funds, and such Noteholder shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof (but only to the extent of the amounts so paid to the Company),
and all liability of the Trustee with respect to such trust money shall
thereupon cease.
SECTION 8.04 Corporate Existence; Merger; Consolidation, etc.
(a) The Company will keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Nevada, and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes or any of
the Auto Loans.
(b) The Company shall at all times observe and comply in all
material respects with (i) all laws applicable to it, (ii) all requirements of
law in the declaration and payment of dividends on its capital stock, and (iii)
all requisite and appropriate corporate and other formalities (including without
limitation meetings of the Company's board of directors and, if required by law,
its charter or otherwise, meetings and votes of the shareholders of the Company
to authorize corporate action) in the management of its business and affairs and
the conduct of the transactions contemplated hereby.
(c) The Company shall not issue or register the transfer of any of
its common stock to any Person other than AutoBond or a wholly-owned subsidiary
of AutoBond.
(d) The Company shall not (i) consolidate or merge with or into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any other Person or (ii) commingle its assets with those of any
other Person.
SECTION 8.05 Protection of Trust Estate; Further Assurances.
The Company will from time to time execute and deliver all such
supplements and amendments hereto and all such Financing Statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively the Trust Assets comprising all or any
portion of the Trust Estate;
(ii) maintain or preserve the lien of this Indenture or carry out
more effectively the purposes hereof;
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(iii) publish notice of, or protect the validity of, any Grant made
or to be made by this Indenture and perfect the security interest
contemplated hereby in favor of the Trustee in each of the Receivables and
all other property included in the Trust Estate; provided, that the
Company shall not be required to cause the recordation of the Trustee's
name as lienholder on the related certificates of title for the Financed
Vehicles so long as no Event of Default has occurred and is continuing;
(iv) enforce or cause the Administrator to enforce any of the
Receivables;
(v) preserve and defend title to the Receivables (including the
right to receive all payments due or to become due thereunder), the
interests in the Financed Vehicles, or other property included in the
Trust Estate and preserve and defend the rights of the Trustee in such
Trust Assets (including the right to receive all payments due or to become
due thereunder) against the claims of all Persons and parties other than
as permitted hereunder; and
(vi) cause the Trustee to be added as an additional named insured on
each of the Insurance Policies.
The Company, upon the Company's failure to do so, hereby designates the Trustee
its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.05; provided,
however, that such designation shall not be deemed to create a duty in the
Trustee to monitor the compliance of the Company with the foregoing covenants,
and provided, further, that the duty of the Trustee to execute any instrument
required pursuant to this Section 8.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure of the Company to comply with
the provisions of this Section 8.05.
SECTION 8.06 Servicing Agreement.
(a) If any Authorized Officer of the Administrator shall have
knowledge of the occurrence of a default under any Servicing Agreement, the
Administrator shall promptly notify the Trustee and the Noteholders of each
affected Series, and shall specify in such notice the action, if any, the
Administrator and the Company is taking in respect of such default. Unless
consented to by the holders of at least 66-2/3% of the then Outstanding
Principal Amount of the Notes of each affected Series, the Company may not waive
any material default under or amend the Servicing Agreement in a manner
materially adverse to the Noteholders of such Series.
SECTION 8.07 Additional Covenants.
(a) The Company will not:
(i) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture;
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(ii) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes by reason of the payment of any taxes
levied or assessed upon any portion of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture or
any Grant hereby to be impaired, or permit the lien of this Indenture to
be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations under
this Indenture, except as may be expressly permitted hereby, (B) permit
any lien, charge, security interest, mortgage or other encumbrance to be
created on or to extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds thereof
other than the lien of this Indenture, or (C) except as otherwise
contemplated in this Indenture, permit the lien of this Indenture not to
constitute a valid first priority security interest in the Trust Estate.
(b) Notice of Event of Default - immediately upon becoming aware of
the existence of any condition or event which constitutes a Default or an Event
of Default, the Company shall deliver to the Trustee a written notice describing
its nature and period of existence and what action the Company is taking or
proposes to take with respect thereto.
(c) Report on Proceedings - promptly upon the Company's becoming
aware of:
(i) any proposed or pending investigation of it by any governmental
authority or agency; or
(ii) any pending or proposed court or administrative proceeding
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition
(financial or otherwise) of the Company;
the Company shall deliver to the Trustee a written notice specifying the nature
of such investigation or proceeding and what action the Company is taking or
proposes to take with respect thereto and evaluating its merits.
SECTION 8.08 Taxes.
AutoBond shall pay all Taxes of the Company when due and payable or
levied against the Company's assets, properties or income, including any
property that is part of the Trust Estate. AutoBond will not seek reimbursement
from the Company for any such Taxes except to the extent of funds of the Company
which may, consistent with this Indenture, be distributed to AutoBond.
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ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of any Noteholders, the Company, by a
Company Order, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or to better assure, convey
and confirm unto the Trustee any property subject or required to be
subjected to the lien of this Indenture; provided such action pursuant to
this clause (i) shall not adversely affect the interests of the
Noteholders of any Series in any respect; or
(ii) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes of one or more
Series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 7.09; or
(iii) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that such action pursuant
to this Clause (iii) shall not adversely affect the interests of the
Holders of Notes of any Series; or
(iv) to establish a Series permitted upon an exchange under Section
13.06.
(b) The Trustee shall promptly deliver, at least 5 Business Days
prior to the effectiveness thereof, to each Noteholder of an affected Series and
each Rating Agency a copy of any supplemental indenture entered into pursuant to
Section 9.01(a).
SECTION 9.02 Supplemental Indentures with Consent of Noteholders.
(a) With the consent of the holders of not less than 66-2/3% of the
then Outstanding Principal Amount of the Notes of each Series affected by such
supplemental indenture and by Act of said Noteholders delivered to the Company
and the Trustee, the Company, by a Company Order, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Noteholders of
such Series under this Indenture; provided, that no supplemental indenture
shall, without the consent of the holder of each Outstanding Note affected
thereby,
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(i) change the Stated Maturity of any Note or the Principal Payments
or Interest Payments due or to become due on any Payment Date with respect
to any Note, or change the priority of payment thereof as set forth
herein, or reduce the principal amount thereof or the Note Interest Rate
thereon, or change the place of payment where, or the coin or currency in
which, any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal Amount of
the Notes of any Series, the consent of whose Noteholders is required for
any such supplemental indenture, for any waiver of compliance with
provisions of this Indenture or Events of Default and their consequences,
provided for in this Indenture;
(iii) modify any of the provisions of this Section or Section 6.13
except to increase any percentage or fraction set forth therein or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the holder of each Outstanding Note
affected thereby;
(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as provided in the applicable Servicing Agreement,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive any Noteholder of the security afforded by the lien of
this Indenture;
provided, no such supplemental indenture may modify or change any terms
whatsoever of the Indenture that could be construed as increasing the Company's
or AutoBond's discretion hereunder.
(b) The Trustee shall promptly deliver to each Noteholder of an
affected Series and each Rating Agency a copy of any supplemental indenture
entered into pursuant to Section 9.02(a).
SECTION 9.03 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture (a) pursuant to Section 9.01 of this Indenture or (b)
pursuant to Section 9.02 of this Indenture without the consent of each holder of
the Notes to the execution of the same, or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be, fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any supplemental indenture which affects the Trustee's
own rights, duties, projections, or immunities under this Indenture or
otherwise.
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SECTION 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 9.05 Reference in Notes to Supplemental Indentures.
Notes of any Series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. New Notes of any Series
so modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes of
such Series.
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.01 Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) 100 days shall have elapsed since either
(A) all Notes theretofore authenticated and delivered (other
than (1) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.04 and (2) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section
8.03(c)) have been delivered to the Trustee for cancellation; or
(B) the final installments of principal on all such Notes not
theretofore delivered to the Trustee for cancellation
(1) have become due and payable, or
(2) will become due and payable at their Stated
Maturity, as applicable, within one year,
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and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Notes which have become
due and payable) or to the Stated Maturity thereof;
(ii) the Company and the Administrator have paid or caused to be
paid all other sums payable hereunder by the Company and the Administrator
for the benefit of the Noteholders and the Trustee; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
At such time, the Trustee shall deliver to the Company all cash, securities and
other property held by it as part of the Trust Estate other than funds deposited
with the Trustee pursuant to Section 10.01(a)(i)(B), for the payment and
discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Sections 7.07 and
8.11, and, if money shall have been deposited with the Trustee pursuant to
Section 10.01(a)(i)(B), the obligations of the Trustee under Section 10.02 and
Section 8.03(c) shall survive.
(c) The Trustee shall provide prompt written notice to each Rating
Agency of any satisfaction and discharge of this Indenture pursuant to this
Article 10.
SECTION 10.02 Application of Trust Money.
Subject to the provisions of Section 8.03(c), all money deposited
with the Trustee pursuant to Sections 10.01 and 8.03 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
SECTION 10.03 Trust Termination Date. Upon the full application of
(a) moneys deposited pursuant to this Article 10 or (b) proceeds of the Trust
Assets pursuant to Sections 3.04 or 6.06, the Trust Estate created by this
Indenture shall be deemed to have terminated (the "Trust Termination Date").
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ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
SECTION 11.01 Representations and Warranties of the Company. The
Company represents and warrants to the Trustee and the Noteholders, as of each
Issuance Date and on each day until the discharge of this Indenture, as follows:
(a) The Company is a wholly-owned bankruptcy remote subsidiary of
AutoBond Acceptance Corporation and is a corporation duly organized, validly
existing and in good standing under the laws of the state of Nevada and is duly
qualified to do business, and is in good standing in each jurisdiction in which
the nature of its business requires it to be so qualified and which permits such
qualification;
(b) The Company has the power and authority to own and convey all of
its properties and to execute and deliver this Indenture and the Related
Documents and to perform the transactions contemplated hereby and thereby;
(c) The Company is operated in such a manner and is constituted so
that it would not be substantively consolidated in the bankruptcy trust estate
of any Affiliate, such that the separate existence of the Company and any
Affiliate would be disregarded, and to such end:
(i) the Company maintains separate records, books of account and
financial statements from those of AutoBond and each other Affiliate of
AutoBond;
(ii) the Company does not commingle any of its assets or funds with
those of AutoBond or any of the other Affiliates of AutoBond;
(iii) the Company maintains a separate board of directors with at
least two independent directors and observes all separate corporate
formalities, and all decisions with respect to the Company's business and
daily operations have been and shall be independently made by the officers
of the Company pursuant to resolutions of its board of directors;
(iv) other than contributions of capital, payment of dividends and
return of capital, no transactions have been entered into between the
Company and AutoBond Funding or between the Company and any of the other
Affiliates of AutoBond except such transactions as are contemplated by
this Indenture and the Related Documents;
(v) except for such administration and collection and functions as
AutoBond may perform on behalf of the Company and the Trust Estate
pursuant to this Indenture and the Related Documents, the Company acts
solely in its own name and through its own authorized officers and agents
and the Company does not act as agent of AutoBond or any other Person in
any capacity;
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(vi) except for any funds received from AutoBond Funding (or from
AutoBond indirectly by way of AutoBond Funding) as a capital contribution,
the Company shall not accept for its own account funds from AutoBond or
any of the other Affiliates of AutoBond; and the Company shall not allow
AutoBond or any of the other Affiliates of AutoBond otherwise to supply
funds to, or guarantee any obligation of, the Company;
(vii) the Company shall not guarantee, or otherwise become liable
with respect to, any obligation of AutoBond or any of the other Affiliates
of AutoBond; and
(viii) the Company shall at all times hold itself out to the public
under the Company's own name as a legal entity separate and distinct from
AutoBond and the other Affiliates of AutoBond.
(d) The Company is a special purpose company and has not engaged,
and does not presently engage and shall not engage, in any activity other than
the activities undertaken pursuant to this Agreement and the Related Documents
and contemplated hereby and thereby and activities ancillary or incident
thereto, and has no Debt other than the Notes;
(e) The execution, delivery and performance by the Company of this
Agreement, the Related Documents and the transactions contemplated hereby and
thereby, (i) have been duly authorized by all necessary corporate or other
action on the part of the Company, (ii) do not contravene or cause the Company
to be in default under (A) the Company's certificate of incorporation or bylaws,
(B) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other agreement
or instrument binding on or affecting the Company or its property, (C) any law,
rule, regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Company or its property, and (iii) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
the property of the Company;
(f) This Indenture and the Related Documents have each been duly
executed and delivered on behalf of the Company;
(g) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority or any other party, is required for the due
execution, delivery and performance by the Company of this Agreement or any of
the Related Documents or for the perfection of or the exercise by the Trustee or
the Noteholders of any of their rights or remedies thereunder which have not
been duly obtained;
(h) This Indenture and each other Related Document is the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its respective terms; except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium or other
laws relating to or affecting the rights of creditors generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in law or in equity);
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(i) There is no pending or threatened action, suit or proceeding,
nor any injunction, writ, restraining order or other order of any nature against
or affecting the Company, its officers or directors, or the property of the
Company, in any court or tribunal, or before any arbitrator of any kind or
before or by any Governmental Authority (i) asserting the invalidity of this
Indenture or any of the Related Documents, (ii) seeking to prevent the sale and
assignment of any Receivable or the consummation of any of the transactions
contemplated thereby, (iii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the Company of this
Indenture or any of the Related Documents or the interests of the Noteholders,
(B) the validity or enforceability of this Indenture or any of the Related
Documents, (C) any Receivable, (D) the Intended Tax Characterization, or (iv)
asserting a claim for payment of money adverse to the Company or the conduct of
its business or which is inconsistent with the due consummation of the
transactions contemplated by this Indenture or any of the Related Documents;
(j) The principal place of business and chief executive office of
the Company are located at the address in Nevada indicated in Section 12.05 and
there are now no, and there have not been any, other locations where the Company
is located (as that term is used in the UCC) or keeps Records except, after the
date of this Indenture, as disclosed in writing to the Trustee and the
Noteholders and the Administrator at least 30 Business Days prior to any such
change;
(k) The legal name of the Company is as set forth in the beginning
of this Indenture and the Company has not changed its name since its formation,
and during such period, the Company did not use, nor does the Company now use
any tradenames, fictitious names, assumed names or "doing business as" names;
(l) The Company does not have any Subsidiaries;
(m) The Company is solvent and will not become insolvent after
giving effect to the transactions contemplated by this Indenture and each of the
Related Documents; the Company's transfers of Transferred Assets to the Trust
Estate have been and will be made for reasonably equivalent value and fair
consideration; and the Company, after giving effect to the transactions
contemplated by this Indenture and each of the Related Documents, will have an
adequate amount of capital to conduct its business in the future; and
(n) The Company has complied in all material respects with all
applicable laws, rules, regulations, and orders with respect to it, its business
and properties and all of the Transferred Assets.
SECTION 11.02 Representations and Warranties as to Each Receivable.
(a) In connection with the establishment of each Series of Notes, each of the
Company and AutoBond will make the representations and warranties designated
with respect to such Series.
(b) The Company and the Administrator each hereby certifies that the
representations and warranties contemplated in this Section 11.02 shall survive
the transfer of the Receivables to the Trust Estate.
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SECTION 11.03 Repurchases and Transfers. (a) Upon the occurrence of
(i) a breach of any of the representations and warranties set forth in Sections
11.01 and 11.02, without regard to any limitation set forth in such
representation or warranty concerning the knowledge of the Company or the
Administrator as to the facts stated therein, which may, or does materially and
adversely affect the interests of the Trust Estate or the Noteholders in any
Receivable, (ii) a failure of any Loan Documents to contain original documents
as set forth in Section 4.01, if the Trustee is unable, or is adversely affected
in its ability, to enforce the obligations of the related Obligor by reason of
not having possession of such original documentation, or if the original
certificate of title for any Financed Vehicle has not been obtained within 180
days after the applicable Transfer Date, or (iii) a failure to make any filing
or take other action referred to in Section 4.05, the party discovering such
breach shall give prompt written notice to the others. If within 30 days of such
notice, occurrence or discovery referred to in the immediately preceding
sentence, such breach or failure shall remain uncured, the Receivable as to
which the breach or failure relates shall be repurchased or purchased for the
Repurchase Price as follows:
(i) in respect of matters set forth in Sections 4.05, 11.01, and
11.02(a), by the Company;
(ii) in respect of the matters set forth in Section 4.05 or
11.02(a), by AutoBond; and
(iii) the Trustee may demand that AutoBond repurchase Receivables
pursuant to rights assigned under the Sale Agreement
(b) Upon receipt by the Trustee of written certification of the
Administrator to the effect that the Repurchase Price has been deposited in the
Collection Account, the Trustee as custodian on behalf of the Trust shall
contemporaneously therewith release such Receivable and the related Loan Files
to the Company or AutoBond, as the case may be, and the Trustee on behalf of the
Trust Estate shall assign to the Company or AutoBond, as the case may be, all of
the Trust Estate's right, title and interest in such purchased or repurchased
Receivable, and all property and rights conveyed to the Trustee and the Trust
Estate relating thereto (excluding, however, payments previously received under
the Insurance Policies), and the Assignments to the extent such payments relate
to such repurchased or purchased Receivables, without recourse, representation
or warranty. The Trustee and the Company shall execute and deliver to the
Company or AutoBond, as the case may be, an assignment substantially in the form
of Exhibit G. The repurchase and purchase obligations pursuant to this Section
11.03 constitute the sole remedy available to the Trustee and the Noteholders
for a breach of a representation or warranty or agreement of the Company or
AutoBond, set forth in Sections 4.05 and 11.02; provided, that the foregoing
limitation shall not be construed to limit in any manner the right of the
Trustee or the Noteholders to declare an Event of Default to have occurred or to
terminate the responsibilities of the Administrator as Collection Agent or
Servicer under the Servicing Agreement to the extent such breaches also
constitute or contribute to the determination of an Event of Default or an Event
of Administrator Termination. For the purposes of this Agreement, a Receivable
has not been "repurchased" or "purchased" by the Company or AutoBond, as the
case may be, pursuant to this Section 3.03 unless the Repurchase Price therefor
has been deposited into the applicable Collection Account.
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(c) As used herein, references to the "repurchase" of Auto Loans by
the Company means the release of the lien of this Indenture with respect to such
Auto Loans.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01 Indemnities of the Administrator.
(a) The Administrator agrees to indemnify (i) the Trust Estate from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses (including reasonable attorneys' fees of counsel) arising as a
result of the Administrator's acts or omissions (subject to the administration
standard set forth in Section 5.02(b)) in violation of this Indenture and (ii)
the Trustee, its directors, officers, employees and agents, from, and hold it
harmless against, any and all losses, liabilities, damages, claims, expenses
(including attorney's fees and disbursements), fines or penalties, or judgments
arising out of or in connection with the performance by the Trustee of its
duties hereunder or in connection with the Trust Estate, or the issuance of the
Notes except to the extent the Trustee's own bad faith, willful misconduct or
negligence contributes to the loss, liability, damage, claim or expense.
(b) This Section 12.01 shall survive the termination of this
Indenture or the resignation or removal of the Trustee in respect of rights
accrued prior to such resignation or removal.
SECTION 12.02 Officers' Certificate and Opinion of Counsel as to
Conditions Precedent.
Upon any request or application by the Company (or any other obligor
upon the Notes) to the Trustee to take any action under this Indenture, the
Company (or such other Obligor) shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 12.03) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements set
forth in Section 12.03) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
SECTION 12.03 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
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(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 12.04 Notices. (a) All communications, instructions,
directions and notices to the parties thereto shall be (i) in writing (which may
be by telecopy, followed by delivery of original documentation within one
Business Day), (ii) effective when received and (iii) delivered or mailed first
class mail, postage prepaid to it at the following address:
If to the Company:
AutoBond Master Funding Corporation V
300 South Fourth Street, Suite 620
Las Vegas, Nevada 89101
If to the Administrator:
AutoBond Acceptance Corporation
301 Congress Avenue
Austin, Texas 78701
Attention: William O. Winsauer
Facsimile Number: (512) 472-1548
Telephone Number: (512) 472-3600
If to the Trustee:
Dynex Capital, Inc.
10900 Nuckols Road, Third Floor
Glen Allen, Virginia 23060
Attention: Master Servicing Department
Facsimile Number: (804) 217-5935
Telephone Number: (804) 217-5800
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or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices pursuant hereto to a Noteholder
shall be in writing and delivered or mailed first class mail, postage prepaid or
overnight courier at the address shown in the Note Register. The Trustee agrees
to deliver to each Noteholder upon receipt, all notices and reports that the
Trustee may receive hereunder and under any Servicing Agreement and Related
Documents. Unless otherwise provided herein (including Section 8.11 hereof) the
Trustee may consent to any requests received under such documents or, at its
option, follow the directions of Noteholders with a Percentage of greater than
50% within 30 days after prior written notice to the Noteholders. All notices to
Noteholders (or any Class thereof) shall be sent simultaneously.
SECTION 12.05 Notices and Reports to be Delivered to the Rating
Agencies. On or before the later to occur of each Payment Date and, the Business
Day following its receipt thereof, the Administrator shall promptly deliver to
each of the Rating Agencies the notices, reports and certificates referred to in
Section 3.05.
SECTION 12.06 No Proceedings. The Noteholders, the Administrator and
the Trustee each hereby agrees that it will not, directly or indirectly
institute, or cause to be instituted, against the Company or the Trust Estate
any proceeding of the type referred to in Section 6.01(e) so long as there shall
not have elapsed one year plus one day since the last maturity of the Notes.
ARTICLE 13.
VARIABLE FUNDING NOTES
SECTION 13.01 Designation.
(a) There is hereby created Notes to be issued pursuant to this
Indenture designated as "AutoBond Master Funding Corporation V -- Variable
Funding Notes" (the "Funding Notes"). (b) The Funding Notes shall consist of
Class A Notes and Class B Notes and the forms thereof and of the Trustee's
certificate of authentication shall be as set forth in Exhibits C-1 and C-2
hereto.
The maximum aggregate principal amount of Funding Notes which may be
Outstanding at anytime under the Trust Indenture is limited to $522,500,000, in
the case of the Class A Notes, and $55,000,000, in the case of the Class B
Notes.
The Funding Notes may be issued in minimum denominations of $500,000
and any integral multiple of $1,000 in excess thereof; provided that the
foregoing shall not restrict or prevent the transfer in accordance with Section
2.03 of the Indenture of any Class A or Class B Notes having a remaining
Outstanding Principal Amount of other than an integral multiple of $1,000, or
the issuance of a single Class A or Class B Note with a denomination less than
$500,000.
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(c) The first Payment Date with respect to the Funding Notes shall
be July 15, 1998.
(d) The Funding Notes shall bear interest at the rate set forth in
the Credit Agreement (as defined in Section 13.02); principal and interest shall
be payable to the Holder in whose name a Funding Note is registered as of the
last day of the month preceding the applicable Payment Date; and principal and
interest shall be payable on the Payment Dates and such other dates as set forth
in the Credit Agreement.
(e) The Trust Assets allocated to the Funding Notes are as set forth
in Schedule 1, as modified from time to time in accordance with this Indenture.
(f) The Issuance Date in respect of the Funding Notes shall be June
9, 1998.
(g) The representations and warranties with respect to the Auto
Loans allocated to such Funding Notes, additional covenants, and conditions
precedent to Advances are set forth in the Credit Agreement.
SECTION 13.02 Certain Definitions.
(a) As used in this Article 13 and with respect to the Funding
Notes, the following terms shall have the following meanings:
"Accounts" shall mean the Lockbox Account, the Loan Purchase Account
and the Collection Account.
"Advances" shall have the meaning specified in the Credit Agreement.
"Automobile" shall mean a new or used automobile, light-duty truck
or van.
"Available Funds" means all funds held in the Lender Collection
Account or the Collection Account (as the case may be) as of the end of any Due
Period.
"Back-up Servicer" means the entity designated by the Initial
Lender.
"Class A Interest" shall mean for any Payment Date, the product of
the Outstanding Principal Amount of the Class A Notes and the Class A Interest
Rate.
"Class A Interest Rate" shall mean the weighted average of the
Interest Rates for Advances allocable to the Class A Notes.
"Class A Principal Payment Amount" shall mean, for any Payment Date,
the product of (i) 95% and (ii) the sum of (a) the amount of all Payments
allocable to principal in respect of the Specified Auto Loans for the related
Due Period, and (b) the Unpaid Principal Balance of any Liquidated Receivable.
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"Class B Interest" shall mean, for any Payment Date, the product of
the Outstanding Principal Amount of the Class B Notes and the Class B Interest
Rate.
"Class B Interest Rate" means 16% per annum.
"Class B Principal Payment Amount" shall mean, for any Payment Date,
the product of (i) 10% and (ii) the sum of (a) the amount of all Payments
allocable to principal in respect of the Specified Auto Loans for the related
Due Period, and (b) the Unpaid Principal Balance of any Liquidated Receivable.
"Collection Account" shall have the meaning assigned to such term in
Section 13.03 hereof.
"Collection Agent" shall mean AutoBond, as collection agent under
the Servicing Agreement.
"Credit Agreement" means the Credit Agreement, dated as of June 9,
1998 among the Company, AutoBond and the Initial Lender.
"Delinquency Ratio" shall mean, as of any Determination Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
(i) the aggregate Unpaid Principal Balance of Auto Loans which have become
Defaulted Auto Loans as of the end of the most recently ended Due Period minus
(ii) the sum of the aggregate Unpaid Principal Balance of (A) all Auto Loans
against which insurance claims have been filed as of the end of the most
recently ended Due Period and (B) Auto Loans for which the related Financed
Vehicles are subject to repossession as of the end of the most recently ended
Due Period and which are not included in (A), and (b) the denominator of which
equals the aggregate Unpaid Principal Balance of Auto Loans outstanding as of
the end of the most recently ended Due Period, minus the Unpaid Principal
Balance of all Liquidated Receivables.
"Due Period" shall mean, (a) with respect to the initial Due Period,
the month of June, 1998, and (b) thereafter, with respect to any Payment Date,
the period commencing on the first day of the calendar month preceding the
calendar month in which such Payment Date occurs and ending on the last day of
the calendar month preceding the calendar month in which such Payment Date
occurs.
"Exchange" has the meaning set forth in Section 13.
"Funding Date" shall have the meaning set forth in the Credit
Agreement.
"Initial Lender" means Dynex Capital, Inc., its successors and
permitted assigns.
"Interest Period" means the period beginning with a Payment Date (or
in the case of the initial Interest Period, June 9, 1998) to and excluding the
following Payment Date.
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"Lender Collection Account" means the account so designated in the
name of the Initial Lender at Chase Bank of Texas, National Association.
"Liquidated Receivable" means, as of any date of determination, any
Auto Loan upon the earlier to occur of (a) receipt of all Recoveries on
Receivables reasonably expected to be received in respect thereof and (b) the
date such Auto Loan is more than 180 days contractually past due.
"Loan Acquisition Price" shall have the meaning set forth in the
Credit Agreement.
"Loan Purchase Account" shall have the meaning assigned to such term
in Section 13.03 hereof.
"Lockbox" means the Lockbox established and maintained pursuant to
the Lockbox Agreement.
"Lockbox Account" means the account in the name of the Trustee,
established in respect of the Auto Loans at the Lockbox Bank and maintained
pursuant to the Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Agreement between the Trustee
and the Lockbox Bank, or any successor agreement hereunder, in the form of
Exhibit H.
"Lockbox Bank" means Banc One, Texas, N.A. or any successor
hereunder.
"Monthly Administrator Fee" shall mean, as of any Payment Date, so
long as AutoBond is acting as Administrator hereunder and as Servicer under the
Servicing Agreement, the sum of (a) a fee, payable monthly, equal to the product
of (i) $15.00 and (ii) the total number of Auto Loans included in the Trust
Estate and allocated to the Funding Notes at any time during the immediately
preceding Due Period and (b) Reimbursable Administrator Expenses; provided, that
to the extent that the Servicer assumes the duties of the Collection Agent under
the Servicing Agreement, such fee shall be payable to the Servicer and shall
equal the amount set forth set forth in the preceding clause.
"Monthly Back-up Servicer Fee" means, as of any Payment Date, the
amount so designated in writing by the Initial Lender.
"Monthly Repossession Ratio" shall mean on any Determination Date,
the annualized static pool repossession rate determined by the product of (a) a
fraction (i) the numerator of which is equal to the aggregate Unpaid Principal
Balance of all Auto Loans which have been repossessed from the Cut-Off Date
through the end of the most recent Due Period and (ii) the denominator of which
is the Unpaid Principal Balance of all Auto Loans as of the Cut-Off Date, and
(b) a fraction (i) the numerator of which is 12, and (ii) the denominator of
which is equal to the number of calendar months (rounded up to the nearest
month) which have elapsed from the Cut-Off Date to the most recent Due Period.
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"Monthly Servicing Fee" means, as of any Payment Date, the Monthly
Administrator Fee.
"Payment Date" shall mean the 15th day of each month (or, if such
day is not a Business Day, the next succeeding Business Day), commencing July
15, 1998, and each other date on which Advances and interest thereon are paid or
payable.
"Reimbursable Administrator Expenses" means, with respect to any
Payment Date, all reasonable and customary out-of-pocket fees and expenses of
third parties incurred by the Collection Agent (including expenses related to
financing statements and titles required to be paid or reimbursed by the
Collection Agent) in connection with their respective repossession activities,
including, without limitation, fees of attorneys, appraisers, third party
collateral managers and others (who shall have been retained by the Collection
Agent, in accordance with the Servicing Agreement) for the Due Period
immediately preceding such Payment Date, but not including expenses paid net of
recoveries.
"Repurchase Price" shall have the meaning set forth in the Credit
Agreement.
"Repossession Ratio" shall mean, on any Determination Date on or
after September 30, 1998, the average of the Monthly Repossession Ratios for the
three immediately preceding calendar months.
"Servicer" means AutoBond, or any successor entity designated as
such under the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of
June 9, 1998 among AutoBond, as Servicer, the Company and the Trustee.
"Specified Auto Loan" shall mean each Auto Loan subject to the Lien
of this Indenture and allocated to the Funding Notes.
SECTION 13.03 Establishment and Maintenance of Lockbox and Trust
Accounts. The Administrator shall cause to be established and maintained at all
times a lockbox and related account (the "Lockbox" and the "Lockbox Account") in
the name of the Trustee. The Administrator agrees to cause the Lockbox Bank to
sweep funds, daily, from the Lockbox Account to the Lender Collection Account if
the Initial Lender is the sole Noteholder (or with the consent of the sole
Noteholder if not the Initial Lender), and otherwise to the Collection Account.
The Administrator agrees to require, and to cause the Servicer to require, that
all payments by Obligors on Specified Auto Loans be made to the Lockbox. Only
payments on Specified Auto Loans will be received in the Collection Account and
no other funds other than funds in which the Trustee has an interest hereunder
will be commingled therein. In addition, concurrently with the execution and
delivery hereof, the Trustee shall establish the following segregated accounts
entitled (a) the "AutoBond Master Funding Corporation V -- Loan Purchase
Account, Dynex Capital, Inc., as Trustee" (the "Loan Purchase Account"); and (b)
the "AutoBond Master Funding Corporation V -- Collection Account, Dynex Capital,
Inc., as Trustee" (the "Funding Notes
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Collection Account"). The Loan Purchase Account and the Collection Account are
sometimes collectively referred to in this Article 13 as the "Funding Notes
Trust Accounts".
SECTION 13.04 Required Deposits to the Accounts. (a) The Company
shall cause the following amounts to be paid to the Trustee for deposit to the
accounts established pursuant to Section 13.03:
(i) all amounts payable to or for the account of the Company by or
on behalf of the Holders of Funding Notes in respect of Advances shall be
deposited directly in the Loan Purchase Account;
(ii) all amounts representing payments in respect of Specified Auto
Loans (including, without limitation, all Recoveries on Receivables, all
late charges, all payments in respect of the Repurchase Price of Specified
Auto Loans repurchased by AutoBond or the Company in accordance with
Section 11.03 and all proceeds of any Exchange) shall be sent to the
Lockbox Account.
(b) The Trustee acting on behalf of the Holders and the Company
agree (i) that the Trust Accounts shall be maintained in the name of the
Trustee, (ii) that the Trust Accounts shall be subject to the exclusive dominion
of the Trustee, and (iii) that the Trustee shall have the sole right of
withdrawal from the Trust Accounts. The Company, the Holders and AutoBond shall
timely provide written remittance information to the Trustee specifying payment
instructions with respect to amounts payable pursuant to each provision of
Section 13.05. The Trustee shall have no liability to the Company, any Holder or
any other Person for failure to pay funds to any Person in accordance with
Section 13.05 in the absence of timely receipt of such written remittance
instructions or in the event of any errors in such written remittance
instructions.
SECTION 13.05 Application of Funds in the Trust Accounts. (a) If no
Event of Default shall have occurred and be continuing, the Trustee, on each
Business Day, shall apply funds in the Loan Purchase Account pursuant to written
instructions of the Company to pay to AutoBond (for the account of the Company)
an amount equal to the Loan Acquisition Price in respect of all Specified Auto
Loans, if any, to be purchased by the Company on such date on or before 10:00
a.m., New York City time; provided that, with respect to each such Specified
Auto Loan, such amounts shall be payable only if the Trustee has received each
of the Loan Documents with respect to such Specified Auto Loan from AutoBond;
and, if any such funds shall remain unused after being applied for the foregoing
purposes, so long as any Funding Notes remain outstanding the remaining funds
shall be retained in the Loan Purchase Account and continue to be part of the
Trust Estate hereunder, and if so instructed in writing by AutoBond, may be
invested by the Trustee in accordance with Section 3.01 hereof. The Trustee may
liquidate any investment when required to make an Advance as contemplated above.
No investment made pursuant to this section will have a maturity later than one
Business Day prior to the date on which such funds will be needed to make
Advances.
(b) On each Payment Date (other than upon or after the occurrence on
an Acceleration Event) (x) the Initial Lender, if sole Noteholder (or with the
consent of the sole Noteholder if not the Initial Lender), shall disburse the
Available Funds in the Lender Collection
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Account, or (y) the Trustee, at the written direction of the Administrator,
shall disburse the Available Funds in the Collection Account, in the following
priority:
(i) to the Class A Noteholders, interest in an amount equal to Class
A Interest, plus any accrued and unpaid Class A Interest from prior Due
Periods;
(ii) to the Class B Noteholders, interest in an amount equal to
Class B Interest, plus any accrued and unpaid Class B Interest from prior
Due Periods;
(iii) to the Trustee, the Monthly Trustee Fee, plus any accrued and
unpaid Monthly Trustee Fees with respect to any prior Due Period;
(iv) (A) to the Administrator (or the Trustee, if acting as
successor Servicer and Administrator), the Monthly Administrator Fee, plus
any accrued and unpaid Monthly Administrator Fees with respect to any
prior Due Period and (B) to the Back-up Servicer, the Monthly Back-up
Servicer Fee;
(v) to the Class A Noteholders, in reduction of the Outstanding
Class A Principal Amount, an amount equal to the Class A Principal Payment
Amount;
(vi) to the Class B Noteholders, in reduction of the Outstanding
Class B Principal Amount, an amount equal to the Class B Principal Payment
Amount; and
(vii) the remaining funds, if any, following the distribution in
clauses (i)-(vi) above shall be (A) disbursed pro rata (based upon the
Outstanding Principal Amount of the Class A Notes and the Class B Notes
after giving effect to the disbursements above) to the Class A Noteholders
and the Class B Noteholders as principal payments thereon, until paid in
full, and (B) thereafter shall be disbursed to the Company.
(c) On each Payment Date occurring upon or after the occurrence of
an Event of Default with respect to which the Outstanding Principal Amount of
the Funding Notes has been accelerated in accordance with Section 6.02 of the
Trust Indenture (each, an "Acceleration Event"), the Trustee, at the written
direction of the Administrator (unless such Event of Default affects the
Administrator, in which case the Trustee shall make such determinations), shall
disburse the balance of Available Funds in the following priority:
(i) to the Trustee, the Back-up Servicer and, if other than an
Affiliate of the Company, the Servicer, the Monthly Trustee Fee, the
Monthly Back-up Servicer Fee and the Monthly Administrator Fee,
respectively, plus any accrued and unpaid Monthly Trustee Fees, Monthly
Back-up Servicer Fee and Monthly Administrator Fees;
(ii) to the Class A Noteholders, interest in an amount equal to
Class A Interest, plus any accrued and unpaid Class A Interest;
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(iii) to the Class B Noteholders, interest in an amount equal to
Class B Interest, plus any accrued and unpaid Class B Interest;
(iv) to the Class A Noteholders, all remaining Available Funds until
the Outstanding Class A Principal Amount has been reduced to zero;
(v) to the Class B Noteholders, an amount equal to all remaining
Available Funds until the Outstanding Class B Principal Amount has been
reduced to zero; and
(vi) the remainder of funds held in the Funding Notes Collection
Account, following the distributions in clauses (i)-(v) above shall be
disbursed to the Company; provided that, all amounts payable to the
Noteholders have been paid in full pursuant to the priorities set forth
above.
SECTION 13.06 Exchanges for New Series.
(a) From time to time, on any Business Day as long as the Funding
Notes are outstanding, and upon 7 days' written notice to the Administrator and
the Trustee, the Initial Lender on behalf of the Noteholders, may elect to
exchange all or a portion of the unpaid Outstanding Principal Amount of the
Funding Notes for one or more new Series of Notes (the "Term Notes") to be
issued in accordance with Section 2.01(a) of this Indenture (each such election,
an "Exchange").
(b) The Company agrees to cause the creation of such Series of Term
Notes under the Indenture and to execute and order the authentication of the
Notes of such Series so long as the terms of such Series of Term Notes do not
materially impair the value under GAAP of the Company's interest in the
Specified Auto Loans.
(c) The Initial Lender may designate the Specified Auto Loans which
will collateralize each Series of Term Notes issued hereunder at the time of an
Exchange.
(d) The Noteholders may sell, pledge or retain some or all of the
Term Notes after such Exchange.
(e) Any payments on the Specified Auto Loans designated as
collateral for a Series of Term Notes in excess of the aggregate principal
amount of and accrued interest on such Term Notes and any prior Funding Notes
from which such Term Notes were created will be for the Company's account.
(f) At the request of the Initial Lender, the Trustee shall release
the Trust Estate to a subsequent transferee (at the direction of the Initial
Lender), which shall issue securities secured by, or representing interests in,
the Trust Estate (as so transferred), on the terms contemplated herein for the
Term Notes. The Initial Lender and the Company shall be entitled to proceeds
from such subsequent issuance in accordance with Section 13.06(d) above.
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SECTION 13.07 Additional Events of Default; Remedies. (a) In
addition to the Events of Default set forth in Section 6.01, the following
additional Events of Default shall be applicable to the Funding Notes:
(i) the Company or AutoBond shall default in the due and punctual
performance of or compliance with any material covenant, condition or
agreement to be performed or observed by it under the Credit Agreement,
respectively, and any such default shall continue unremedied for a period
of twenty (20) Business Days after an Authorized Officer of the Company or
AutoBond obtains knowledge thereof; or
(ii) any representation, warranty, certification or statement of the
Company or AutoBond made or contained in the Credit Agreement or in any
agreement, instrument, certificate, statement or other writing furnished
in connection herewith or therewith or pursuant hereto or thereto, shall
prove to have been false or inaccurate in any material respect on the date
as of which such representation or warranty was made and any such breach
shall continue unremedied for a period of thirty (30) days after an
Authorized Officer of the Company or AutoBond obtains knowledge thereof;
or
(iii) any Liens on the Trust Assets, other than Permitted Liens,
continue to exist after 5 Business Days' notice from the Initial Lender.
(b) in addition to the remedies set forth in Article 6, upon the
occurrence and continuance of any Event of Default set forth in this Section
13.07 by AutoBond, the Initial Lender may remove AutoBond as Servicer under the
Servicing Agreement and appoint a successor Servicer.
SECTION 13.08 Resignation or Removal of Trustee. Notwithstanding
Section 7.08(a), the Trustee may at any time resign and be discharged with
respect to the Funding Notes by giving 30 days' written notice thereof to the
Administrator, the Company and the Initial Lender. Upon receiving such notice of
resignation, the Administrator shall promptly appoint a successor Trustee not
objected to by Initial Lender within 30 days after prior written notice, by
written instrument, in quintuplicate, one counterpart of which instrument shall
be delivered to each of the Company, the successor Trustee and the predecessor
Trustee.
73
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed as of the day and year first above written.
AUTOBOND MASTER FUNDING CORPORATION V,
as Issuer
By:
--------------------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION,
as Administrator and individually
By:
--------------------------------------------
Name:
Title:
DYNEX CAPITAL, INC.,
not in its individual capacity, but solely as Trustee
By:
--------------------------------------------
Name:
Title:
74
<PAGE>
<PAGE>
EXHIBIT C-1
FORM OF VARIABLE FUNDING NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS
ACCEPTANCE HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN,
TRUST OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN
INDIVIDUAL RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR ACCOUNT
DESCRIBED ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL BE
COVERED BY A DEPARTMENT OF LABOR CLASS EXEMPTION.
AUTOBOND MASTER FUNDING CORPORATION V
CLASS A VARIABLE FUNDING NOTE
June 9, 1998
New York, New York
FOR VALUE RECEIVED, AutoBond Master Funding Corporation V, a Nevada
corporation (the "Company") hereby promises to pay to Dynex Capital, Inc. (the
"Holder") or its assigns, the principal sum of Five Hundred Twenty-two Million,
Five Hundred Thousand Dollars ($522,500,000.00), in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Indenture referred to below, and to pay
interest on the unpaid principal amount of this Class A Note until paid in full,
at the rates per annum and on the dates provided in the Indenture and the Credit
Agreement, dated as of June 9, 1998 (the "Credit Agreement") among the Company,
AutoBond Acceptance Corporation and the Holder).
The Stated Maturity of this Class A Note is as set forth in the
Credit Agreement.
C-1-1
<PAGE>
<PAGE>
By its holding of this Class A Note, the Holder shall be deemed to
accept the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein by manual signature, this Class A Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
This Class A Note is one of a duly authorized issue of Class A Notes
of the Company designated as its "Class A Funding Notes" (herein called the
"Notes") limited in aggregate principal amount of $522,500,000.00, issued under
the Trust Indenture, dated as of June 9, 1998 (herein called the "Indenture"),
among the Company, AutoBond Acceptance Corporation ("AutoBond") and Dynex
Capital, Inc., as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
AutoBond, the Trustee and the Holders and of the terms upon which the Notes are
authenticated and delivered. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings set forth in the Indenture.
This Note is secured by the pledge to the Trustee under the
Indenture of the Trust Estate allocated to the Notes and recourse is limited to
the Company and AutoBond as set forth in the Indenture and the Credit Agreement.
The amounts owed under this Note shall not include any recourse to the Trustee
or any affiliates thereof.
In addition to the Notes, the Company may from time to time issue
additional Series of Notes under the Indenture, including in exchange for all or
a portion of the outstanding principal amount of this Note.
If certain Events of Default under the indenture have been declared,
the unpaid principal of the Notes may be declared immediately due and payable in
the manner and with the effect provided in the Indenture. Notice of Note
declaration will be given by mail to Noteholders, as their names and addresses
appear in the Note Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the obligations of the
Company with respect to the payment of principal and interest on this Note shall
terminate.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Noteholders of the percentages
specified in the Indenture at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes, at the time Outstanding, on behalf of all the
Holders, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by he Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
C-1-2
<PAGE>
<PAGE>
Each Note may be issued only in registered form and only in minimum
denominations of at least $100,000 and integral multiples of $1,000 in excess
thereof; provided that the foregoing shall not restrict or prevent the transfer
in accordance with Section 2.03 of the Indenture of any Note having a remaining
Outstanding Principal Amount of other than an integral multiple of $1,000, or
the issuance of a single Note with a denomination less than $100,000.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note may be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be deemed to be contracts made
under the laws of the State of New York and shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
C-1-3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual signature of its duly authorized officer.
Dated: June 9, 1998
AUTOBOND MASTER FUNDING CORPORATION V
By:
----------------------------------
C-1-4
<PAGE>
<PAGE>
Trustee's Certificate of Authentication
This is one of the Funding Notes referred to in the within mentioned Indenture.
,
--------------------------------
as Trustee
By:
----------------------------
Authorized Signatory
C-1-5
<PAGE>
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _________________, agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated: ____________________ Signed:
(sign exactly as the name appears on the
other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this Assignment Form, you may
sign a separate "power of attorney" form and then mail the unsigned Note and the
signed "power of attorney" in separate envelopes. For added protection, use
certified or registered mail for a Note.
C-1-6
<PAGE>
<PAGE>
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Credit
Agreement to the Borrower, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Amount of Interest Date of Paid or Principal Notation
Date of Advance Advance Rate Advance Prepaid amount Made By
- --------------------------------------------------------------------------------
C-1-7
<PAGE>
<PAGE>
EXHIBIT C-2
FORM OF VARIABLE FUNDING NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS ACCEPTANCE
HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST
OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION 4975(e)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN INDIVIDUAL
RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR ACCOUNT DESCRIBED
ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL BE COVERED BY A
DEPARTMENT OF LABOR CLASS EXEMPTION.
AUTOBOND MASTER FUNDING CORPORATION V
CLASS B VARIABLE FUNDING NOTE
June 9, 1998
New York, New York
FOR VALUE RECEIVED, AutoBond Master Funding Corporation V, a Nevada
corporation (the "Company") hereby promises to pay to Dynex Capital, Inc. (the
"Holder") or its assigns, the principal sum of Fifty-five Million Dollars
($55,000,000.00), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Indenture referred to below, and to pay interest on the unpaid principal
amount of this Class B Note until paid in full, at the rates per annum and on
the dates provided in the Indenture and the Credit Agreement, dated as of June
9, 1998 (the "Credit Agreement") among the Company, AutoBond Acceptance
Corporation and the Holder).
The Stated Maturity of this Class B Note is as set forth in the
Credit Agreement.
By its holding of this Class B Note, the Holder shall be deemed to
accept the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
C-2-1
<PAGE>
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein by manual signature, this Class B Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
This Class B Note is one of a duly authorized issue of Class B Notes
of the Company designated as its "Class B Funding Notes" (herein called the
"Notes") limited in aggregate principal amount of $55,000,000.00, issued under
the Trust Indenture, dated as of June 9, 1998 (herein called the "Indenture"),
among the Company, AutoBond Acceptance Corporation ("AutoBond") and Dynex
Capital, Inc., as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
AutoBond, the Trustee and the Holders and of the terms upon which the Notes are
authenticated and delivered. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings set forth in the Indenture.
This Note is secured by the pledge to the Trustee under the
Indenture of the Trust Estate allocated to the Notes and recourse is limited to
the Company and AutoBond as set forth in the Indenture and the Credit Agreement.
The amounts owed under this Note shall not include any recourse to the Trustee
or any affiliates thereof.
In addition to the Notes, the Company may from time to time issue
additional Series of Notes under the Indenture, including in exchange for all or
a portion of the outstanding principal amount of this Note.
If certain Events of Default under the indenture have been declared,
the unpaid principal of the Notes may be declared immediately due and payable in
the manner and with the effect provided in the Indenture. Notice of Note
declaration will be given by mail to Noteholders, as their names and addresses
appear in the Note Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the obligations of the
Company with respect to the payment of principal and interest on this Note shall
terminate.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Noteholders of the percentages
specified in the Indenture at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes, at the time Outstanding, on behalf of all the
Holders, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by he Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
Each Note may be issued only in registered form and only in minimum
denominations of at least $100,000 and integral multiples of $1,000 in excess
thereof; provided that the foregoing shall not restrict or prevent the transfer
in accordance with Section 2.03 of the Indenture of any Note
C-2-2
<PAGE>
<PAGE>
having a remaining Outstanding Principal Amount of other than an integral
multiple of $1,000, or the issuance of a single Note with a denomination less
than $100,000.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note may be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be deemed to be contracts made
under the laws of the State of New York and shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
C-2-3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual signature of its duly authorized officer.
Dated: June 9, 1998
AUTOBOND MASTER FUNDING CORPORATION V
By:
-----------------------------------
C-2-4
<PAGE>
<PAGE>
Trustee's Certificate of Authentication
This is one of the Funding Notes referred to in the within mentioned Indenture.
-------------------------------------
as Trustee
By:
----------------------------------
Authorized Signatory
C-2-5
<PAGE>
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _________________, agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated: ____________________ Signed:
(sign exactly as the name appears on the
other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this Assignment Form, you may
sign a separate "power of attorney" form and then mail the unsigned Note and the
signed "power of attorney" in separate envelopes. For added protection, use
certified or registered mail for a Note.
C-2-6
<PAGE>
<PAGE>
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Credit
Agreement to the Borrower, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Amount of Interest Date of Paid or Principal Notation
Date of Advance Advance Rate Advance Prepaid amount Made By
- --------------------------------------------------------------------------------
C-2-7
