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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) December 15, 1998
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Asset Backed Securities Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State of Other Jurisdiction Of Incorporation)
333-00365 13-3354848
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(Commission File Number) (I.R.S. Employer Identification No.)
11 Madison Avenue, New York, New York 10010
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(Address of Principal Executive Offices) (zip code)
(212) 325-1811
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if changed Since Last Report)
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Item 5. Other Events
The Registrant is filing final forms of the Exhibits
listed in Item 7(c) below.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Document Description
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<S> <C>
1.3 Underwriting Agreement, dated as of December 7, 1998,
between Credit Suisse First Boston Corporation and
Asset Backed Securities Corporation.
4.1.5 Indenture, dated as of November 1, 1998 between Triad
Auto Receivables Owner Trust 1998-4, as Issuer, and
The Chase Manhattan Bank, as Indenture Trustee.
4.4.8 Amended and Restated Trust Agreement, dated as of
November 1, 1998, among Asset Backed Securities
Corporation, Triad Financial Special Purpose
Corporation II, a Delaware corporation, as initial
Certificateholder, Triad Financial Corporation and
Wilmington Trust Company, as Owner Trustee.
4.4.9 Note Guaranty Surety Bond, dated December 15, 1998 and
delivered by Financial Security Assurance Inc.
10.1.5 Receivables Purchase Agreement, dated as of November
1, 1998 between Triad Financial Corporation, a
California corporation, as Seller, and Asset Backed
Securities Corporation, as Purchaser.
10.2.3 Sale and Servicing Agreement, dated as of November 1,
1998, among Triad Auto Receivables Owner Trust 1998-4,
as Issuer, Asset Backed Securities Corporation, Triad
Financial Corporation, a California corporation, as
Servicer, and The Chase Manhattan Bank, as Indenture
Trustee as Backup Servicer.
10.3.2 Indemnification Agreement, dated as of November 1,
1998, among Financial Security Assurance Inc., Triad
Financial Corporation and Credit Suisse First Boston
Corporation.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSET BACKED SECURITIES CORPORATION
(Registrant)
By: /s/ Philip Weingord
-----------------------------------
Name: Philip Weingord
Title: Vice President
Dated: December 31, 1998
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Exhibit Index
<TABLE>
<CAPTION>
Exhibit
No. Document Description
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<S> <C>
1.3 Underwriting Agreement, dated as of December 7, 1998,
between Credit Suisse First Boston Corporation and
Asset Backed Securities Corporation.
4.1.5 Indenture, dated as of November 1, 1998 between Triad
Auto Receivables Owner Trust 1998-4, as Issuer, and
The Chase Manhattan Bank, as Indenture Trustee.
4.4.8 Amended and Restated Trust Agreement, dated as of
November 1, 1998, among Asset Backed Securities
Corporation, Triad Financial Special Purpose
Corporation II, a Delaware corporation, as initial
Certificateholder, Triad Financial Corporation and
Wilmington Trust Company, as Owner Trustee.
4.4.9 Note Guaranty Surety Bond, dated December 15, 1998 and
delivered by Financial Security Assurance Inc.
10.1.5 Receivables Purchase Agreement, dated as of November
1, 1998 between Triad Financial Corporation, a
California corporation, as Seller, and Asset Backed
Securities Corporation, as Purchaser.
10.2.3 Sale and Servicing Agreement, dated as of November 1,
1998, among Triad Auto Receivables Owner Trust 1998-4,
as Issuer, Asset Backed Securities Corporation, Triad
Financial Corporation, a California corporation, as
Servicer, and The Chase Manhattan Bank, as Indenture
Trustee as Backup Servicer.
10.3.2 Indemnification Agreement, dated as of November 1,
1998, among Financial Security Assurance Inc., Triad
Financial Corporation and Credit Suisse First Boston
Corporation.
</TABLE>
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EXHIBIT 1.3
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
$ 100,000,000 5.98% ASSET BACKED NOTES
ASSET BACKED SECURITIES CORPORATION
Company
UNDERWRITING AGREEMENT
December 7, 1998
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
1. Introduction. Asset Backed Securities Corporation, a Delaware
corporation (the "Company") has previously filed a registration statement with
the Securities and Exchange Commission relating to the issuance and sale from
time to time of asset backed notes and/or asset backed certificates. The Company
proposes to cause Triad Auto Receivables Owner Trust 1998-4 (the "Trust") to
issue and sell $100,000,000 principal amount of its 5.98% Asset Backed Notes
(the "Notes"), to Credit Suisse First Boston Corporation (the "Underwriter").
The Trust will also issue Asset Backed Certificates (the "Certificates" and
together with the Notes, the "Securities") which will be retained by Triad
Financial Corporation ("Triad"). The assets of the Trust will include, among
other things, a pool of motor vehicle retail installment sale contracts (the
"Receivables") secured by new and used automobiles and light trucks financed
thereby (the "Financed Vehicles"), and certain monies received thereunder on or
after October 31, 1998 (the "Cutoff Date"), and the other property and the
proceeds thereof to be conveyed to the Trust pursuant to the Sale and Servicing
Agreement to be dated as of the Closing Date (the "Sale and Servicing
Agreement") among the Trust, the Company, Triad, as servicer (the "Servicer")
and the Indenture Trustee. Pursuant to the Sale and Servicing Agreement, the
Company will sell the Receivables to the Trust and the Servicer will service the
Receivables on behalf of the Trust. In addition, pursuant to the Sale and
Servicing Agreement, the Servicer will agree to perform certain administrative
tasks on behalf of the Trust imposed on the Trust under the Indenture. The Notes
will be issued pursuant to the Indenture to be dated as of the Closing Date (as
amended and supplemented from time to time, the "Indenture"), between the Trust
and The Chase Manhattan Bank (the "Trustee"). The Certificates, each
representing a fractional undivided interest in the Trust, will be issued
pursuant to an Amended and Restated Declaration of Trust (the "Trust
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Agreement") to be dated as the Closing Date, among the Company, Triad and
Wilmington Trust Company, as owner trustee (the "Owner Trustee").
The Receivables were originated by dealers and then acquired by Triad
pursuant to its contract acquisition program. Triad will sell the Receivables to
the Company pursuant to the terms of a Receivables Purchase Agreement (the
"Receivables Purchase Agreement") dated as of December 1, 1998 between the
Company and Triad.
Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the preliminary prospectus or, if not defined therein, as
defined in the Sale and Servicing Agreement. As used herein, the term "Basic
Documents" refers to the Sale and Servicing Agreement, Indenture, Trust
Agreement, Receivables Purchase Agreement and Note Depository Agreement.
2. Representations and Warranties of the Company. The Company
represents and warrants to the Underwriter as of the date hereof as follows:
(a) A registration statement on Form S-3 (No. 333-64351),
including a prospectus and such amendments thereto as may have been
required to the date hereof, relating to the Notes and the offering of
asset backed notes and asset backed certificates from time to time in
accordance with Rule 415 under the Securities Act of 1933, as amended
(the "Act"), has been filed with the Securities and Exchange Commission
(the "Commission") and such registration statement, as amended, has
become effective. For purposes of this Agreement, "Effective Time"
means the date and time as of which such registration statement, or the
most recent post-effective amendment thereto (if any) filed prior to
the execution and delivery of this Agreement, was declared effective by
the Commission and "Effective Date" means the date of the Effective
Time. Such registration statement, as amended, and the prospectus and
related prospectus supplement that the Company has filed with the
Commission pursuant to Rule 424(b) relating to the sale of the Notes,
as from time to time amended or supplemented (including any prospectus
relating to the Notes filed with the Commission pursuant to Rule 424(b)
of the rules and regulations of the Commission promulgated under the
Act (the "Rules and Regulations")), including all documents
incorporated therein by reference relating to the Notes, are
respectively referred to as the "Registration Statement" and the "Base
Prospectus"; provided, however, that a supplement to such Base
Prospectus prepared pursuant to Section 5(a) shall be deemed to have
supplemented the Base Prospectus only with respect to the offering of
the Notes (any such supplement for the Notes, together with the Base
Prospectus, the "Prospectus"). The conditions to the use of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, and the conditions of Rule 415 under
the Act, have been satisfied with respect to the Registration
Statement.
(b) The Registration Statement, on the Effective Date,
and the Base Prospectus, as of the date of the related Prospectus
conformed in all material respects to the requirements of the Act and
the Rules and Regulations, and did not include any untrue statement of
a material fact or omit to state any material fact required to be
stated therein
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or necessary to make the statements therein not misleading, and on the
date of this Agreement, at the time of the filing of the Prospectus
pursuant to Rule 424(b) and at the Closing Date such Base Prospectus
conforms and will conform in all material respects to the requirements
of the Act and the Rules and Regulations, and does not include and will
not include, any untrue statement of a material fact and does not omit
and will not omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. The Prospectus delivered to the
Underwriter was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system, except to the extent
permitted by Regulation S-T. The two immediately preceding sentences do
not apply to statements or omissions from either of such documents
based upon written information (including Computational Materials (as
such term is defined in Section 8(a)) furnished to the Company by any
Underwriter specifically for use therein.
(c) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own its assets
and conduct its business as described in the Prospectus, is duly
qualified as a foreign corporation in good standing in all
jurisdictions in which the ownership or lease of its property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company, and is conducting its business so as to comply in all
material respects with the applicable statutes, ordinances, rules and
regulations of the jurisdictions in which it is conducting business.
(d) The Basic Documents conform, or will conform as of
the Closing Date, to the description thereof contained in the
Registration Statement and the Prospectus. The Notes, when duly and
validly executed by the Trustee, authenticated and delivered in
accordance with the Indenture, and delivered and paid for pursuant
hereto will be validly issued and outstanding and entitled to the
benefits of the Indenture. The Certificates, when duly and validly
executed by the Owner Trustee, authenticated and delivered in
accordance with the Trust Agreement will be validly issued and
outstanding and entitled to the benefits of the Trust Agreement.
(e) The execution and delivery by the Company of this
Agreement and the Basic Documents to which it is a party are within the
corporate power of the Company and have been, or will have been on the
Closing Date, duly authorized by all necessary corporate action on the
part of the Company; and neither the execution and delivery by the
Company of such instruments, nor the consummation by the Company of the
transactions herein or therein contemplated, nor the compliance by the
Company with the provisions hereof or thereof, will (i) conflict with
or result in a breach of, or constitute a default under, any of the
provisions of the certificate of incorporation or by-laws of the
Company, (ii) conflict with any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Company or its properties, (iii) conflict with any of the provisions of
any indenture, mortgage, contract or other instrument to which the
Company is a party or by which it is bound, or (iv) result in the
creation or imposition of
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any lien, charge or encumbrance upon any of its property pursuant to
the terms of any such indenture, mortgage, contract or other
instrument.
(f) At the date thereof, the Basic Documents to which the
Company is a party will constitute a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with their terms, subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting creditors' rights generally from time to time in
effect, and to general principles of equity.
(g) All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official (except with respect
to the state securities or Blue Sky laws of various jurisdictions),
required in connection with the valid and proper authorization,
issuance and sale of the Notes pursuant to this Agreement and the Basic
Documents has been or will be taken or obtained on or prior to the
Closing Date.
(h) The Company's assignment and delivery of the
Receivables to the Trust on the Closing Date will vest in the Trust all
the Triad's right, title and interest therein, or will result in a
first priority perfected security interest therein, in either case
subject to no prior lien. The Trust's assignment of the Collateral to
the Trustee pursuant to the Indenture will vest in the Trustee, for the
benefit of the Noteholders, a first priority perfected security
interest therein, subject to no prior lien.
(i) At the Closing Date, the Receivables included in the
Trust will meet the criteria for selection described in the Prospectus,
and will conform in all material respects to the representations and
warranties with respect thereto set forth in the Receivables Purchase
Agreement and assigned to the Trust pursuant to the Sale and Servicing
Agreement.
(j) The Trust is not an "investment company" and is not
required to be registered as an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
3. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to cause the Trust to
sell to the Underwriter, and the Underwriter agrees, to purchase from the Trust,
the principal amount of each class of Notes set forth opposite the name of the
Underwriter on Schedule I hereto at a purchase price equal to "Price %" as
specified on Schedule II hereto.
The Company agrees to cause the Trust to deliver the Notes to
the Underwriter, against payment of the purchase price to or upon the order of
the Company by wire transfer or check in Federal (same day) Funds, at the office
of Dechert Price & Rhoads, at 10:00 a.m., New York time on December 16, 1998, or
at such other time not later than seven full business days thereafter as the
Representative and the Company, on behalf of the Trust, determine, such time
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being herein referred to as the "Closing Date." The Notes to be so delivered
will be initially represented by one or more Notes registered in the name of
Cede & Co., the nominee of The Depository Trust Company ("DTC"). The interests
of beneficial owners of the Notes will be represented by book entries on the
records of DTC and participating members thereof. Definitive Notes will be
available only under the limited circumstances specified in the Basic Documents.
4. Offering by Underwriter. It is understood that the Underwriter
proposes to offer the Notes for sale to the public (which may include selected
dealers), on the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees
with the Underwriter that:
(a) Immediately following the execution of this
Agreement, the Company will prepare a supplement to the Base Prospectus
setting forth the amount of Notes and the terms thereof not otherwise
specified in the Base Prospectus, the price at which such Notes are to
be purchased by the Underwriter, from the Company, either the initial
public offering price or the method by which the price at which such
Notes are to be sold will be determined, the selling concessions and
reallowances, if any, and such other information as the Underwriter and
the Company deem appropriate in connection with the offering of such
Notes, but the Company will not file, for so long as the delivery of a
Prospectus is required in connection with the offering or sale of such
Notes, any amendments to the Registration Statement as in effect with
respect to such Notes, or any amendments or supplements to the related
Prospectus, unless it shall first have delivered copies of such
amendments or supplements to the Underwriter, or if the Underwriter
shall have reasonably objected thereto promptly after receipt thereof,
the Company will, during such period, immediately advise the
Underwriter or its counsel (i) when notice is received from the
Commission that any post-effective amendment to the Registration
Statement has become or will become effective and (ii) of any order or
communications suspending or preventing, or threatening to suspend or
prevent, the offer and sale of the Notes or of any proceedings or
examinations that may lead to such an order or communication, whether
by or of the Commission or any authority administering any state
securities or Blue Sky law, as soon as the Company is advised thereof,
and will use its best efforts to prevent the issuance of any such order
or communication and to obtain as soon as possible its lifting, if
issued.
(b) If, at any time when a Prospectus relating to the
Notes is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend or supplement the Prospectus
to comply with the Act or the Rules and Regulations, the Company will
promptly prepare and file with the Commission, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance; provided, however, that the Company
will not be required to file any such amendment or supplement with
respect to any Computational
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Materials, Structural Term Sheets (each as defined in Section 8 below)
or Collateral Term Sheets (as defined in Section 9 below) incorporated
by reference in the Prospectus other than any amendments or supplements
of such Computational Materials or Structural Term Sheets that are
furnished to the Company by the Underwriter pursuant to Section 8(a)
hereof or any amendments or supplements of such Collateral Term Sheets
that are furnished to the Company by the Underwriter pursuant to
Section 9(a) hereof which are required to be filed in accordance
therewith.
(c) The Company will cause any Computational Materials
and any Structural Term Sheets with respect to the Notes that are
delivered by the Underwriter to the Company pursuant to Section 8 to be
filed with the Commission on a Current Report on Form 8-K (a "Current
Report") pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the date on
which this Agreement is executed and delivered. The Company will cause
any Collateral Term Sheet with respect to the Notes that is delivered
by the Underwriter to the Company in accordance with the provisions of
Section 9 to be filed with the Commission on a Current Report pursuant
to Rule 13a-11 under the Exchange Act in accordance with Section 10 on
the business day immediately following the day on which such Collateral
Term Sheet is delivered to counsel for the Company by an Underwriter
prior to 10:30 a.m. New York time In addition, if at any time prior to
the availability of the related Prospectus, the Underwriter has
delivered to any prospective investor a subsequent Collateral Term
Sheet that reflects, in the reasonable judgment of the Underwriter and
the Company, a material change in the characteristics of the
Receivables from those on which a Collateral Term Sheet with respect to
the Notes previously filed with the Commission was based, the Company
will cause any such Collateral Term Sheet that is delivered by the
Underwriter to the Company in accordance with the provisions of Section
9 hereof to be filed with the Commission on a Current Report in
accordance with Section 10. Each such Current Report shall be
incorporated by reference in the related Prospectus and the related
Registration Statement.
(d) The Company will cause the Trust to furnish or make
available, within a reasonable time after the end of each calendar
year, to each holder of a Notes (each, a "Noteholder") at any time
during such year, such information as the Company deems necessary or
desirable to assist Noteholders in preparing their federal income tax
returns.
(e) The Company will furnish to the Underwriter copies of
the Registration Statement (two of which will be signed and will
include all documents and exhibits thereto or incorporated by reference
therein), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents relating to the Notes, in
each case as soon as available, and in such quantities as the
Underwriter reasonably requests.
(f) The Company will arrange for the qualification of the
Notes for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Underwriter
designates and will continue such qualifications in effect so long as
required for the distribution of the Notes; provided, however, that
neither the Company, Triad, nor the Trust shall be required to do
business in any jurisdiction where it is now not
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qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction in which it is now not
subject to service of process.
(g) The Company will, while the Notes are outstanding,
furnish to the Underwriter, and upon request of the Underwriter,
information with respect to the Trust or the Receivables, as the
Underwriter may reasonably request, including but not limited to
information necessary or appropriate to the maintenance of a secondary
market in the Notes.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement and will reimburse
the Underwriter for any expenses (including fees and disbursements of
its counsel) incurred by them in connection with the offering and the
qualification of the Notes and determination of their eligibility for
investment under the laws of such jurisdictions as the Representative
may designate and the reproduction of memoranda relating thereto, for
any fees charged by investment rating agencies for the rating of the
Notes and, to the extent previously agreed upon with the
Representative, the expenses incurred in distributing any preliminary
prospectuses, the Prospectus or any amendments or supplements thereto
to the Underwriter.
(i) The Company will file, or cause the Trustee to file
on behalf of the Trust, on a timely and complete basis, all documents
that are required by the Trust with the Commission pursuant to Sections
13, 14 or 15(d) of the Exchange Act.
6. Conditions to the Obligations of the Underwriter. The
obligations of the Underwriter to purchase and pay for the Notes subject to this
Agreement will be subject to the accuracy of the representations and warranties
on the part of the Company as of the date hereof and the Closing Date, to the
accuracy of the statements of the Company made pursuant to the provisions
thereof, to the performance by the Company in all material respects of its
obligations hereunder and to the following additional conditions precedent:
(a) The Underwriter shall have received letters dated the
date of this Agreement, in form and substance acceptable to the
Underwriter and its counsel, prepared by independent certified public
accountants acceptable to the Underwriter and its counsel, (i)
regarding the numerical information contained in the Prospectus and
(ii) relating to certain agreed upon procedures as specified by the
Underwriter.
(b) The Underwriter shall have received a copy of the
Prospectus.
(c) All actions required to be taken and all filings
required to be made by the Company under the Act prior to the sale of
the Notes shall have been duly taken or made; and prior to the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted, or to the knowledge of the Company or the
Underwriter, shall be contemplated by the Commission.
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(d) The Notes shall be rated "Aaa" by Moody's Investors
Service, Inc. ("Moody's") and "AAA" by Standard & Poor's Ratings Group,
a division of The McGraw Hill Companies, Inc. ("S&P" and, together with
Moody's, the "Rating Agencies").
(e) The Underwriter shall have received an opinion of
counsel or counsels for the Company, dated the Closing Date,
substantially to the effect that:
(i) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business as a
foreign corporation in the State of New York.
(ii) The Company has requisite corporate power
and corporate authority to enter into this Agreement and the
Basic Documents to which it is a party.
(iii) The execution, delivery and performance of
this Agreement and the Basic Documents to which the Company is
a party do not conflict with the Certificate of Incorporation
or the By-laws of the Company and, to the knowledge of such
counsel, (A) do not conflict with or violate or constitute a
material breach of, or constitute a default under, any
material written contract, indenture, undertaking, or other
agreement or instrument by which the Company is now bound or
to which it is now a party, and (B) do not conflict with or
violate any order, writ, injunction or decree of any court or
governmental authority against the Company.
(iv) This Agreement and the Basic Documents to
which the Company is a party have been authorized by all
necessary corporate action on the part of the Company and have
been fully executed and delivered by the Company.
(v) To the knowledge of such counsel, no
authorization, consent, approval of or other filing with any
New York State or federal governmental authority, that has not
been obtained or made, is required for the execution of,
delivery of or performance by the Company of any material
obligation under the Basic Documents to which it is a party or
the Securities; provided however that, such counsel need not
express an opinion with respect to (i) any authorization,
consent, approval or any filing which may be required under
the Securities Act of 1933, as amended, or any state
securities laws, or (ii) the creation or perfection of any
security interest in the Receivables or the Financed Vehicles.
(vi) The Registration Statement (except
information of an accounting, financial or statistical nature
included therein, as to which we do not express any opinion)
and the Prospectus comply as to form in all material respects
with the requirements of the Act and the rules and regulations
promulgated thereunder. In passing upon the form of the
Registration Statement, such counsel may assume the
correctness and completeness of the statements made therein
and take no responsibility therefor, except insofar as such
statements relate to them.
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(vii) The conditions to the use of a registration
statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, and the conditions of Rule
415 under the Act, have been satisfied with respect to the
Registration Statement.
(viii) The Registration Statement, on the day it
became effective, and the Base Prospectus, as of the date of
the Prospectus Supplement conformed in all material respects
to the requirements of the Act and the Rules and Regulations.
(f) The Underwriter shall have received an opinion of
counsel to Triad, addressed to the Underwriter and the Company, dated
the Closing Date, substantially to the effect that the statements in
the Prospectus Supplement do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(it being understood that such counsel need not render any opinion with
respect to any financial or statistical information contained therein).
(g) The Underwriter shall have received from Stroock &
Stroock & Lavan LLP, counsel for the Underwriter, such opinion or
opinions, dated the Closing Date, with respect to the existence of the
Company, the Registration Statement, the Prospectus and other related
matters as the Underwriter may require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(h) The Underwriter shall have received a certificate or
certificates signed by such of the principal executive, financial and
accounting officers of the Company as the Underwriter may request,
dated the Closing Date, in which such officers, to the best of their
knowledge after reasonable investigation, shall state that (i) the
representations and warranties of the Company in this Agreement are
true and correct; (ii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Date; (iii) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated;
(iv) subsequent to the respective dates as of which information is
given in the Prospectus, and except as otherwise set forth in or
contemplated by the Prospectus, there has not been any material adverse
change in the general affairs, capitalization, financial condition or
results of operations of the Company; and (v) except as otherwise
stated in the Prospectus, there are no material actions, suits or
proceedings pleading before any court or governmental agency, authority
or body or, to their knowledge, threatened, affecting the Company or
the transactions contemplated by this Agreement.
(i) The Underwriter shall have received letters dated the
Closing Date from counsel rendering opinions to either Rating Agency,
to the effect that the Underwriter may rely upon their opinion to such
rating organization, as if such opinion were rendered to the
Underwriter.
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(j) The Underwriter shall have received copies of all
documents, certificates, legal opinions and accountant's letters
delivered to the Company pursuant to the Receivables Purchase Agreement
in form and substance satisfactory to the Underwriter and with the
legal opinions and accountant's letters addressed to the Underwriter or
accompanied by a letter entitling the Underwriter to rely thereon.
(k) The Company will furnish the Underwriter with such
copies of such other opinions, certificates, letters and documents as
the Underwriter reasonably requests.
7. Indemnification.
(a) The Company will indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the
Underwriter or such controlling person may become subject, under the
Act or the Exchange Act or other Federal or State statutory law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement or the Prospectus or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
will reimburse the Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by the Underwriter and each
such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided however,
that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement in or
omission or alleged omission made in any of such documents (A) in
reliance upon and in conformity with written information furnished to
the Company by the Underwriter specifically for use therein, or (B) in
any Computational Materials or ABS Term Sheets furnished to prospective
investors by the Underwriter or any Current Report or any amendment or
supplement thereof, except to the extent that any untrue statement or
alleged untrue statement therein or omission therefrom results directly
from an error (a "Receivable Pool Error") in the information concerning
the characteristics of the Receivables furnished by Triad or the
Company to the Underwriter in writing or by electronic transmission
that was used in the preparation of either (x) any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof)
included in such Current Report (or amendment or supplement thereof) or
(y) any written or electronic materials furnished to prospective
investors on which the Computational Materials (or amendments or
supplements) were based. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act to the same
extent as the foregoing indemnities from the Company to the
Underwriter,
10
<PAGE> 11
but only with reference to (A) written information furnished to the
Company by or on behalf of the Underwriter specifically for use in the
preparation of the documents referred to in the foregoing indemnity
(the "Underwriter Information"), or (B) any Computational Materials or
ABS Term Sheets (or amendments or supplements thereof) delivered to
prospective investors by the Underwriter, including any Computational
Materials or ABS Term Sheets that are furnished to the Company by such
Underwriter pursuant to Section 8 and incorporated by reference in such
Registration Statement, or the related Prospectus or any amendment or
supplement thereof (except that no such indemnity shall be available
for any losses, claims, damages or liabilities, or actions in respect
thereof, resulting from any Receivable Pool Error, other than a
Receivable Pool Error that had been corrected and such corrected
information had been provided to the Underwriter); provided, however,
that in no event shall the Underwriter be liable to the Company under
this paragraph (b) with respect to the material described in clause (B)
in an amount in excess of the underwriting discounts and commissions
received by such Underwriter in connection with the offering of the
Notes. This indemnity agreement will be in addition to any liability
that the Underwriter may otherwise have. The Company acknowledges that,
for purposes of this Section, the statements set forth in the
Prospectus regarding stabilization allocation of Notes between
Underwriters and concessions, under the heading "Underwriting" with
respect to the Notes to be purchased by the Underwriter, constitute the
only information furnished to the Company by the Underwriter for
inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the
indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may
have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action
is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party). After notice
from the indemnifying party to such indemnified party of its election
to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on
any claims that are the subject matter of such action.
11
<PAGE> 12
(d) If the indemnification provided for in this Section
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriter on the other from the offering of the Notes or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriter on
the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Underwriter on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Underwriter. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriter
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified in connection with
investigating or defending any action or claim which is the subject to
this subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. Computational Materials and Structural Term Sheets.
(a) The Underwriter agrees to provide to the Company no
less than two business days prior to the date on which the Prospectus
is proposed to be filed pursuant to Rule 424(b) under the Act, for the
purpose of permitting the Company to comply with the filing requirement
set forth in Section 5(a), all information (in such written or
electronic format as required by the Company) with respect to the Notes
which constitutes "Computational Materials", as defined in the
Commission's No-Action Letter, dated May 20, 1994, addressed to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated
and Kidder Structured Asset Corporation, and the no-action letter dated
May 27, 1994 issued by the Division of Corporation Finance of the
Commission to the Public Securities Association (together, the "Kidder
Letters"), the filing of which material is a condition of the relief
granted in such letters (such materials being the "Computational
12
<PAGE> 13
Materials"), and (ii) "Structural Term Sheets" within the meaning of
the no-action letter dated February 17, 1995 issued by the Division of
Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter") and the filing of such material is a
condition of the relief granted in such letter (such materials being
the "Structural Term Sheets"), such delivery to be made not later than
10:30 a.m. New York on the business day immediately following the date
on which such Computational Materials or Structural Term Sheets was
first delivered to a prospective investors in the Notes. Each delivery
of Computational Materials and Structural Term Sheets to the Company
pursuant to this paragraph (a) shall be effected in accordance with
Section 10.
(b) The Underwriter represents and warrants to and agrees with the
Company, as of the date hereof and as of the Closing Date, that:
(i) the Computational Materials furnished to the Company
by such Underwriter pursuant to Section 8(a) constitute
(either in original, aggregated or consolidated form) all of
the materials furnished to prospective investors by such
Underwriter prior to the time of delivery thereof to the
Company that are required to be filed with the Commission with
respect to the Notes in accordance with the Kidder Letters,
and such Computational Materials comply with the requirements
of the Kidder Letters;
(ii) the Structural Term Sheets furnished to the Company
by such Underwriter pursuant to Section 8(a) constitute all of
the materials furnished to prospective investors by such
Underwriter prior to the time of delivery thereof to the
Company that are required to be filed with the Commission as
"Structural Term Sheets" with respect to the related Notes in
accordance with the PSA Letter, and such Structural Term
Sheets comply with the requirements of the PSA Letter; and
(iii) on the date any such Computational Materials or
Structural Term Sheets with respect to the Notes (or any
written or electronic materials furnished to prospective
investors on which the Computational Materials are based) were
last furnished to each prospective investor by such
Underwriter and on the date of delivery thereof to the Company
pursuant to Section 8(a) and on the Closing Date, such
Computational Materials (or such other materials) or
Structural Term Sheets did not and will not include any untrue
statement of a material fact or, when read in conjunction with
the Prospectus and Prospectus Supplement, omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
Notwithstanding the foregoing, the Underwriter makes no representation
or warranty as to whether any Computational Materials or Structural Term Sheets
(or any written or electronic materials on which the Computational Materials are
based) included or will include any untrue statement resulting directly from any
Receivable Pool Error.
13
<PAGE> 14
9. Collateral Term Sheets.
(a) Prior to the delivery of any "Collateral Term Sheet"
within the meaning of the PSA Letter, the filing of which material is a
condition of the relief granted in such letter (such material being the
"Collateral Term Sheets"), to a prospective investor in the Notes, the
Underwriter shall notify the Company and its counsel by telephone of
their intention to deliver such materials and the approximate date on
which the first such delivery of such materials is expected to occur.
Not later than 10:30 a.m., New York time, on the business day
immediately following the date on which any Collateral Term Sheet was
first delivered to a prospective investor in the Notes, the Underwriter
shall deliver to the Company one complete copy of all materials
provided by the Underwriter to prospective investors in such Notes
which constitute "Collateral Term Sheets." Each delivery of a
Collateral Term Sheet to the Company pursuant to this paragraph (a)
shall be effected in accordance with Section 10. (Collateral Term
Sheets and Structural Term Sheets are, together, referred to herein as
"ABS Term Sheets.") At the time of each such delivery, the Underwriter
making such delivery shall indicate in writing that the materials being
delivered constitute Collateral Term Sheets, and, if there has been any
prior such delivery with respect to the Notes, shall indicate whether
such materials differ in any material respect from any Collateral Term
Sheets previously delivered to the Company with respect to the Notes
pursuant to this Section 9(a) as a result of the occurrence of a
material change in the characteristics of the related Receivables.
(b) The Underwriter represents and warrants to and agrees with
the Company as of the date of this Agreement and as of the Closing
Date, that:
(i) The Collateral Term Sheets furnished to the
Company by such Underwriter pursuant to Section 9(a)
constitute all of the materials furnished to prospective
investors by such Underwriter prior to time of delivery
thereof to the Company that are required to be filed with the
Commission as "Collateral Term Sheets" with respect to the
Notes in accordance with the PSA Letter, and such Collateral
Term Sheets comply with the requirements of the PSA Letter;
and
(ii) On the date any such Collateral Term Sheets
with respect to the Notes were last furnished to each
prospective investor by such Underwriter and on the date of
delivery thereof to the Company pursuant to Section 9(a) and
on the Closing Date, such Collateral Term Sheets did not and
will not include any untrue statement of a material fact or,
when read in conjunction with the Prospectus, omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
Notwithstanding the foregoing, the Underwriter makes no
representation or warranty as to whether any Collateral Term
Sheet included or will include any untrue statement or
material omission resulting directly from any Receivable Pool
Error.
14
<PAGE> 15
(c) If, at any time when a Prospectus relating to the
Notes is required to be delivered under the Act, it shall be necessary
to amend or supplement the related Prospectus as a result of an untrue
statement of a material fact contained in any Collateral Term Sheets
provided by the Underwriter pursuant to this Section 9 or the omission
to state therein a material fact required, when considered in
conjunction with the related Prospectus, to be stated therein or
necessary to make the statements therein, when read in conjunction with
the related Prospectus, not misleading, or if it shall be necessary to
amend or supplement any Current Report relating to any Collateral Term
Sheets to comply with the Act or the rules thereunder, such Underwriter
promptly will prepare and furnish to the Company for filing with the
Commission an amendment or supplement which will correct such statement
or omission or an amendment which will effect such compliance. The
Underwriter represents and warrants to the Company, as of the date of
delivery of such amendment or supplement to the Company, that such
amendment or supplement will not include any untrue statement of a
material fact or, when read in conjunction with the related Prospectus,
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, such Underwriter makes no representation or warranty as to
whether any such amendment or supplement will include any untrue
statement resulting directly from any Receivable Pool Error.
10. Delivery and Filing of Current Reports, Collateral Term
Sheets, Structural Term Sheets.
(a) Any Current Report, Collateral Term Sheet or
Structural Term Sheet that is required to be delivered by the
Underwriter to the Company hereunder shall be effected by the delivery
of one copy to counsel for the Company and, if requested, one copy in
computer readable format to the Financial Printer on or prior to 10:30
a.m. on the date so specified herein.
(b) The Company shall cause its counsel or the Financial
Printer to file with the Commission any such Current Report, Collateral
Term Sheet or Structural Term Sheet within one business day immediately
following the delivery thereof pursuant to the preceding subsection.
The Company shall use its best efforts to cause any such Current
Report, Collateral Term Sheet or Structural Term Sheet to be so filed
prior to 4:00 p.m., New York time, on such business day and will
promptly advise the Representative of such filing.
11. Default of Underwriter. If the Underwriter defaults in its
obligations to purchase the Notes hereunder and the aggregate principal amount
of such Notes which such defaulting Underwriter agreed, but failed, to purchase
does not exceed 10% of the total principal amount of the Notes, the Company may
make arrangements for the purchase of such Notes by other persons, including any
other underwriters. If the Underwriter so defaults and the aggregate principal
amount of Notes with respect to which such default or defaults occur is more
than 10% of the total principal amount of the Notes and arrangements
satisfactory to the Company for the purchase of such Notes by other persons are
not made pursuant to this Agreement, this
15
<PAGE> 16
Agreement will terminate without liability on the part of any other underwriter,
except as provided in Section 10. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
12. Termination of the Obligations of the Underwriter. The
obligations of the Underwriter to purchase the Notes on the Closing Date shall
be terminable by the Underwriter if at any time on or prior to the Closing Date
(a) any of the conditions set forth in Section 6 are not satisfied when and as
provided therein; (b) there shall have been the entry of a decree or order by a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to Triad or the Company, or for the winding up or
liquidation of the affairs of Triad or the Company; (c) there shall have been
the consent by Triad or the Company to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to Triad or the
Company or of or relating to substantially all of the property of Triad or the
Company; (d) any purchase and assumption agreement with respect to Triad or the
Company of substantially all of the assets and properties of Triad or the
Company shall have been entered into; or (e) a Termination Event (as defined
below) shall have occurred. The termination of the Company's obligations
hereunder shall not terminate the Company's rights hereunder or its right to
exercise any remedy available to it at law or inequity.
A "Termination Event" means the existence of any one or more
of the following conditions:
(a) a stop order suspending the effectiveness of the
Registration Statement shall have been issued or a proceeding for that purpose
shall have been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this
Agreement, there shall have occurred an adverse change in the condition,
financial or otherwise, in the earnings, regulatory situation or business
prospects of Triad or the Company reasonably determined by the Underwriter to be
material; or
(c) subsequent to the date of this Agreement there shall
have occurred any of the following: (i) any suspension or limitation of trading
in securities generally on the New York Stock Exchange or any setting of minimum
prices for trading on such exchange, or any suspension of trading of any
securities of Triad or its parent, if so listed on any exchange or in the
over-the-counter market; (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State authorities;
or (iii) the engagement by the United States in hostilities, or the escalation
of such hostilities, or any calamity or crisis, if the effect of any such event
specified in this clause (iii) in the reasonable judgment of the Underwriter
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Notes on the terms and in the manner contemplated in the
Prospectus.
16
<PAGE> 17
13. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements by the Company or its officers and of the Underwriter set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof, made by or on
behalf of the Underwriter, the Company or any of its officers or directors or
any controlling person, and will survive delivery of and payment for Notes.
If this Agreement is terminated pursuant to Section 9 or if for any
reason the purchase of the Notes by the Underwriter is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by
them pursuant to Section 5(g), and the obligations of the Company and the
Underwriter pursuant to Sections 7 and 8 shall remain in effect.
14. Notices. All communications hereunder will be in writing and,
if sent to the Underwriter will be mailed, delivered or telegraphed and
confirmed to the Underwriter at 11 Madison Avenue, New York, New York 10010 or
if sent the Company, will be mailed, delivered or telegraphed and confirmed to
it at 11 Madison Avenue, New York, New York 10010 Attention: President;
provided, however, that any notice to the Underwriter pursuant to Section 7 will
be mailed, delivered or telegraphed to such Underwriter at the address furnished
by it.
15. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Sections 7 and 8, and
their successors and assigns, and no other person will have any right or
obligations hereunder.
16. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
17
<PAGE> 18
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon, it
will become a binding agreement between the Company and the Underwriter, in
accordance with its terms.
Very truly yours,
ASSET BACKED SECURITIES CORPORATION,
as Company
By:
-----------------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION,
as Underwriter
By:
-----------------------------------
Name:
Title:
18
<PAGE> 19
SCHEDULE I
<TABLE>
<CAPTION>
Initial Principal
Balance of
Underwriter Notes
- ----------- -----
<S> <C>
Credit Suisse First Boston Corporation.................... $100,000,000
Total..................................................... $100,000,000
</TABLE>
19
<PAGE> 20
SCHEDULE II
<TABLE>
<CAPTION>
Original
Principal Investor Investor
Security Balance $ Price % Price $ Price % Price $ Rate %
- -------- --------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Class A Notes $100,000,000 5.98%
</TABLE>
Total Price to Public: $
Total Price to Seller:
Underwriting Discounts
and Commissions: $
20
<PAGE> 1
EXHIBIT 4.1.5
================================================================================
INDENTURE
between
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
and
THE CHASE MANHATTAN BANK
as Indenture Trustee
Dated as of November 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.................................................... 3
Section 1.1. Definitions...................................................................... 3
ARTICLE II THE NOTES...................................... 9
Section 2.1. Form............................................................................. 9
Section 2.2. Execution, Authentication and Delivery........................................... 10
Section 2.3. Temporary Notes.................................................................. 10
Section 2.4. Registration, Registration of Transfer and Exchange.............................. 11
Section 2.5. Mutilated, Destroyed, Lost or Stolen Notes....................................... 13
Section 2.6. Persons Deemed Owners............................................................ 14
Section 2.7. Payment of Principal and Interest, Defaulted Interest............................ 14
Section 2.8. Cancellation..................................................................... 15
Section 2.9. Release of Collateral............................................................ 15
Section 2.10. Book-Entry Notes................................................................ 16
Section 2.11. Notices to Clearing Agency...................................................... 16
Section 2.12. Definitive Notes................................................................ 17
Section 2.13. Authenticating Agents........................................................... 17
ARTICLE III COVENANTS..................................... 18
Section 3.1. Payment of Principal and Interest................................................ 18
Section 3.2. Maintenance of Office or Agency.................................................. 18
Section 3.3. Money for Payments To Be Held in Trust........................................... 18
Section 3.4. Existence........................................................................ 20
Section 3.5. Protection of the Trust Estate................................................... 20
Section 3.6. Opinion as to the Trust Estate................................................... 21
Section 3.7. Performance of Obligations, Servicing; of Receivables............................ 22
Section 3.8. Negative Covenants............................................................... 23
Section 3.9. Annual Statement as to Compliance................................................ 23
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms............................. 24
Section 3.11. Successor or Transferee......................................................... 26
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.12. No Other Business............................................................... 26
Section 3.13. No Borrowing.................................................................... 26
Section 3.14. Servicer's Obligations.......................................................... 27
Section 3.15. Guarantees, Loans, Advances and Other Liabilities............................... 27
Section 3.16. Capital Expenditures............................................................ 27
Section 3.17. Notice of Events of Default..................................................... 27
RESTRICTED PAYMENTS....................................... 27
Section 3.18. Further Instruments and Acts.................................................... 27
Section 3.19. Compliance with Laws............................................................ 28
Section 3.20. Tax Treatment................................................................... 28
Section 3.21. Investment Company Act.......................................................... 28
Section 3.22. Liens........................................................................... 28
Section 3.23. Conduct of Business............................................................. 28
ARTICLE IV SATISFACTION AND DISCHARGE................................................................... 29
Section 4.1. Satisfaction and Discharge of Indenture.......................................... 29
APPLICATION OF TRUST MONEY................................... 30
Section 4.2. Payment of Moneys Held by Paying Agent........................................... 30
ARTICLE V REMEDIES....................................... 31
Section 5.1. Events of Default................................................................ 31
Section 5.2. Acceleration of Maturity; Rescission and Annulment............................... 32
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee........ 34
Section 5.4. Remedies; Priorities............................................................. 36
Section 5.5. Optional Preservation of the Receivables......................................... 38
Section 5.6. Limitation of Suits.............................................................. 38
Section 5.7. Unconditional Rights of Noteholders To Receive Principal and Interest............ 39
Section 5.8. Restoration of Rights and Remedies............................................... 39
Section 5.9. Rights and Remedies Cumulative................................................... 39
Section 5.10. Delay or Omission Not a Waiver.................................................. 40
Section 5.11. Control by Noteholders.......................................................... 40
Section 5.12. Waiver of Past Default.......................................................... 40
Section 5.13. Undertaking for Costs........................................................... 41
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 5.14. Waiver of Stay or Extension Laws................................................ 41
Section 5.15. Action on Notes................................................................. 41
Section 5.16. Performance and Enforcement of Certain Obligations.............................. 42
SUBROGATION........................................... 42
ARTICLE VI THE INDENTURE TRUSTEE................................ 43
DUTIES OF THE INDENTURE TRUSTEE................................. 43
Section 6.2. Rights of Indenture Trustee...................................................... 46
Section 6.3. Individual Rights of the Indenture Trustee....................................... 47
Section 6.4. Indenture Trustee's Disclaimer................................................... 47
Section 6.5. Notice of Defaults............................................................... 47
Section 6.6. Reports by Indenture Trustee to the Holders...................................... 47
Section 6.7. Compensation, Reimbursement and Indemnity........................................ 48
Section 6.8. Replacement of the Indenture Trustee............................................. 49
Section 6.9. Successor Indenture Trustee by Merger............................................ 50
Section 6.10. Appointment of Co-Trustee or Separate Trustee................................... 51
Section 6.11. Eligibility; Disqualification................................................... 52
Section 6.12. Preferential Collection of Claims Against Issuer................................ 52
Section 6.13. Appointment and Powers.......................................................... 52
Section 6.14. Performance of Duties........................................................... 53
Section 6.15. Limitation on Liability......................................................... 53
Section 6.16. Reliance Upon Documents......................................................... 54
Section 6.17. Successor Indenture Trustee..................................................... 54
Section 6.19. Representations and Warranties of the Indenture Trustee......................... 54
Section 6.20. Waiver of Setoffs............................................................... 55
Section 6.21. Control by the Controlling Party................................................ 55
Section 6.22. Indenture Trustee Not Liable for Notes or Receivables........................... 55
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.............................................................. 56
Section 7.1. Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders........... 56
Section 7.2. Preservation of Information, Communications to Noteholders....................... 57
Section 7.3. Reports by Issuer................................................................ 57
Section 7.4. Reports by Indenture Trustee..................................................... 58
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES....................................................... 58
Section 8.1. Collection of Money.............................................................. 58
Section 8.2. Trust Accounts................................................................... 58
Section 8.3. General Provisions Regarding Accounts............................................ 58
Section 8.4. Release of Trust Estate.......................................................... 59
Section 8.5. Opinion of Counsel............................................................... 59
ARTICLE IX SUPPLEMENTAL INDENTURES............................... 60
Section 9.1. Supplemental Indentures Without Consent of Noteholders........................... 60
Section 9.2. Supplemental Indentures With Consent of Noteholders.............................. 61
Section 9.3. Execution of Supplemental Indentures............................................. 62
Section 9.4. Effect of Supplemental Indenture................................................. 62
Section 9.5. Conformity With Trust Indenture Act.............................................. 63
Section 9.6. Reference in Notes to Supplemental Indentures.................................... 63
ARTICLE X REDEMPTION OF NOTES................................. 63
Section 10.1. Redemption...................................................................... 63
Section 10.2. Form of Redemption Notice....................................................... 63
Section 10.3. Notes Payable on Redemption Date................................................ 64
ARTICLE XI MISCELLANEOUS.................................... 64
Section 11.1. Compliance Certificates and Opinions, etc....................................... 64
Section 11.2. Form of Documents Delivered to Indenture Trustee................................ 66
Section 11.3. Acts of Noteholders............................................................. 67
Section 11.4. Notices, etc., to the Indenture Trustee, Issuer and Rating Agency............... 67
Section 11.5. Notices to Noteholders, Waiver.................................................. 68
Section 11.6. Alternate Payment and Notice Provisions......................................... 69
Section 11.7. Effect of Headings and Table of Contents........................................ 69
Section 11.8. Conflict with Trust Indenture Act............................................... 69
Section 11.9. Successors and Assigns.......................................................... 69
Section 11.10. Severability................................................................... 69
Section 11.11. Benefits of Indenture.......................................................... 70
Section 11.12. Legal Holidays................................................................. 70
Section 11.13. Governing Law.................................................................. 70
Section 11.14. Counterparts................................................................... 70
</TABLE>
iv
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<TABLE>
<S> <C>
Section 11.15. Recording of Indenture......................................................... 70
Section 11.16. Trust Obligation............................................................... 71
Section 11.17. No Petition.................................................................... 71
Section 11.17. Inspection..................................................................... 71
</TABLE>
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<PAGE> 7
EXHIBITS
Exhibit A Form of Class A Note
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INDENTURE, dated as of November 1, 1998, between TRIAD AUTO RECEIVABLES
OWNER TRUST 1998-4, a Delaware business trust (the "Issuer"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, as trustee (the "Indenture
Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's 5.98% Asset Backed
Notes, Class A (each, a "Class A Note" or, a "Note").
As security for the payment and performance by the Issuer of the Issuer
Secured Obligations (as defined below), the Issuer has agreed to assign the
Indenture Collateral (as defined below) as collateral to the Indenture Trustee
on behalf of the Insurer and the Noteholders.
Financial Security Assurance Inc. (the "Insurer") has issued and
delivered a financial guaranty insurance policy, dated the Closing Date (with
endorsements, the "Note Policy"), pursuant to which the Insurer guarantees
Scheduled Payments, as defined in the Note Policy.
As an inducement to the Insurer to issue and deliver the Note Policy,
the Issuer and the Insurer have executed and delivered the Insurance and
Indemnity Agreement, dated as of November 1, 1998 (as amended from time to time,
the "Insurance Agreement"), among the Insurer, the Issuer, Triad Financial
Corporation, and Triad Financial Special Purpose Corporation II ("TFSPC II").
As an additional inducement to the Insurer to issue the Note Policy,
and as security for the performance by the Issuer of the Insurer Issuer Secured
Obligations and as security for the performance by the Issuer of the Indenture
Trustee Issuer Secured Obligations, the Issuer has agreed to assign the
Indenture Collateral (as defined below) as collateral to the Indenture Trustee
for the benefit of the Issuer Secured Parties, as their respective interests may
appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on behalf of and for
the benefit of the Issuer Secured Parties to secure the performance of the
Issuer Secured Obligations and its compliance with the covenants hereof, all of
the Issuer's right, title and interest in (but none of the Issuer's
obligations), to and under the following, whether now existing or hereafter
arising or acquired (collectively, the "Indenture Collateral"):
(a) the Initial Receivables and any Subsequent
Receivables, all monies due or received thereunder or in respect thereof after
the Initial Cutoff Date or the related Subsequent Cutoff Date (in each case,
including amounts due on or before the related Cutoff Date but received by
Triad, the Company, TFSPC II or the Issuer after the related Cutoff Date), as
applicable, and all Liquidation Proceeds and recoveries received with respect to
such Receivables;
(b) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Initial Receivables and any Subsequent
Receivables, and any other interest of the Issuer in the Financed Vehicles,
including the certificates of title with respect to the Financed Vehicles;
<PAGE> 9
(c) the Insurance Policies and any proceeds from any
Insurance Policies relating to the Initial Receivables and any Subsequent
Receivables, the Obligors or the related Financed Vehicles, including rebates or
refunds of premiums;
(d) rights against Dealers with respect to the Initial
Receivables and any Subsequent Receivables under the Dealer Agreements, Dealer
Assignments and rights against Correspondents under the Correspondent Agreements
and the Correspondent Assignments;
(e) property (including the right to receive future
Liquidation Proceeds) that secures the Initial Receivables, any Subsequent
Receivables and any property that has been acquired by or on behalf of the
Company or the Issuer pursuant to liquidation of any such Receivables;
(f) all funds on deposit from time to time in the Trust
Accounts, including all income thereon and proceeds thereof; and
(g) all right, title and interest (but none of the
Issuer's obligations) of the Trust and Company, respectively, in and to the Sale
and Servicing Agreement, any Subsequent Transfer Agreement, the Receivables
Purchase Agreement and any Subsequent Purchase Agreement, including a direct
right to cause the Company and Triad, respectively, to purchase Receivables from
the Trust under certain circumstances;
(h) all right, title and interest in and to refunds for
the costs of extended service contracts financed under each Receivable with
respect to the Financed Vehicles;
(i) all items contained in the Receivable File related to
each Receivable, and all other documents or electronic records that Triad keeps
on file in accordance with its customary procedures relating to the Receivables;
and
(j) all proceeds and investments of any of the foregoing,
all present and future claims, demands, causes and choses in action in respect
of any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any of the foregoing.
The foregoing Grant is made in trust to secure the payment of the
Issuer Secured Obligations.
The Indenture Trustee, on behalf of the Noteholders and the Insurer,
hereby acknowledges such Grant, accepts the trusts under this Indenture in
accordance with this Indenture and agrees to perform its duties required in this
Indenture to the end that the interests of the Issuer Secured Parties may be
adequately and effectively protected.
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<PAGE> 10
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
(a) Except as otherwise specified herein or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Indenture:
"Act" has the meaning specified in Section 11.3(a).
"Authorized Officer" means, with respect to the Issuer or the Servicer,
as the case may be, any officer of the Owner Trustee or the Servicer or other
person who is authorized to act for the Owner Trustee or the Servicer, as
applicable, in matters relating to the Issuer and who is identified on the list
of Authorized Officers delivered by each of the Owner Trustee and the Servicer
to the Indenture Trustee and the Insurer on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"Class" means any class of Notes.
"Class A Note" is defined in the recitals. Each Class A Note shall be
substantially in the form of Exhibit A.
"Class A Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Pre-Funded Amount as of such Payment Date.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means December 15, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Controlling Party" means the Insurer, so long as an Insurer Default
shall not have occurred and be continuing, and otherwise, the Indenture Trustee
for the benefit of the Noteholders.
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<PAGE> 11
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Indenture is
located at 450 West 33rd Street, New York, New York 10001; or at such other
address as the Indenture Trustee may designate from time to time by notice to
the Noteholders, the Insurer and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee (the address of which the successor
Indenture Trustee shall notify the Noteholders, the Insurer and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall mean definitive, fully registered Notes issued
to Note Owners. The Definitive Notes shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
"Event of Default" has the meaning specified in Section 5.1.
"Eligible Account" means (i) a segregated trust account that is
maintained with the corporate trust department of the Indenture Trustee, or (ii)
a segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "A-1" by
Standard & Poor's or "P-1" by Moody's.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture, and other forms of the verb "to Grant" shall have
correlative meanings. A Grant of the Indenture Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations of the granting party) of the granting party thereunder,
including the immediate and continuing right to claim for, collect, receive and
give receipt for principal and interest payments in respect of the Indenture
Collateral 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 Proceedings in the name of the granting party or
otherwise and generally to do and receive anything that the granting party is or
may be entitled to do or receive thereunder or with respect thereto.
"Holder" means the Person in whose name a Note is registered on the
Note Register.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Indenture Collateral" has the meaning specified in the Granting Clause
of this Indenture.
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<PAGE> 12
"Indenture Trustee" means The Chase Manhattan Bank, not in its
individual capacity but solely as Indenture Trustee under this Indenture, or any
successor Indenture Trustee under this Indenture.
"Indenture Trustee Fee" with respect to any Payment Date, the fee
payable to the Indenture Trustee for services rendered during the related
Collection Period, which shall be equal to one twelfth of .0025% multiplied by
the Note Balance as of the open of business on the first day of the related
Collection Period, provided, however, in no event shall the Indenture Trustee
Fee be less than $1875.00 in aggregate in any calendar year.
"Indenture Trustee Issuer Secured Obligations" means all amounts and
obligations that the Issuer may at any time owe to or on behalf of the Indenture
Trustee for the benefit of the Noteholders under this Indenture or the Notes
(including all payments under the Notes).
"Independent" means, when used with respect to any specified Person,
that the Person: (a) is in fact independent of the Issuer, any other obligor
upon the Notes, Triad, the Company other than the Underwriter and any Affiliate
of any of the foregoing Persons, (b) does not have any direct financial interest
or any material indirect financial interest in the Issuer, any such other
obligor, Triad, the Company other than the Underwriter or any Affiliate of any
of the foregoing Persons and (c) is not connected with the Issuer, the Company
other than the Underwriter any such other obligor, Triad or any Affiliate of any
of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, made by
an Independent appraiser or other expert duly licensed and of recognized
standing appointed by an Issuer Order, and such opinion or certificate shall
state that the signer has read the definition of "Independent" in this Indenture
and that the signer is Independent within the meaning thereof.
"Insurance Agreement Indenture Cross Default" has the meaning specified
therefor in the Insurance Agreement.
"Insurer Issuer Secured Obligations" means all amounts and obligations
that the Issuer may at any time owe to or on behalf of the Insurer under this
Indenture, the Insurance Agreement or any other Related Document.
"Interest Rate" means 5.98% per annum, calculated on the basis of a
360-day year consisting of twelve 30-day months.
"Issuer" means Triad Auto Receivables Owner Trust 1998-4, until a
permitted successor replaces it and, thereafter, means such successor and for
purposes of any provision contained herein and required by the TIA, each other
obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request,
respectively, signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Indenture Trustee.
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<PAGE> 13
"Issuer Secured Obligations" means the Insurer Issuer Secured
Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee in respect
of the Indenture Trustee Issuer Secured Obligations and the Insurer in respect
of the Insurer Secured Obligations.
"Noteholder" means a Holder.
"Note Majority" means Holders of Outstanding Notes representing more
than 50% of the Note Balance of Outstanding Notes.
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agent Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Policy" means the financial guaranty insurance policy issued by
the Insurer with respect to the Notes, including any endorsements thereto.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Notes" is defined in the introduction hereto.
"Officers' Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA ss.314, and
delivered to the Indenture Trustee.
"Opinion of Counsel" means one or more written opinions of counsel,
reasonably acceptable in form and substance and from counsel acceptable to (i)
if addressed to the Insurer, the Insurer, and (ii) a Note Majority and the
Indenture Trustee or the Owner Trustee and not at the expense of the Indenture
Trustee or Owner Trustee and which shall comply with any applicable requirements
of Section 11.1.
"Outstanding" means, as of any date, all Notes theretofore
authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of such
Notes (provided, however, that if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture); and
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<PAGE> 14
(iii) Notes in exchange for or in lieu of other Notes that
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that Notes that have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Indenture Trustee, and the Insurer shall be deemed to be the holder
thereof to the extent of any payments thereon made by the Insurer, provided,
further, that in determining whether the Holders of the requisite Note Balance
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder or under any Related Document, Notes owned by the Issuer, any
other obligor upon the Notes, Triad, the Company or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Indenture 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 Indenture Trustee actually
knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other obligor
upon the Notes, Triad, the Company or any Affiliate of any of the foregoing
Persons.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as trustee of the Issuer.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make the payments to and distributions
from the Collection Account and the Note Distribution Account, including payment
of principal or of interest on the Notes on behalf of the Issuer.
"Predecessor Note" means, 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 purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Redemption Date" means the Payment Date specified by the Servicer or
the Issuer pursuant to Section 10.1.
"Redemption Price" means (a) in the case of a redemption of Notes
pursuant to Section 10.1 (a), the aggregate unpaid principal amount of the Notes
to be redeemed, plus accrued and unpaid interest thereon at the applicable
interest rate to but excluding the related Redemption Date, and (b) in the case
of a payment to Noteholders pursuant to Section 10.1(b), the amount on
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<PAGE> 15
deposit in the Note Distribution Account, but not in excess of the amount
specified in clause (a) above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Secretary or Assistant Secretary,
or any other officer of the Indenture Trustee 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, in each case having responsibility with respect to this
Indenture.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of November 1, 1998, among the Issuer, the Company, Triad, in its
individual capacity and as Servicer, and The Chase Manhattan Bank, as Indenture
Trustee and as Backup Servicer, as the same may be amended or supplemented from
time to time.
"Scheduled Payments" has the meaning specified in the Note Policy.
"Securities Act" means the Securities Act of 1933, as amended.
"State" means any one of the fifty states of the United States of
America or the District of Columbia.
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Insurer for cancellation, (ii)
the date on which the Insurer shall have received payment and performance of all
Insurer Issuer Secured Obligations and (iii) the date on which the Indenture
Trustee shall have received full and indefeasible payment and performance of all
Indenture Trustee Issuer Secured Obligations.
"Trust Estate" means all the money, instruments, rights and other
property that are subject or intended to be subject to the Lien and security
interest of this Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture Trustee)
and the Insurer, including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
(b) Except as otherwise specified herein or as the
context may otherwise require, the capitalized terms used herein but not defined
have the respective meanings set forth in the Sale and Servicing Agreement for
all purposes of this Indenture.
Section 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made
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<PAGE> 16
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
Section 1.3. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect on the date hereof,
(iii) "or" is not exclusive;
(iv) "including" means "including, without limitation,";
and
(v) words in the singular include the plural and words in
the plural include the singular.
Section 1.4. Material Adverse Effect. Whenever a determination is
to be made under this Agreement as to whether a given event, action, course of
conduct or set of facts could or would have a material adverse effect on the
Noteholders (or any similar or analogous determination), such determination
shall be made without taking into account the funds available from claims under
the Note Policy.
ARTICLE II
THE NOTES
Section 2.1. Form. The Notes, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A, 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, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any
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<PAGE> 17
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits A are part of the terms of this Indenture.
Section 2.2. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon receipt of the Note Policy and an
Issuer Order authenticate and deliver Class A Notes for original issue in an
aggregate principal amount of $100,000,000. The Note Balance at any time may not
exceed such amount except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $250,000
and in integral multiples of $1,000 in excess thereof; provided, however, that
one Note may be issued in an additional amount equal to any remaining portion of
the original Note Balance.
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 Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate of authentication shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.3. Temporary Notes. Pending the preparation of
Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order,
the Indenture Trustee shall authenticate and deliver, temporary Notes that are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and
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the Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
Section 2.4. Registration, Registration of Transfer and Exchange.
(a) The Indenture Trustee shall keep or cause to be kept
a register (the "Note Register") for the registration, transfer and exchange of
Notes. The Indenture Trustee shall be the "Note Registrar" for the purpose of
registering Notes and transfers and exchanges of Notes as herein provided. The
names and addresses of all Noteholders and the names and addresses of the
transferees of any Notes shall be registered in the Note Register. The Person in
whose name any Note is so registered shall be deemed and treated as the sole
owner and Holder thereof for all purposes of this Indenture and the Note
Registrar and the Indenture Trustee and any agent of any of them shall not be
affected by any notice or knowledge to the contrary. A Note is transferable or
exchangeable only upon the surrender of such Note to the Note Registrar at the
Corporate Trust Office together with an assignment and transfer (executed by the
Holder or his duly authorized attorney), subject to the requirements of Section
2.10 and 2.12. Upon request of the Indenture Trustee, the Note Registrar shall
provide the Indenture Trustee with the names, addresses and percentage interests
of the Holders.
Upon any resignation of any Note Registrar, the Issuer shall promptly
appoint a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer shall give the Indenture Trustee and the Insurer
prompt written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Register, and the
Indenture Trustee shall have the right to inspect the Note Register at all
reasonable times and to obtain copies thereof, and the Indenture Trustee shall
have the right to conclusively rely upon a certificate executed on behalf of the
Note Registrar by a Responsible Officer thereof as to the names and addresses of
the Holders of the Notes and the principal amounts and number of such Notes.
(b) Subject to Sections 2.10 and 2.12 hereof, upon surrender for
registration of transfer of any Note together with an instrument of assignment
or transfer (executed by the Holder or its duty authorized attorney) at the
office or agency of the Issuer to be maintained as provided in Section 3.2, if
the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, the Indenture Trustee shall authenticate and the Noteholder shall
obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations of a like
aggregate principal amount. Each new Note issued pursuant to this Section 2.4
shall be registered in the name of any Person as the transferring Holder may
request, subject to the provisions of Sections 2.10 and 2.12.
(c) At the option of the Holder, Notes may be exchanged for other
new Notes in any authorized denominations of a like aggregate principal amount,
upon surrender of the Notes to be exchanged, together with a written request at
the office or agency designated pursuant to Section 3.2. Whenever any Notes are
so surrendered for exchange, subject to the requirements of
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Sections 2.10 and 2.12 and if the requirements of Section 8-401(1)(a) of the UCC
are met, the Issuer shall execute, the Indenture Trustee shall authenticate and
the Noteholder shall obtain from the Indenture Trustee, the Notes that the
Noteholder making the exchange is entitled to receive.
(d) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(e) Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar.
(f) Notwithstanding the foregoing, in the case of any sale or
other transfer of a Definitive Note or a temporary Note, the transferor of such
Definitive Note or such temporary Note shall be required to represent and
warrant in writing that the prospective transferee either (a) is not (i) an
employee benefit plan (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), which is subject to the
provisions of Title I of ERISA, (ii) a plan (as defined in section 4975(e)(1) of
the Code), which is subject to Section 4975 of the Code, or (iii) an entity
whose underlying assets are deemed to be assets of a plan described in (i) or
(ii) above by reason of such plan's investment in the entity (any such entity
described in clauses (i) through (iii), a "Benefit Plan Entity") or (b) is a
Benefit Plan Entity and the acquisition and holding of the Definitive Note or
the temporary Note by such prospective transferee is covered by a Department of
Labor Prohibited Transaction Class Exemption. Each transferee of a Book Entry
Note that is a Benefit Plan Entity shall be deemed to represent that its
acquisition and holding of the Book Entry Note is covered by a Department of
Labor Prohibited Transaction Class Exemption.
(g) No fee or service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Issuer or the Indenture
Trustee may require payment of a sum sufficient to cover any tax, expense 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 2.3 or 9.6 not involving any transfer. In connection with any transfer
to Noteholders requesting Notes, the transferor shall reimburse the Trust for
any costs (including the cost of the Note Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Note Registrar as provided herein) incurred by the Note Registrar in
connection with such transfer.
(h) The preceding provisions of this section notwithstanding, the
Issuer shall not be required to make and the Note Registrar shall not register
transfers or exchanges of any Note for a period of fifteen (15) days preceding
the due date for any payment with respect to the Note.
Section 2.5. Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Indenture Trustee
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and the Insurer (unless an Insurer Default shall have occurred and be
continuing) such security or indemnity as may be required by the Indenture
Trustee, the Insurer and the Issuer to hold the Issuer, the Insurer and the
Indenture Trustee, respectively, harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a protected purchaser, and provided that the requirements of Section
8-405 of the UCC are met, the Issuer shall execute, and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note;
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become, or within seven (7) days shall be, due and
payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note (or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence), a protected purchaser
of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer, the Indenture Trustee and the
Insurer shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Note from such Person to whom such replacement Note was delivered (or payment
made) or any assignee of such Person, except a protected purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 2.5, the
Issuer or the Indenture Trustee may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.5 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, 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.
The provisions of this Section 2.5 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 2.6. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer, the Indenture Trustee and the Insurer may treat the Person
in whose name any Note is registered as of the preceding Record Date as the
owner of such Note for the purpose of receiving payments of principal of and
interest, if any, on such Note and for all other purposes whatsoever, whether or
not such Note be overdue, and none of the Issuer, the Insurer or the Indenture
Trustee nor any agent thereof shall be affected by notice to the contrary.
Section 2.7. Payment of Principal and Interest, Defaulted
Interest.
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(a) The Class A Notes shall accrue interest at the Class
A Interest Rate, and such interest shall be payable on each Payment Date, as and
to the extent provided in Sections 4.6 and 4.7 of the Sale and Servicing
Agreement and Section 3.1 of this Indenture. Any installment of interest or
principal, if any, payable on any Note that is punctually paid or duly provided
for by the Issuer on the applicable Payment Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on the
related Record Date, by wire transfer of immediately available funds if such
Noteholder holds the Notes representing at least $1,000,000 in Note Balance as
of the Closing Date and if such Person has delivered to the Indenture Trustee in
writing instructions with respect to effecting a wire transfer to such Person no
later than the applicable Determination Date by check mailed first-class,
postage prepaid, to such Person's address as it appears on the Note Register on
such Record Date, except that, unless Definitive Notes have been issued pursuant
to Section 2.12, with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment will be made by wire transfer in immediately available funds to
the account designated by such nominee and except for the final installment of
principal payable with respect to such Note on a Payment Date (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1) which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Payment Date (including the Final Scheduled Payment Date) as and to the
extent provided in this Indenture and in Sections 4.6 and 4.7 of the Sale and
Servicing Agreement. Notwithstanding the foregoing (and subject to the
provisions of Sections 5.1 and 5.2), the entire Note Balance shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing if the Insurer (if an Insurer Default shall not have occurred and be
continuing) or the Indenture Trustee or a Note Majority (if an Insurer Default
has occurred and is continuing) has declared the Notes to be immediately due and
payable in the manner provided in Section 5.2.
The Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and
interest on such Note will be paid. Such notice shall be mailed no later than
the fifth (5th) day of the month in which such final Payment Date occurs and
shall specify that such final installment will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment unless there are five
or fewer Noteholders of record in which case such presentation and surrender
shall occur within thirty (30) days after the Final Scheduled Payment Date.
Notices in connection with redemptions of Notes shall be mailed to Noteholders
as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes,
and such default is waived by the Controlling Party, the Issuer shall pay, in
any lawful manner, as and to the extent provided in Section 4.7 of the Sale and
Servicing Agreement, defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable interest rate in any lawful
manner. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on the immediately following Payment Date, and, if such amount is
not paid on such following Payment Date, then on a subsequent special record
date, which date shall be at least five (5) Business Days
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prior to the payment date. The Issuer shall fix or cause to be fixed any such
special record date and payment date, and, at least fifteen (15) days before any
such special record date, the Issuer shall mail to each Noteholder and the
Indenture Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, if the Insurer has paid
any amount in respect of the Notes under the Note Policy or otherwise which has
not been reimbursed to it, deliver such surrendered Notes to the Insurer to the
extent not previously cancelled or destroyed.
Section 2.8. Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.7(d), the Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder that the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Indenture 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.
Subject to Section 2.7(d), all canceled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time.
Section 2.9. Release of Collateral. The Indenture Trustee shall,
on or after the Termination Date, release any remaining portion of the Trust
Property from the lien created by this Indenture and deposit in the Collection
Account any funds then on deposit in any other Trust Account. The Indenture
Trustee shall release property from the lien created by this Indenture pursuant
to this Section 2.9 only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA ss.ss. 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.1.
Section 2.10. Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner shall receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until the Definitive Notes have been issued to Note
Owners pursuant to Section 2.12:
(i) the provisions of this Section 2.10 shall be in full
force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Notes, and shall have no obligation to the Note
Owners;
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(iii) to the extent that the provisions of this Section
2.10 conflict with any other provisions of this Indenture, the
provisions of this Section 2.10 shall control;
(iv) the rights of Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Note Owners and the Clearing Agency
and/or the Clearing Agency Participants. Unless and until Definitive
Notes are issued pursuant to Section 2.10, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit payments of principal of and interest on the
Notes to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Noteholders
evidencing a specified percentage of the Note Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to the Indenture Trustee;
and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Indenture Trustee at the Corporate Trust Office.
Section 2.11. Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to the Noteholders to the Clearing
Agency, and shall have no obligation to the Note Owners.
Section 2.12. Definitive Notes. If (i) the Servicer advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Notes, and
the Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option (with prior written notice to the Insurer) advises the Indenture Trustee
in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, the
Insurer (if no Insurer Default shall have occurred and is continuing) or Note
Owners representing beneficial interests aggregating at least a majority of the
Note Balance (if an Insurer Default shall have occurred and is continuing)
advise the Indenture Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing Agency is no longer in
the best interests of the Insurer or the Note Owners, as the case may be, then
the Clearing Agency shall notify all Note Owners and the Indenture Trustee of
the occurrence of any such event and of the availability of Definitive Notes to
Note Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of the Clearing Agency.
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None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be fully protected in relying on, such instructions. Upon the issuance of
Definitive Notes, the Indenture Trustee shall recognize the Holders of the
Definitive Notes as Noteholders.
Section 2.13. Authenticating Agents. (a) The Indenture Trustee may
appoint one or more Persons (each, an "Authenticating Agent") (with the written
consent of the Servicer if such Person is other than the Indenture Trustee),
with power to act on its behalf and subject to its direction in the
authentication of Notes in connection with issuance, transfers and exchanges
under Sections 2.2, 2.3, 2.4, 2.5 and 2.12, as fully to all intents and purposes
as though each such Authenticating Agent had been expressly authorized by those
Sections to authenticate such Notes. For all purposes of this Indenture, the
authentication of Notes by an Authenticating Agent pursuant to this Section
shall be deemed to be the authentication of Notes "by the Indenture Trustee."
(b) Any corporation into which any Authenticating Agent
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, without the
execution or filing of any further act on the part of the parties hereto or such
Authenticating Agent or such successor corporation.
(c) Any Authenticating Agent may at any time resign by
giving written notice of resignation to Indenture Trustee and Owner Trustee.
Indenture Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
Owner Trustee. Upon receiving such notice of resignation or upon such a
termination, Indenture Trustee may appoint a successor Authenticating Agent and
shall give written notice of any such appointment to Owner Trustee.
(d) Servicer agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services. The provisions of
Section 6.4 shall be applicable to any Authenticating Agent.
ARTICLE III
COVENANTS
Section 3.1. The Issuer shall duly and punctually pay the
principal and interest, if any, on the Notes in accordance with the terms of the
Notes and this Indenture. Without limiting the foregoing, the Issuer shall
distribute (or cause to be distributed) the amounts on deposit in the Note
Distribution Account on each Payment Date for the benefit of the Notes, as and
to the extent provided in Sections 4.6 and 4.7 of the Sale and Servicing
Agreement to Holders of the Notes. Amounts properly withheld under the Code or
any applicable State law by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Issuer
to such Noteholder for all purposes of this Indenture.
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Section 3.2. Maintenance of Office or Agency. The Indenture
Trustee shall maintain in the city of New York, New York an office or agency
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Indenture Trustee
shall give prompt written notice to the Issuer of the location, and of any
change in the location, of any such office or agency. If at any time the
Indenture Trustee shall fail to maintain any such office or agency or shall fail
to furnish the Issuer with the address thereof, such surrenders, notices and
demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Indenture Trustee as its agent to receive all such
surrenders, notices and demands.
Section 3.3. Money for Payments To Be Held in Trust. All payments
of amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Note Distribution Account pursuant to Section 8.2(b)
hereof shall be made on behalf of the Issuer by the Indenture Trustee or by
another Paying Agent, and no amounts so withdrawn from the Note Distribution
Account for payments of Notes shall be paid over to the Issuer, except as
provided in this Section 3.3 and Sections 4.6 and 4.7 of the Sale and Servicing
Agreement.
On or before each Payment Date (including the Final Scheduled Payment
Date) and Redemption Date, the Issuer shall deposit or cause to be deposited in
the Note Distribution Account an aggregate sum sufficient to pay the amounts
then becoming due under the Notes as and to the extent provided in Sections
3.2(c), 3.3 and 4.4 of the Sale and Servicing Agreement, such sum to be held in
trust for the benefit of the Persons entitled thereto.
The Issuer shall cause each Paying Agent (other than the Indenture
Trustee) to execute and deliver to the Indenture Trustee and the Insurer an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section 3.3, that such Paying Agent shall:
(i) 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;
(ii) give the Indenture Trustee written notice of any
Default by the Issuer (or any other obligor upon the Notes) of which it has
actual knowledge in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such
Default, upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met by a
Paying Agent; and
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(v) comply with all requirements of the Code and any
applicable State law with respect to the withholding from any payments
made by it on any Notes of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in
connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order, direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon Issuer Request with the prior written consent of the Insurer (unless an
Insurer Default shall have occurred and be continuing) shall be deposited with
the Issuer; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability of the Indenture
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that if such money or any portion thereof had been
previously deposited by the Insurer or the Indenture Trustee with the Indenture
Trustee for the payment of principal or interest on the Notes, to the extent any
amounts are owing to the Insurer, such amounts shall be paid promptly to the
Insurer upon the Indenture Trustee's receipt of a written request by the Insurer
to such effect, and provided, further, that the Indenture Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense
and direction of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
thirty (30) days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Issuer. The Indenture Trustee
shall also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment (including mailing notice of such
repayment to Holders whose Notes have been called but have not been surrendered
for redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Holder).
Section 3.4. Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer shall keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware and shall obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes, the Indenture
Collateral and each other instrument or agreement included in the Trust Estate
or to enforce its rights under the Receivables and with respect to the Financed
Vehicles.
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Section 3.5. Protection of the Trust Estate. The Issuer intends
the security interest Granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Indenture Trustee for the benefit of the Issuer Secured Parties, a first
lien on and a first priority, perfected security interest in the Trust Estate.
The Issuer shall 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 shall take such
other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain the Trust Estate free and clear of all prior
liens;
(iii) maintain or preserve the lien and security interest
(and the priority thereof) in favor of the Indenture Trustee for the
benefit of the Issuer Secured Parties created by this Indenture or
carry out more effectively the purposes hereof;
(iv) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(v) enforce any of the Indenture Collateral;
(vi) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Issuer Secured Parties in such
Trust Estate against the claims of all Persons; and
(vii) pay all taxes or assessments levied or assessed upon
the Trust Estate when due.
The Issuer hereby designates the Indenture Trustee as its agent and
attorney-in-fact to execute any financing statement, continuation statement,
instrument of further assurance or other instrument required to be executed to
accomplish the foregoing; provided, however, that, except with respect to
continuation statements, the Indenture Trustee shall not be obligated to execute
such instruments except upon written instruction from the Servicer or the
Issuer, except, that such instruction need not be in writing if delivered with
respect to instruments to be executed by the Indenture Trustee on the Closing
Date.
Section 3.6. Opinion as to the Trust Estate.
(a) On the Closing Date the Issuer shall furnish to the
Indenture Trustee and the Insurer an Opinion of Counsel either stating that, in
the opinion of such counsel, such action has been taken, or will be taken within
two (2) Business Days of the Closing Date, with respect to the execution and
filing of any financing statements and continuation statements as are necessary
to perfect and make effective the first priority lien and security interest in
the Indenture Collateral and the proceeds thereof in favor of the Indenture
Trustee for the benefit of the Issuer Secured Parties created by this Indenture
and reciting the details of such action, or stating that, in the
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opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) Within 90 days after the beginning of each calendar
year, beginning in March 2000, the Issuer shall furnish to the Indenture Trustee
and the Insurer, an Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording, filing,
rerecording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security agreement. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.
Section 3.7. Performance of Obligations; Servicing of Receivables.
(a) The Issuer shall not take, or fail to take, any
action and shall use its best efforts not to permit any action to be taken by
others that would release any Person from any material covenants or obligations
under any instrument or agreement included in the Trust Estate or that would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture, the Sale and
Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable
to the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee and
the Insurer in an Officers' Certificate of the Issuer shall be deemed to be
action taken by the Issuer. Pursuant to the Sale and Servicing Agreement, the
Issuer has contracted with the Servicer to assist the Issuer in performing its
duties under the Notes and this Indenture.
(c) The Issuer shall perform and observe all of its
obligations and agreements contained in this Indenture, the other Related
Documents and in the instruments and agreements included in the Trust Estate,
including filing or causing to be filed any UCC financing statements and
continuation statements required to be filed by this Indenture and the Sale and
Servicing Agreement in accordance with and within the time periods provided for
herein and therein.
(d) If the Issuer shall have knowledge of the occurrence
of a Servicer Termination Event under the Sale and Servicing Agreement, the
Issuer shall promptly notify the Indenture Trustee, the Insurer and the Rating
Agencies thereof in accordance with Section 11.4 hereof, and shall specify in
such notice the action, if any, the Issuer is taking with respect thereto. If a
Servicer Termination Event shall arise from the failure of the Servicer to
perform any of its
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duties or obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) If notice of termination has been given to the
Servicer of the Servicer's rights and powers pursuant to Section 9.2 of the Sale
and Servicing Agreement, the Backup Servicer or another successor Servicer shall
be appointed as successor Servicer in accordance with Section 9.3 of the Sale
and Servicing Agreement. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Related
Document or any provision thereof without the consent of the Indenture Trustee
and the Insurer (if an Insurer Default shall not have occurred and be
continuing) or the Note Majority (if an Insurer Default shall have occurred and
is continuing).
(f) Upon any termination of the Servicer's rights and
powers pursuant to the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee, the Insurer and the Rating Agencies. As soon as a
successor Servicer is appointed, the Issuer shall notify the Indenture Trustee
of such appointment, specifying in such notice the name and address of such
successor Servicer.
(g) The Issuer agrees that it shall not waive timely
performance or observance by the Servicer, the Backup Servicer or Triad of their
respective duties under Related Documents (x) without the prior consent of the
Insurer (unless an Insurer Default shall have occurred and be continuing) or (y)
if the effect thereof would adversely affect the Holders.
Section 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, the
Sale and Servicing Agreement or the Related Documents, sell, transfer,
exchange or otherwise dispose of any of the properties or assets of
the Issuer, including those included in the Trust Estate, unless
directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable State law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Trust Estate; or
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this
Indenture 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 with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein
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or the proceeds thereof, other than (i) any liens on the Financed
Vehicles which (w) are junior to or are otherwise subordinated to the
lien in favor of the Indenture Trustee (x) have arisen notwithstanding
the Servicer's best efforts to avoid the imposition of such liens,
(y) to which neither the Indenture Trustee nor the Issuer has
consented, and (z) have arisen despite the Servicer not having
surrendered title to the Financed Vehicle (unless the Servicer was
legally obligated to do so) and (ii) tax liens, mechanics' liens and
other liens that arise subsequent to the Closing Date or Subsequent
Transfer Date, as applicable by operation of law, in each case on a
Financed Vehicle and arising solely as a result of an action or
omission of the related Obligor), or (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with
respect to any such tax lien, mechanics lien or other lien that
arises by operation of law) security interest in the Trust Estate.
Section 3.9. Annual Statement as to Compliance. The Issuer shall
deliver to the Indenture Trustee and the Insurer, within ninety (90) days after
the end of each fiscal year of the Issuer (commencing with the fiscal year ended
December 31, 2000), and otherwise in compliance with the requirements of TIA
Section 314(a)(4) an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such
year and of performance under this Indenture has been made under such
Authorized Officer's supervision;
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof; and
(iii) such certificate is in compliance with the
requirements of TIA Section 314(a)(4).
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or
into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory
to the Indenture Trustee and the Insurer (so long as an Insurer Default
shall not have occurred and be continuing), the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
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(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Insurer (so long as an Insurer Default shall not have occurred and
be continuing)) to the effect that such transaction will not have any
material adverse tax consequence to the Issuer, the Insurer, any
Noteholder or the Certificateholders;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Insurer an Officers' Certificate and an Opinion of
Counsel each stating that such merger or consolidation and such
supplemental indenture comply with this Section 3.10 and that all
conditions precedent provided for in this Section 3.10 relating to such
transaction have been complied with (including any filing required by
the Exchange Act); and
(vii) so long as an Insurer Default shall not have occurred
and be continuing, the Issuer shall have given the Insurer written
notice of such conveyance or transfer at least twenty (20) Business
Days prior to the consummation of such action and shall have received
the prior written approval of the Insurer of such conveyance or
transfer and the Issuer or the Person (if other than the Issuer) formed
by or surviving such conveyance or transfer has a net worth,
immediately after such conveyance or transfer, that is (a) greater than
zero and (b) not less than the net worth of the Issuer immediately
prior to giving effect to such conveyance or transfer.
(b) Except as otherwise provided herein and in the
Related Documents, the Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Trust Estate,
to any Person, unless:
(i) the Person that acquires by conveyance or transfer
the properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall: (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee and the Insurer (so long
as an Insurer Default shall not have occurred and be continuing), the
due and punctual payment of the principal of and interest on all Notes
and the performance or observance of every agreement and covenant of
this Indenture and each of the Related Documents on the part of the
Issuer to be performed or observed, all as provided herein, (C)
expressly agrees by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject
and subordinate to the rights of Holders of the Notes, (D) unless
otherwise provided in such supplemental indenture, expressly agrees to
indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture
and the Notes, and (E) expressly agrees by means of such supplemental
indenture that such Person (or if a group of Persons, then one
specified Person) shall make any filings with the Commission (and any
other appropriate Person) required by the Exchange Act in connection
with the Notes;
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(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Insurer (so long as an Insurer Default shall not have occurred and
be continuing)) to the effect that such transaction will not have any
material adverse tax consequence to the Trust, the Insurer, any
Noteholder or the Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Insurer an Officers' Certificate and an Opinion of
Counsel each stating that such conveyance or transfer and such
supplemental indenture comply with this Section 3.10 and that all
conditions precedent provided for in this Section 3.10 relating to such
transaction have been complied with (including any filing required by
the Exchange Act).
(vii) so long as an Insurer Default shall not have occurred
and be continuing, the Issuer shall have given the Insurer written
notice of such conveyance or transfer at least twenty (20) Business
Days prior to the consummation of such action and shall have received
the prior written approval of the Insurer of such conveyance or
transfer and the Issuer or the Person (if other than the Issuer)
acquiring or surviving such conveyance or transfer has a net worth,
immediately after such conveyance or transfer, that is (a) greater than
zero and (b) not less than the net worth of the Issuer immediately
prior to giving effect to such conveyance or transfer.
Section 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in
accordance with Section 3.10(a), the Person formed by or surviving such
consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all or substantially
all the assets and properties of the Issuer pursuant to Section 3.10(b), the
Issuer shall be released from every covenant and agreement of this Indenture to
be observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee stating
that the Issuer is to be so released.
Section 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing of the
Receivables in the manner contemplated by this Indenture and the other Related
Documents and activities incidental thereto.
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Section 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for (i) the Notes, (ii) obligations arising from time to
time to the Insurer under the Insurance Agreement and (iii) any other
indebtedness permitted by the Related Documents. The proceeds of the Notes shall
be used to purchase the Receivables, to fund the Pre-Funding Account and the
Capitalized Interest Account and to pay the Issuer's organizational,
transactional and start up expenses. Net amounts remaining after such payments
shall be distributed by the Issuer to the Certificateholder(s). The Issuer shall
incur no additional borrowed money indebtedness secured by the Trust Estate
other than the Notes.
Section 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Article III and Section 4.10 of the Sale and Servicing
Agreement.
Section 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. Notice of Events of Default. The Issuer shall give
the Indenture Trustee, the Insurer and the Rating Agencies prompt written notice
of each Event of Default hereunder and each default on the part of the Servicer
or Triad of its obligations under the Sale and Servicing Agreement, in each case
of which it becomes aware.
Section 3.18. Restricted Payments. The Issuer shall not, directly
or indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amount for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Indenture Trustee and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement or Trust Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Related
Documents.
Section 3.19. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer, the Issuer shall execute and deliver such
further instruments and do such further acts
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as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
Section 3.20. Compliance with Laws. The Issuer shall comply with
the requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Related Document.
Section 3.21. Tax Treatment. The Issuer has structured this
Indenture and the Notes with the intention that the Notes will qualify under
applicable federal, state and local tax law as indebtedness. The Issuer and each
Holder agree to treat, and take no action inconsistent with the treatment of,
the Notes (or any beneficial interest therein) as indebtedness for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income. Each Holder, by acquisition of a beneficial interest in a
Note, agrees to be bound by the provisions of this Section 3.21.
Section 3.22. Investment Company Act. The Issuer shall conduct its
operations in a manner that will not subject it to registration as an
"investment company" under the Investment Company Act of 1940, as amended.
Section 3.23. Liens. The Issuer shall not contract for, create,
incur or suffer to exist any Lien upon any of its property or assets, whether
now owned or hereafter acquired, except for Permitted Liens.
Section 3.24. Conduct of Business. Except as provided herein and in
the Related Documents, the Issuer shall (a) conduct its business solely in its
own name through its duly authorized officers or agents so as not to mislead
others as to the identity of the Issuer with which those others are concerned,
and particularly shall use its best efforts to avoid the appearance of
conducting business on behalf of Triad, TFSPC II, any Affiliate thereof or any
Certificateholder or that the assets of the Issuer are available to pay the
creditors of Triad, TFSPC II, any Affiliate thereof or any Certificateholder;
(b) maintain records and books of account separate from those of Triad, TFSPC
II, any Affiliate thereof or any Certificateholder; (c) maintain an arm's-length
relationship with Triad, TFSPC II, any Affiliate thereof or any
Certificateholder and shall not hold itself out as being liable for the debts of
Triad, TFSPC II, any Affiliate thereof or any Certificateholder; (d) keep its
assets and its liabilities wholly separate from those of all other entities,
including Triad, TFSPC II, any Affiliate thereof or any Certificateholder,
except as expressly permitted by the Related Documents; (e) not maintain bank
accounts or other depository accounts to which any Affiliate or
Certificateholder (other than TFSPC II in its capacity as sole Certificateholder
of the Issuer) is an account party, into which any Affiliate or
Certificateholder (other than TFSPC II in its capacity as sole Certificateholder
of the Issuer) makes deposits or from which any Affiliate or Certificateholder
(other than TFSPC II in its capacity as sole Certificateholder of the Issuer)
has the power to make withdrawals, except as otherwise permitted by Sections 3.2
and 4.2 of the Sale and Servicing Agreement; (f) shall obtain proper
authorization for all the Issuer's actions requiring such authorization; (g)
shall obtain proper authorization from TFSPC II and its other
Certificateholders, if any, for all action requiring approval of TFSPC II and
its other Certificateholders, if any; (h) shall pay operating
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expenses and liabilities from the Issuer's own funds; (i) shall disclose in its
annual financial statements the effects of the Issuer's transactions under the
Related Documents in accordance with generally accepted accounting principles
and shall disclose that the assets of the Issuer are not available to pay
creditors of Triad, TFSPC II, any Affiliate thereof or any Certificateholder;
(j) shall continuously maintain the resolutions, agreements and other
instruments underlying the transactions described in the Related Documents as
official records; and (k) shall insure that any consolidated financial
statements of Triad, TFSPC II, any Affiliate thereof or any Certificateholder
have notes to the effect that the Issuer is a separate entity whose creditors
have a claim on its assets prior to those assets becoming available to its
equity holders.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except,
to the extent applicable, as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii)
rights of Noteholders to receive payments of principal thereof and interest
thereon, (iv) Sections 3.2 and 3.20, (v) the rights, obligations and immunities
of the Indenture Trustee hereunder (including the rights of the Indenture
Trustee under Section 6.7 and the obligations of the Indenture Trustee under
Section 4.2) and (vi) the rights of Noteholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when:
(A) either
(1) all Notes theretofore authenticated
and delivered (other than (i) Notes that have been destroyed,
lost or stolen and that have been replaced or paid as provided
in Section 2.5 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation and
the Note Policy has expired and been returned to the Insurer
for cancellation; or
(2) all Notes not theretofore delivered
to the Indenture Trustee for cancellation
(i) have become due and
payable,
(ii) will become due and
payable at their respective Final Scheduled
Payment Dates within one year, or
(iii) are to be called for
redemption within one year under
arrangements satisfactory to the Indenture
Trustee for the
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giving of notice of redemption by the
Indenture Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due to the Final Scheduled Payment Date or
Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1), as the case may be;
(B) the Issuer has paid or caused to be paid all
Insurer Issuer Secured Obligations and all Indenture Trustee Issuer
Secured Obligations and the Note Policy has expired in accordance with
its terms and has been returned to the Insurer for cancellation;
(C) the Issuer has delivered to the Indenture
Trustee an Officers' Certificate, an Opinion of Counsel and (if
required by the TIA, the Indenture Trustee or the Insurer (so long as
an Insurer Default shall not have occurred and be continuing)) an
Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.1 and, subject
to Section 11.2, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this
Indenture have been complied with; and
(D) the Issuer has delivered to the Indenture
Trustee an Opinion of Counsel to the effect that the satisfaction and
discharge of the Notes pursuant to this Section shall not cause any
Noteholder to be treated as having sold or exchanged any of its Notes
for purposes of Section 1001 of the Code.
Section 4.2. Application of Trust Money. All monies deposited with
the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from the other funds except to
the extent required herein or in the Sale and Servicing Agreement or required by
law.
Section 4.3. Payment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
this Indenture with respect to such Notes shall, upon demand of the Issuer, be
paid to the Indenture Trustee to be held and applied according to Section 3.3
hereof and Sections 4.6 and 4.7 of the Sale and Servicing Agreement, and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.
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ARTICLE V
REMEDIES
Section 5.1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any Governmental Authority):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five (5) days (solely for purposes of this clause, a payment
on the Notes funded by the Insurer or the Collateral Agent pursuant to
the Reserve Account Agreement shall be deemed to be a payment made by
the Issuer);
(ii) default in the payment of the principal of or any
installment of the Principal of any Note when the same becomes due and
payable (solely for purposes of this clause, a payment on the Notes
funded by the Insurer or the Collateral Agent pursuant to the Reserve
Account Agreement shall be deemed to be a payment made by the Issuer);
(iii) so long as an Insurer Default shall not have occurred
and be continuing, an Insurance Agreement Indenture Cross Default shall
have occurred; provided, however, that the occurrence of an Insurance
Agreement Indenture Cross Default may not form the basis of an Event of
Default unless the Insurer shall, upon prior written notice to the
Rating Agencies, have delivered in accordance with Section 11.4 to the
Issuer and the Indenture Trustee and not rescinded a written notice
specifying that such Insurance Agreement Indenture Cross Default
constitutes an Event of Default under the Indenture;
(iv) so long as an Insurer Default shall have occurred and be
continuing, default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement a default in the observance or performance of which is
elsewhere in this Section 5.1 specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of thirty (30) days (or for such longer period, not in excess of
ninety (90) days, as may be reasonably necessary to remedy such
default; provided, however, that such default is capable of remedy
within ninety (90) days or less and the Servicer on behalf of the Owner
Trustee delivers an Officer's Certificate to the Indenture Trustee to
the effect that such Owner Trustee has commenced, or will promptly
commence and diligently pursue, all reasonable efforts to remedy such
default) after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Holders of at least 25% of the Note Balance, a
written notice specifying such default or incorrect representation or
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warranty and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder;
(v) so long as an Insurer Default shall have occurred and be
continuing, the filing of a petition for relief by a court having
jurisdiction in the premises in respect of the Issuer, the Company or
any substantial part of their property in an involuntary case under any
applicable Federal or State bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer, the Company or for any substantial part of their property, or
ordering the winding-up or liquidation of the affairs of the Issuer or
the Company, and such petition shall remain unstayed and in effect for
a period of sixty (60) consecutive days; or
(vi) so long as an Insurer Default shall have occurred and be
continuing, the commencement by the Issuer or the Company of a
voluntary case under any applicable Federal or State bankruptcy,
insolvency or other similar law now or hereafter in effect, or the
consent by the Issuer or the Company to the entry of an order for
relief in an involuntary case under any such law, or the consent by the
Issuer or the Company to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or the Company or for any substantial
part of its property, or the making by the Issuer or the Company of any
general assignment for the benefit of creditors, or the failure by the
Issuer or the Company generally to pay its debts as such debts become
due, or the taking of action by the Issuer or the Company in
furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, the Insurer, the
Noteholders and the Rating Agencies, within five (5) days after the occurrence
thereof, written notice in the form of an Officers' Certificate of any event
that, with the giving of notice or the lapse of time or both, would become an
Event of Default, its status and what action the Issuer is taking or proposes to
take with respect thereto.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
(a) If an Insurer Default shall not have occurred and be
continuing and an Event of Default shall have occurred and be continuing, the
Notes shall become immediately due and payable at par, together with accrued
interest thereon. If an Event of Default shall have occurred and be continuing,
the Controlling Party may exercise any of the remedies specified in Section
5.4(a). In the event of any acceleration of any Notes by operation of this
Section 5.2, the Indenture Trustee shall continue to be entitled to make claims
under the Note Policy pursuant to the Sale and Servicing Agreement for Scheduled
Payments on the Notes. Payments under the Note Policy following acceleration of
any Notes shall be applied by the Indenture Trustee:
(i) to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest; and
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(ii) to Noteholders for amounts due and unpaid on the Notes
for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal.
(b) In the event any Notes are accelerated due to an Event of
Default, the Insurer shall have the right (in addition to its obligation to pay
Scheduled Payments on the Notes in accordance with the Note Policy), but not the
obligation, to make payments under the Note Policy or otherwise of interest and
principal due on such Notes, in whole or in part, on any date or dates following
such acceleration as the Insurer, in its sole discretion, shall elect.
(c) If an Insurer Default shall have occurred and be
continuing and an Event of Default shall have occurred and be continuing, the
Indenture Trustee in its discretion may, or if so requested in writing by the
Note Majority shall declare by written notice to the Issuer that the Notes
become, whereupon they shall become, immediately due and payable at par,
together with accrued interest thereon.
(d) If an Insurer Default shall have occurred and be
continuing, then at any time after such declaration of acceleration of maturity
has been made by the Indenture Trustee and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article V provided, the Note Majority, by written notice to
the Issuer and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and
counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.3. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon demand of
the Indenture Trustee, pay to it as and to the extent provided in Sections 4.6
and 4.7 of the Sale and Servicing Agreement, for
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the benefit of the Holders of Notes, the whole amount then due and payable on
such Notes for principal and interest, and, to the extent payment at such rate
of interest shall be legally enforceable, upon overdue installments of interest,
at the applicable interest rate, and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and
unconditionally appoints the Controlling Party as the true and lawful
attorney-in-fact of such Issuer Secured Party for so long as such Issuer Secured
Party is not the Controlling Party, with full power of substitution, to execute,
acknowledge and deliver any notice, document, certificate, paper, pleading or
instrument and to do in the name of the Controlling Party as well as in the
name, place and stead of such Issuer Secured Party such acts, things and deeds
for or on behalf of and in the name of such Issuer Secured Party under this
Indenture (including specifically under Section 5.4) and under the Related
Documents which such Issuer Secured Party could or might do or which may be
necessary, desirable or convenient in such Controlling Party's sole discretion
to effect the purposes contemplated hereunder and under the Related Documents
and, without limitation, following the occurrence of an Event of Default,
exercise full right, power and authority to take, or defer from taking, any and
all acts with respect to the administration, maintenance or disposition of the
Trust Estate.
(c) In the event that an Event of Default occurs and is
continuing, the Indenture Trustee may, in its discretion but with the prior
written consent of the Controlling Party and shall, at the direction of the
Controlling Party (except as provided in Section 5.3(d) below), proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee or the Controlling Party shall
deem most effective 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
or legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture (including, without limitation, Sections 5.4(a), 5.11, 5.12 and 5.16)
and regardless of whether an Insurer Default shall have occurred and be
continuing, if the Issuer fails to perform its obligations under Section 10.1(b)
hereof when and as due, the Indenture Trustee may in its discretion (and without
the consent of the Controlling Party) proceed to protect and enforce its rights
and the rights of the Noteholders by such appropriate proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for specific performance 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 or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law; provided that the Indenture Trustee shall
only be entitled to take any such actions without the consent of the Controlling
Party to the extent such actions (x) are taken only to enforce the Issuer's
obligations to redeem the principal amount of Notes and (y) are taken only
against the portion of the Indenture Collateral, if any, consisting of the
Pre-Funding Account, the Capitalized Interest Account, any investments therein
and any proceeds thereof.
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(e) In the event that there shall be pending, relative to the
Issuer or any other obligor upon the Notes or any Person having or claiming an
ownership interest in the Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable Federal or State bankruptcy, insolvency or
other similar law, or in case a receiver, assignee, trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor upon the Notes, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor upon the Notes, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Indenture Trustee shall have made any demand pursuant to this
Section 5.3, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law or regulations, to
vote on behalf of the Holders of the Notes in any election of a
trustee, a standby trustee or any Person performing similar functions
in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Holders of Notes allowed in any
Proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, assignee, custodian, sequestrator or
other similar official in any such Proceeding is hereby authorized by each of
such Noteholders to make payments to the Indenture Trustee, and, if the
Indenture Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient
to cover reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of negligence
or bad faith.
(f) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights
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of any Holder thereof or to authorize the Indenture Trustee to vote in respect
of the claim of any Noteholder in any such proceeding except, as aforesaid, to
vote for the election of a trustee in bankruptcy or similar Person.
(g) All rights of action and of asserting claims under this
Indenture, the Reserve Account or under any of the Notes may be enforced by the
Indenture Trustee without the possession of any of the Notes or the production
thereof in any trial or other Proceedings relative thereto, and any such action
or Proceedings instituted by the Indenture Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of judgment, subject
to the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders of the Notes.
(h) In any Proceedings brought by the Indenture Trustee or
to which the Indenture Trustee shall be a party (and also any Proceedings
involving the interpretation of any provision of this Indenture or the Reserve
Account Agreement), the Indenture Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such Proceedings.
Section 5.4. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be
continuing, the Controlling Party may do one or more of the following (subject
to Sections 5.5 and 5.11):
(i) institute Proceedings in its own name and as or on
behalf of a trustee of an express trust for the collection of all
amounts then payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Issuer Secured Parties;
(iv) elect to have the Issuer maintain possession of the
Receivables and continue to apply collections on such Receivables as if
there had been no declaration of acceleration; and
(v) direct the Indenture Trustee in writing to sell the
Trust Estate, or any portion thereof or rights or interest therein, at
one or more public or private sales called and conducted in any manner
permitted by law; provided, however, that:
(A) if the Insurer is the Controlling Party,
the Insurer may not sell or otherwise liquidate the Trust
Estate following an Insurance Agreement
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Indenture Cross Default unless: (x) such Insurance Agreement
Indenture Cross Default arises from a claim being made on the
Note Policy or from the insolvency of the Trust, Triad or
TFSPC II or the Trust becomes taxable as an association (or
publicly traded partnership) taxable as a corporation for
federal or state income tax purposes, or the Notes are not
being treated as indebtedness for federal or applicable state
income tax purposes and such characterization having a
material adverse effect on the Trust, the Noteholders or the
Insurer or (y) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge
in full all amounts then due and unpaid upon such Notes for
principal and interest; or
(B) if the Indenture Trustee is the
Controlling Party, the Indenture Trustee may not sell or
otherwise liquidate the Trust Estate following an Event of
Default, other than an Event of Default described in Section
5.1(i) or (ii), unless: (x) all the Noteholders consent
thereto, (y) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge
in full all amounts then due and unpaid upon such Notes for
principal and interest or (z) the Indenture Trustee determines
that the Trust Estate will not continue to provide sufficient
funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee provides
prior written notice to the Rating Agency and obtains the
consent of Holders of the Note Majority. In determining such
sufficiency or insufficiency with respect to clauses (y) and
(z) above, the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility
of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
(b) Following (i) an acceleration of the Notes pursuant to
Section 5.2 or, (ii) in the event that an Insurer Default shall have occurred
and be continuing, the occurrence of an Event of Default pursuant to Section
5.1(i), 5.1(ii), 5.1(iv), 5.1(v) or 5.1(vi) of the Indenture or (iii) the
receipt of Insolvency Proceeds pursuant to Section 10.1(b) of the Sale and
Servicing Agreement, the Payment Amount, including any money or property
collected pursuant to this Section and any such Insolvency Proceeds, shall be
applied by the Indenture Trustee on the related Payment Date in the following
order of priority:
(i) first, amounts due and owing and required to be
distributed to the Servicer (provided there is no Servicer Termination
Event), the Owner Trustee, the Collateral Agent, Back Up Servicer and
the Indenture Trustee, respectively, pursuant to priorities (i) and
(ii) of Section 4.6(b) of the Sale and Servicing Agreement and not
previously distributed, in the order of such priorities and without
preference or priority of any kind within such priorities;
(ii) second, to Noteholders for amounts due and unpaid on the
Notes for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
interest;
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(iii) third, to Noteholders for amounts due and unpaid on the
Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
principal;
(iv) fourth, amounts due and owing and required to be
distributed to the Insurer pursuant to priority (v) of Section 4.6(b)
of the Sale and Servicing Agreement and not previously distributed);
and
(v) fifth, to the Collateral Agent to be applied as provided
in the Reserve Account Agreement;
provided that any amounts collected from the Pre-Funding Account or the
Capitalized Interest Account shall be paid, first, for amounts due and unpaid on
the Notes for principal for distribution to Noteholders in accordance with
Section 10.1(b) hereof and, second, in accordance with priorities (i) through
(v) above.
(c) The Indenture Trustee may fix a special record date and
special payment date for any payment to Noteholders pursuant to this Section. At
least fifteen (15) days before such special record date, the Indenture Trustee
shall mail to each Noteholder and the Issuer a notice that states the special
record date, the special payment date and the amount to be paid.
Section 5.5. [Reserved].
Section 5.6. Limitation of Suits. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note Balance
have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Holders have offered to the Indenture Trustee
indemnity reasonably satisfactory to the Indenture Trustee against the
costs, expenses and liabilities to be incurred in complying with such
request;
(iv) the Indenture Trustee for sixty (60) days after its
receipt of such notice, request and offer of indemnity has failed to
institute such Proceeding; and
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such sixty (60) day period
by the Note Majority; and
(vi) an Insurer Default shall have occurred and be
continuing;
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it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture 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.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Note Balance, the Indenture
Trustee in its sole discretion or with advice of counsel (which shall be at
Issuer's expense) may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.
Section 5.7. Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
Section 5.8. Restoration of Rights and Remedies. If the Controlling
Party 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 Controlling
Party or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee, the Insurer and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Insurer and the Noteholders shall continue as though no
such Proceeding had been instituted.
Section 5.9. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Controlling Party 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 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, the Controlling Party or any Holder of Notes to exercise
any right or remedy accruing upon any Default or Event of Default shall impair
any such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V or by law to the Indenture Trustee, the Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Insurer or by the Noteholders, as the case may be.
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Section 5.11. Control by Noteholders. If the Indenture Trustee is the
Controlling Party, the Holders of the Note Majority shall have the right to
direct the time, method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee with respect to the Notes or exercising any
trust or power conferred on the Indenture Trustee; provided, however, that:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Indenture Trustee to sell or liquidate the Trust
Estate shall be by Holders of Notes representing not less than 100% of
the Note Balance;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee
by Holders of Notes representing less than 100% of the Note Balance to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; and
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it reasonably determines might involve it in liability or
would reasonably be expected to materially adversely affect the rights of any
Noteholder(s) not consenting to such action.
Section 5.12. Waiver of Past Default. If an Insurer Default shall have
occurred and be continuing prior to the declaration of the acceleration of the
maturity of Notes as provided in Section 5.4, the Holders of the Note Majority
may waive any past Default or Event of Default and its consequences except a
Default (a) in payment of principal of or interest on any of the Notes or (b) in
respect of a covenant or provision hereof that cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Indenture Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
The Indenture Trustee shall promptly provide written notice to each
Rating Agency of any such waiver.
Section 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's 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 Indenture Trustee for any action taken, suffered or
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omitted by it as Indenture 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 attorney's 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 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder(s) holding in
the aggregate more than 10% of the Note Balance or (c) any suit instituted by
any Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer 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, that may affect the covenants or the performance of this
Indenture; and the Issuer (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 Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to the Notes or this Indenture. Neither the lien of this Indenture nor
any rights or remedies of the Indenture Trustee or the Noteholders shall
be impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Trust Estate or upon any of the assets of the Issuer.
Section 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to
do so (upon the direction of the Servicer) and at the Issuer's expense, the
Issuer shall take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by Triad and the Servicer, as
applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement in accordance, with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement to the extent and in the manner directed by the Indenture Trustee,
including the transmission of notices of default on the part of Triad or the
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by Triad or the Servicer of each of
their obligations under the Sale and Servicing Agreement.
(b) If the Indenture Trustee is the Controlling Party and if
an Event of Default has occurred and is continuing, the Indenture Trustee may,
and subject to Section 5.11 hereof at the direction (which direction shall be in
writing) of the Holders of the Note Majority shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against Triad or the
Servicer under or in connection with the Sale and Servicing Agreement, including
the right or
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power to take any action to compel or secure performance or observance by Triad
or the Servicer of each of their obligations to the Company thereunder and to
give any consent, request, notice, direction, approval, extension or waiver
under the Sale and Servicing Agreement, and any right of the Issuer to take such
action shall be suspended.
Section 5.17. Subrogation. The Indenture Trustee shall receive as
attorney-in-fact of each Noteholder any Note Policy Claim Amount from the
Insurer. Any and all Note Policy Claim Amounts disbursed by the Indenture
Trustee from claims made under the Note Policy shall not be considered payment
by the Trust or from the Reserve Account with respect to such Notes and shall
not discharge the obligations of the Trust with respect thereto. The Insurer
shall, to the extent it makes any payment with respect to the Notes, become
subrogated to the rights of the recipient of such payments to the extent of such
payments. Subject to and conditioned upon any payment with respect to the Notes
by or on behalf of the Insurer, the Indenture Trustee shall assign to the
Insurer all rights to the payment of interest of interest or principal with
respect to the Notes which are then due for payment to the extent of all
payments made by the Insurer, and the Insurer may exercise any option, vote,
right, power or the like with respect to the Notes to the extent that it has
made payment pursuant to the Note Policy. To evidence such subrogation, the Note
Registrar shall note the Insurer's rights as subrogee upon the register of
Noteholders upon receipt from the Insurer of proof of payment by the Insurer of
any Interest Payment Amount or Principal Payment Amount. The foregoing
subrogation shall in all cases be subject to the rights of the Noteholders to
receive the Scheduled Payments in respect of the Notes.
Section 5.18. Preference Claims. (a) In the event that the Indenture
Trustee has received a certified copy of an order of the appropriate court that
any Interest Payment Amount or Principal Payment Amount paid on a Note has been
avoided in whole or in part as a preference payment under applicable bankruptcy
law, the Indenture Trustee shall so notify the Insurer, shall comply with the
provisions of the Note Policy to obtain payment by the Insurer of such avoided
payment, and shall, at the time it provides notice to the Insurer, notify
Holders of the Notes by mail that, in the event that any Noteholder's payment is
so recoverable, such Noteholder will be entitled to payment pursuant to the
terms of the Note Policy. The Indenture Trustee shall furnish to the Insurer at
its written request, the requested records it holds in its possession evidencing
the payments of principal of and interest on Notes, if any, which have been made
by the Indenture Trustee and subsequently recovered from Noteholders, and the
dates on which such payments were made. Pursuant to the terms of the Note
Policy, the Insurer will make such payment on behalf of the Noteholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Note Policy) and not to the Indenture Trustee or
any Noteholder directly (unless a Noteholder has previously paid such payment to
the receiver, conservator, debtor-in-possession or trustee in bankruptcy, in
which case the Insurer will make such payment to the Indenture Trustee for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) The Indenture Trustee shall promptly notify the Insurer of
any proceeding or the institution of any action (of which a Responsible Officer
of the Indenture Trustee has actual knowledge), seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any distribution made
with respect to the Notes. Each Holder, by its purchase of Notes, and the
Indenture
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Trustee hereby agree that so long as an Insurer Default shall not have occurred
and be continuing, the Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedes or performance bond pending any such appeal at the expense of
the Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.17, the Insurer shall be subrogated to, and each Noteholder and the
Indenture Trustee hereby delegate an assign, to the fullest extent permitted by
law, the rights of the Indenture Trustee and each Noteholder in the conduct of
any proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.1 Duties of the Indenture Trustee.
(a) If an Event of Default has occurred and is continuing,
the Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and the Related Documents 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.
(b) Except during the continuance of an Event of Default
actually known to a Responsible Officer:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and its other Related Documents and no implied covenants or obligations
shall be read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
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 Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture and the Indenture Trustee's other Related Documents.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this clause (c) does not limit the effect of clause
(b) of this Section;
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(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction by the Insurer (so long as an Insurer Default shall
have not occurred and be continuing) or a Note Majority (if an Insurer
Default has occurred and is continuing) or otherwise received by it
pursuant to this Indenture;
(iv) the Indenture Trustee shall not be charged with
knowledge of an Event of Default or Servicer Termination Event unless a
Responsible Officer obtains actual knowledge of such event or the
Indenture Trustee receives written notice of such event from Triad, the
Insurer, the Servicer or Holders owning Notes aggregating not less than
10% of the Note Balance; and
(v) the Indenture Trustee shall have no duty to monitor the
performance of the Issuer, the Company, Triad or the Servicer, nor
shall it have any liability in connection with malfeasance or
nonfeasance by the Issuer, the Company, Triad or the Servicer. The
Indenture Trustee shall have no liability in connection with compliance
of the Issuer, the Company, Triad or the Servicer with statutory or
regulatory requirements related to the Receivables. The Indenture
Trustee shall not make or be deemed to have made any representations or
warranties with respect to the Receivables or the validity or
sufficiency of any pledge or assignment of the Receivables to the
Indenture Trustee.
(d) Every provision of this Indenture that in any way
relates to the Indenture Trustee is subject to clauses (a), (b), (c) and (g) and
to the provisions of the TIA.
(e) The Indenture Trustee shall not be liable for interest
on any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law, this Indenture
or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur or be
subjected to financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayments of such funds or adequate
indemnity reasonably satisfactory to it against any loss, liability or expense
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Indenture
Trustee shall be subject to this Section 6.1 and to the provisions of the TIA.
(i) The Indenture Trustee shall, upon one (1) Business Day's
prior notice to the Indenture Trustee, permit any representative of the Insurer,
during the Indenture Trustee's
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normal business hours, to examine all books of account, records, reports and
other papers of the Indenture Trustee relating to the Notes, to make copies and
extracts therefrom and to discuss the Indenture Trustee's affairs and actions,
as such affairs and actions relate to the Indenture Trustee's duties with
respect to the Notes, with the Indenture Trustee's officers and employees
responsible for carrying out the Indenture Trustee's duties with respect to the
Notes. All expenses incurred by the Indenture Trustee in connection with such
examination shall be borne by the Issuer.
(j) The Indenture Trustee shall, and hereby agrees that it
shall, perform all of the obligations and duties required of it under the Sale
and Servicing Agreement.
(k) In no event shall the Indenture Trustee be required to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer, or any other party, under the Sale and Servicing
Agreement except that The Chase Manhattan Bank solely in its capacity as Backup
Servicer, shall perform and be responsible for such obligations during such
time, if any, as the Backup Servicer shall be the successor to, and be vested
with the rights, powers, duties and privileges of the Servicer in accordance
with the terms of the Sale and Servicing Agreement.
(l) The Indenture Trustee shall, and hereby agrees that it
will, hold the Note Policy in trust, and will hold any proceeds of any claim on
the Note Policy in trust solely for the use and benefit of the Noteholders.
(m) Without limiting the generality of this Section 6.1, the
Indenture Trustee, in its capacity as Indenture Trustee, shall have no duty,
unless specifically set forth in this Indenture or the Related Documents, (i) to
see to any recording, filing or depositing of this Indenture or any agreement
referred to herein or any financing statement evidencing a security interest in
the Financed Vehicles, or to see to the maintenance of any such recording or
filing or depositing or to any recording, refiling or redepositing of any
thereof, (ii) to see to the payment or discharge of any tax, assessment or other
governmental charge or any lien or encumbrance of any kind owing with respect
to, assessed or levied against any part of the Trust Estate, (iii) to confirm or
verify the contents of any reports or certificates delivered to the Indenture
Trustee pursuant to this Indenture or the Sale and Servicing Agreement believed
by the Indenture Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (iv) to inspect the Financed Vehicles at any
time or ascertain or inquire as to the performance or observance of any of the
Issuer's, the Company's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as Servicer.
(n) The Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture and left to
the Indenture Trustee's discretion, or to institute, conduct or defend any
litigation under this Agreement or in relation to this Indenture, at the
request, order or direction of any of the Noteholders, pursuant to the
provisions of this Indenture, unless such Noteholders shall have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby.
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Section 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively rely and shall be
fully protected in acting on any document reasonably believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, attorneys or a custodian or nominee, and (with respect to
actions or omissions by an attorney that is not an employee of the Indenture
Trustee) the Indenture Trustee shall not be responsible for any misconduct or
negligence on the part of, or for the supervision of, any such attorney.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence (other than errors in
judgment) or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture, the Related Documents and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Indenture Trustee, other than in its capacity as
Custodian under the Sale and Servicing Agreement, shall not be required to make
any initial or periodic examination of any files or records related to the
Receivables for the purpose of establishing the presence or absence of defects,
the compliance by the Issuer with its representations and warranties or for any
other purpose.
(g) If the Indenture Trustee is also acting as Paying Agent or
Note Registrar hereunder, the rights and protections afforded to the Indenture
Trustee pursuant to this Article VI shall also be afforded to such Paying Agent
or Note Registrar.
Section 6.3. Individual Rights of the Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not the Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for, and makes no representation as to the validity or
adequacy of, this Indenture, the
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Trust Estate or the Notes; (except the enforceability of this Indenture and the
Indenture Trustee's Related Documents against the Indenture Trustee) shall not
be accountable for the Issuer's use of the proceeds from the Notes; and shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
Section 6.5. Notice of Defaults. If an Event of Default or Servicer
Termination Event occurs and is continuing and is known to, or written notice
thereof has been delivered to, a Responsible Officer, the Indenture Trustee
shall promptly mail to the Rating Agencies and each Noteholder notice of the
Event of Default or Servicer Termination Event after such Responsible Officer
has knowledge or written notice of such Event of Default or Servicer Termination
Event. Except in the case of an Event of Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice of such
Event of Default if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
Section 6.6. Reports by Indenture Trustee to the Holders. The Indenture
Trustee shall deliver to each Noteholder such information as set forth in
Section 4.10 of the Sale and Servicing Agreement.
Section 6.7. Compensation, Reimbursement and Indemnity.
(a) The Issuer shall, or shall cause the Servicer to, pay to
the Indenture Trustee the Indenture Trustee Fee, including compensation for
extraordinary services such as default administration in accordance with Section
4.6 of the Sale and Servicing Agreement. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall, or shall cause the Servicer to, reimburse the Indenture
Trustee for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services,
to the extent such expenses do not result from the bad faith or negligence of
the Indenture Trustee. Such expenses shall include securities transaction
charges and the reasonable compensation and expenses, disbursements and advances
of the Indenture Trustee's agents, counsel, accountants and experts but, with
respect to securities transaction charges, only to the extent such charges have
not been waived due to the Indenture Trustee's receipt of payment from any
financial institution with respect to certain eligible investments specified by
the Servicer pursuant to Section 4.1(c) of the Sale and Servicing Agreement.
(b) The Issuer shall or shall cause the Servicer in accordance
with Section 7.1 of the Sale and Servicing Agreement to indemnify the Indenture
Trustee and its officers, directors, employees and agents against any and all
loss, liability or expense (including attorneys' fees) incurred by them in
connection with the administration of this trust and the performance of its
duties hereunder. The Indenture Trustee shall notify the Issuer and the Servicer
promptly of any claim for which it may seek indemnity. Failure by the Indenture
Trustee to so notify the Issuer and the Servicer shall not relieve the Issuer or
the Servicer of its obligations hereunder. The Issuer shall, or shall cause the
Servicer to, defend the claim and the Indenture Trustee may have
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separate counsel and the Issuer shall, or shall cause the Servicer to, pay the
fees and expenses of such counsel. Neither the Issuer nor the Servicer need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence (other than errors in judgment) or bad faith.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Indenture Trustee be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Indenture Trustee has been advised of the likelihood of such loss or
damage and regardless of the form of action. This indemnity shall survive the
termination of the Agreement.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section 6.7 shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified in
Section 5.1(iv) or (v), the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or State bankruptcy, insolvency or similar law. Notwithstanding anything
else set forth in this Indenture or the Related Documents, the Indenture Trustee
agrees that the obligations of the Issuer to the Indenture Trustee hereunder and
under the Related Documents shall be recourse to the Trust Estate only and
specifically shall not be recourse to the assets of the Issuer, the Company or
Triad, except that Triad, as Servicer, has undertaken the payment and indemnity
obligations as described in this Section 6.7. In addition, the Indenture Trustee
agrees that its recourse to the amounts held pursuant to the Reserve Account
Agreement shall be limited to the right to receive the distributions referenced
to in Section 4.6(b) of the Sale and Servicing Agreement and that its recourse
to TFSPC II shall be solely as explicitly set forth in the Related Documents.
Section 6.8. Replacement of the Indenture Trustee. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.8. Subject to the
preceding sentence, the Indenture Trustee may resign at any time by providing
sixty (60) days prior written notice to the Issuer, the Insurer and the
Noteholders or sooner if so required by law. The Issuer may and, at the request
of the Insurer (unless an Insurer Default shall have occurred and be continuing)
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official) for
the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs;
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(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other similar official) for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due
or take any corporate action in furtherance of any of the foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly provide written notice of such event to the Rating Agencies, the
Insurer and the Noteholders and shall appoint a successor Indenture Trustee
acceptable to the Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or a Note Majority (if an Insurer Default has occurred and is
continuing). If the Issuer shall fail to appoint such a successor Indenture
Trustee, the Insurer (so long as an Insurer Default shall not have occurred and
be continuing) or a Note Majority (if an Insurer Default has occurred and is
continuing) may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Insurer (provided that an
Insurer Default shall not have occurred and be continuing) and to the Issuer.
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the retiring Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee and shall be
paid all fees and expenses owed through the date of termination.
If a successor Indenture Trustee does not take office within sixty (60)
days after the retiring Indenture Trustee provides notice of intended
resignation or is removed, the retiring Indenture Trustee, the Issuer or the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or a Note Majority (if an Insurer Default has occurred and is
continuing) may petition any court of competent jurisdiction for the appointment
of a successor Indenture Trustee.
If the Indenture Trustee shall fail to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
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Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the retiring Indenture Trustee. The retiring Indenture Trustee shall
have no liability for any act or omission by any successor Indenture Trustee.
Section 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee. The Indenture
Trustee shall provide the Rating Agencies, the Insurer and the Issuer written
notice of any such transaction as soon as practicable thereafter; provided,
however, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11.
If at the time of any such succession by merger, conversion or
consolidation to the Indenture Trustee any of the Notes shall have been
authenticated but not delivered, any such successor to the Indenture Trustee may
adopt the certificate of authentication of any predecessor trustee, and deliver
such Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may authenticate
such Notes either in the name of any predecessor Indenture Trustee hereunder or
in the name of the successor to the Indenture Trustee; and in all such cases
such certificates of authentication shall have the full force and effect to the
same extent given to the certificate of authentication of the Indenture Trustee
anywhere in the Notes or in this Indenture.
Section 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust Estate may at the time be located, the Indenture
Trustee with the consent of the Insurer (so long as an Insurer Default shall not
have occurred and be continuing) or a Note Majority (if an Insurer Default has
occurred and is continuing) shall have the power and may execute and deliver all
instruments to appoint one or more Person(s) to act as co-trustee(s), or
separate trustee(s), of all or any part of the Trust Estate, and to vest in such
Person(s), in such capacity and for the benefit of the Noteholders, such title
to the Trust Estate, or any part thereof, and, subject to the other provisions
of this Section, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8.
(c) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
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Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act(s) are to be
performed, the Indenture Trustee shall be incompetent or unqualified to
perform such act(s), in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(d) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(e) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee as its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Indenture on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
(f) The Indenture Trustee shall have no obligation to
determine whether a co-trustee or separate trustee is legally required in any
jurisdiction in which any part of the Trust Estate may be located.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of ss. 26(a)(1) of the Investment
Company Act of 1940, as amended and the requirements of TIA ss. 301(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and it shall have a long-term debt rating of BBB- or better by the Rating
Agencies. The Indenture Trustee shall provide copies of such reports to the
Insurer upon request. The Indenture Trustee shall comply with TIA ss. 310(b),
including the optional provision permitted by the second sentence of TIA ss.
310(b)(9); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA ss. 310(b)(1) are met.
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Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints The Chase
Manhattan Bank as Indenture Trustee with respect to the Indenture Collateral,
and The Chase Manhattan Bank hereby accepts such appointment and agrees to act
as the Indenture Trustee with respect to the Indenture Collateral for the Issuer
Secured Parties, to maintain custody and possession of such Indenture Collateral
(except as otherwise provided hereunder and under the Sale and Servicing
Agreement) and to perform the other duties of the Indenture Trustee in
accordance with the provisions of this Indenture and the Related Documents. Each
Issuer Secured Party hereby authorizes the Indenture Trustee to take such action
on its behalf, and to exercise such rights, remedies, powers and privileges
hereunder, as the Controlling Party may direct and as are specifically
authorized to be exercised by the Indenture Trustee by the terms hereof,
together with such actions, rights, remedies, powers and privileges as are
reasonably incidental thereto. The Indenture Trustee shall act upon and in
compliance with the written instructions of the Controlling Party delivered
pursuant to this Indenture promptly following receipt of such written
instructions; provided that the Indenture Trustee shall not act in accordance
with any instructions (i) which are not authorized by, or in violation of the
provisions of, this Indenture, (ii) which are in violation of any applicable
law, rule or regulation or (iii) for which the Indenture Trustee has not
received reasonable indemnity. Receipt of such instructions shall not be a
condition to the exercise by the Indenture Trustee of its express duties
hereunder, except where this Indenture provides that the Indenture Trustee is
permitted to act only following and in accordance with such instructions.
Section 6.14. Performance of Duties. The Indenture Trustee shall have
no duties or responsibilities except those expressly set forth in this Indenture
and the other Related Documents to which the Indenture Trustee is a party or as
directed by the Controlling Party in accordance with this Indenture. The
Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction and with the indemnification of the
Controlling Party. The Indenture Trustee shall, and hereby agrees that it will,
subject to this Article VI, perform all of the duties and obligations required
of it under the Sale and Servicing Agreement.
Section 6.15. Limitation on Liability. Neither the Indenture Trustee
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except that the Indenture Trustee shall be liable for its negligence
(other than errors in judgment), bad faith or willful misconduct; nor shall the
Indenture Trustee be responsible for the validity, effectiveness, value,
sufficiency or enforceability against the Issuer of this Indenture or any of the
Indenture Collateral (or any part thereof). Notwithstanding any term or
provision of this Indenture, the Indenture Trustee shall incur no liability to
the Issuer or the Issuer Secured Parties for any action taken or omitted by the
Indenture Trustee in connection with the Indenture Collateral, except for the
negligence (other than errors in judgment) or willful misconduct on the part of
the Indenture Trustee and, further, shall incur no liability to the Issuer
Secured Parties except for negligence (other than errors in judgment), bad faith
or willful misconduct in carrying out its duties to the Issuer Secured Parties.
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The Indenture Trustee shall be protected and shall incur no liability to any
such party in relying upon the accuracy, acting in reliance upon the contents,
and assuming the genuineness of any notice, demand, certificate, signature,
instrument or other document reasonably believed by the Indenture Trustee to be
genuine and to have been duly executed by the appropriate signatory, and (absent
actual knowledge to the contrary by a Responsible Officer of the Indenture
Trustee) the Indenture Trustee shall not be required to make any independent
investigation with respect thereto. The Indenture Trustee shall at all times be
free independently to establish to its reasonable satisfaction, but shall have
no duty to independently verify, the existence or nonexistence of facts that are
a condition to the exercise or enforcement of any right or remedy hereunder or
under any of the Related Documents. The Indenture Trustee may consult with
counsel, and shall not be liable for any action taken or omitted to be taken by
it hereunder in good faith and in accordance with the advice of such counsel.
The Indenture Trustee shall not be under any obligation to exercise any of the
remedial rights or powers vested in it by this Indenture or to follow any
direction from the Controlling Party or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder unless it
shall have received reasonable security or indemnity satisfactory to the
Indenture Trustee against the costs, expenses and liabilities which might be
incurred by it.
Section 6.16. Reliance Upon Documents. In the absence of negligence,
bad faith or willful misconduct on its part, the Indenture Trustee shall be
entitled to conclusively rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such document
or instrument.
Section 6.17. Successor Indenture Trustee. Any Person into which the
Indenture Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantially as a whole, or any Person resulting from any such
conversion, merger, consolidation, sale or transfer to which the Indenture
Trustee is a party, shall (provided it is otherwise qualified to serve as the
Indenture Trustee hereunder) be and become a successor Indenture Trustee
hereunder and be vested with all of the title to and interest in the Indenture
Collateral and all of the trusts, powers, discretions, immunities, privileges
and other matters as was its predecessor without the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, except to the
extent, if any, that any such action is necessary to perfect, or continue the
perfection of, the security interest of the Issuer Secured Parties in the
Indenture Collateral; provided that any such successor shall also be the
successor Indenture Trustee under Section 6.9.
Section 6.18. Representations and Warranties of the Indenture Trustee.
The Indenture Trustee represents and warrants to the Issuer and to each Issuer
Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a New York
banking corporation and is duly organized, validly existing and in good standing
under the laws of the
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State of New York, and is duly authorized and licensed under applicable law to
conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite
right, power and authority to execute and deliver this Indenture and its related
documents and to perform all of its duties as Indenture Trustee hereunder and
thereunder.
(c) Due Authorization. The execution and delivery by the
Indenture Trustee of this Indenture and the other Related Documents to which it
is a party, and the performance by the Indenture Trustee of its duties hereunder
and thereunder, have been duly authorized by all necessary corporate proceedings
and no further approvals or filings, including any governmental approvals, are
required for the valid execution and delivery by the Indenture Trustee, or the
performance by the Indenture Trustee, of this Indenture and such other Related
Documents.
(d) No Violation. The execution, delivery and performance by
the Indenture Trustee of this Agreement and its Related Documents (i) do not
violate any provision of any law or regulation governing it or any order, writ,
judgment, or decree of any court, arbitrator, or governmental authority
applicable to it or any of its assets, (ii) do not violate any provision of its
corporate charter or by-laws, and (iii) do not violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any lien on any of the Trust property pursuant
to the provisions of any mortgage, indenture, contract, agreement or other
undertaking other than this Agreement to which it is a party.
(e) No Consent Required. The execution, delivery and
performance by the Indenture Trustee of this Agreement and its Related Documents
do not require the authorization, consent or approval of, the giving of notice
to, the filing or registration with, or the taking of any action in respect of,
any governmental authority or agency.
(f) Valid and Binding Indenture. The Indenture Trustee has
duly executed and delivered this Indenture and each other Related Document to
which it is a party, and each of this Indenture and each such other Related
Document constitutes the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its terms,
except as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
Section 6.19. Waiver of Setoffs. The Indenture Trustee hereby expressly
waives any and all rights of setoff that the Indenture Trustee may otherwise at
any time have under applicable law with respect to any Trust Account and agrees
that amounts in the Trust Accounts shall at all times be held and applied solely
in accordance with the provisions hereof and of the Sale and Servicing
Agreement.
Section 6.20. Control by the Controlling Party. The Indenture Trustee
shall comply with notices and instructions given by the Issuer only if
accompanied by the written consent of the Controlling Party, except that if any
Event of Default shall have occurred and be continuing, the
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Indenture Trustee shall act upon and comply with notices and instructions given
by the Controlling Party alone in the place and stead of the Issuer.
Section 6.21. Indenture Trustee Not Liable for Notes or Receivables.
The Indenture Trustee makes no representations as to the validity or sufficiency
of the Sale and Servicing Agreement or of the Notes (other than authentication
of the Notes) or of any Receivable or Related Document, except as expressly
provided herein or in the Sale and Servicing Agreement. Except as expressly set
forth in the Related Documents, the Indenture Trustee shall at no time (except
with respect to its duties as Backup Servicer, Collateral Agent and Custodian
under the Related Documents and except during such time, if any, as it is acting
as successor Servicer) have any responsibility or liability for or with respect
to the legality, validity and enforceability of any security interest in any
Financed Vehicle or any Receivable, or the perfection and priority of such a
security interest or the maintenance of any such perfection and priority, or for
or with respect to the sufficiency of the Trust or its ability to generate the
payments to be distributed to Noteholders under this Indenture, including the
existence, condition, location and ownership of any Financed Vehicle; subject to
Section 2.3 of the Sale and Servicing Agreement, the existence and
enforceability of any insurance thereon; the existence of any Receivable or any
computer or other record thereof; subject to Section 2.3 of the Sale and
Servicing Agreement, the completeness of any Receivable; subject to Section 2.3
of the Sale and Servicing Agreement, the receipt by the Servicer of any
Receivable; the performance or enforcement of any Receivable; the compliance by
the Company and the Servicer with any covenant or the breach by the Company and
the Servicer of any warranty or representation made under any Related Document
and the accuracy of any such warranty or representation prior to the Indenture
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof; any investment of monies by or at the direction of the
Servicer or any loss resulting therefrom (it being understood, however, that the
Indenture Trustee shall remain responsible for any Trust Property that it may
hold directly); the acts or omissions of the Company, the Servicer or any
Obligor; any action of the Servicer taken in the name of the Indenture Trustee;
the accuracy, content or completeness of any offering documents used in
connection with the sale of the Notes or any action by the Indenture Trustee
taken at the instruction of the Servicer, the Company or the Noteholders holding
the requisite percentage of Notes not inconsistent with the provisions hereof or
of any Related Document; provided, however, that the foregoing shall not relieve
the Indenture Trustee of its respective obligation to perform its duties under
this Agreement and the other Related Documents, whether as Indenture Trustee, as
Collateral Agent, as Custodian or as Backup Servicer. The Indenture Trustee
shall not be accountable for the use or application by the Company of any of the
Notes or of the proceeds of such Notes, or for the use or application of any
funds paid to the Servicer in respect of the Receivables prior to the time such
funds are deposited in the Collection Account.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.1. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee within thirty (30) days after receipt by the Issuer of a written request
by the Indenture Trustee, a list of the names and addresses of the Holders of
Notes as of a date not more than ten (10) days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the
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Note Registrar, no such list shall be required to be furnished. The Indenture
Trustee shall or, if the Indenture Trustee is not the Note Registrar, the Issuer
shall, furnish to the Insurer in writing upon their written request and at such
other times as the Insurer may request a copy of the list.
Section 7.2. Preservation of Information, Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of the Holders of
Notes contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.1 and the names and addresses of Holders of Notes received
by the Indenture Trustee in its capacity as Note Registrar. The Indenture
Trustee may destroy any list furnished to it as provided in Section 7.1 upon
receipt of a new list so furnished.
(b) Three or more Noteholders, or one or more Holder(s) of
Notes evidencing at least 25% of the Note Balance, may obtain a list of the
names and addresses of Holders of Notes of record as of the most recent Record
Date in order to communicate with other Noteholders with respect to their rights
under this Indenture or under the Notes.
(c) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(d) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
Section 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (15) days
after the Issuer is required to file the same with the Commission,
copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA ss.
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
Section 7.4. Reports by Indenture Trustee. If required by TIA ss.
313(a), within 60 days after each June 30, beginning with June 30, 1999, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a
brief report dated as of such date that complies with TIA ss. 313(a). The
Indenture Trustee also shall comply with TIA ss. 313(b). A copy of each report
at the time of its mailing to Noteholders shall be given by the Indenture
Trustee to the Servicer to file with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Sale
and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it, as provided in this Indenture and the Sale and Servicing
Agreement. Except as otherwise expressly provided in this Indenture or in the
Sale and Servicing Agreement, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Estate, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article V.
Section 8.2. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause
the Indenture Trustee to establish and maintain, in the name of the Indenture
Trustee, for the benefit of the Noteholders and the Insurer, the Trust Accounts
as provided in Section 4.1 of the Sale and Servicing Agreement.
(b) On each Payment Date, the Indenture Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders to the extent of amounts due and unpaid on the Notes for principal
and interest in the amounts and in the order of priority set forth in Sections
4.6 and 4.7 of the Sale and Servicing Agreement.
Section 8.3. General Provisions Regarding Accounts.
(a) The funds in the Trust Accounts shall be invested and
reinvested by the Indenture Trustee in Eligible Investments in accordance with
Section 4.1(c) of the Sale and Servicing Agreement.
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(b) Subject to Section 6.1(c), the Indenture Trustee shall not
in any way be held liable for the selection of Eligible Investments or by reason
of any insufficiency in the Trust Accounts resulting from any loss on any
Eligible Investment included therein, except for losses attributable to the
Indenture Trustee's failure to make payments on such Eligible Investments issued
by the Indenture Trustee, in its commercial capacity as principal obligor and
not as trustee, in accordance with their terms.
Section 8.4. Release of Trust Estate.
(a) The Indenture Trustee may, and when required by this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with this Indenture and the
Sale and Servicing Agreement. No party relying upon an instrument executed by
the Indenture Trustee as provided in this Article shall be bound to ascertain
the Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due to the Indenture Trustee pursuant to Section
6.7 have been paid, all other Issuer Secured Obligations have been paid in full
and the Note Policy has expired in accordance with its terms and has been
returned to the Insurer for cancellation, release any remaining portion of the
Trust Estate that secured the Notes from the lien of this Indenture and release
to the Issuer or any other Person entitled thereto any funds then on deposit in
the Collection Account. The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Section 8.2(b) only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
Section 8.5. Opinion of Counsel. The Indenture Trustee shall receive at
least seven (7) days' notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of this Indenture; provided, however,
that no such notice or Opinion of Counsel shall be required after the Notes and
all other Issuer Secured Obligations have been paid in full and the Note Policy
has expired in accordance with its terms and has been returned to the Insurer
for cancellation, or for the release of liens in connection with a Purchased
Receivable or a replaced Receivable; and provided, further, that such Opinion of
Counsel shall not be required to express an opinion as to the fair value of the
Trust Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of
Noteholders. Without the consent of the Holders of Notes but with the prior
written consent of the Insurer (unless an Insurer Default shall have occurred
and be continuing) and with prior written notice to the Rating Agencies, the
Issuer and the Indenture Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto in form satisfactory to the
Indenture 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 better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of Notes, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) (A) to cure any ambiguity or to correct any provision
herein or in any supplemental indenture that may be inconsistent with
any other provision herein or in any supplemental indenture or (B) to
make any other provisions with respect to matters or questions arising
under this Indenture which are not inconsistent with the provisions of
this Indenture or in any supplemental indenture so long as, in the
Opinion of Counsel, such action in this clause (B) shall not materially
adversely affect the interests of the Holders of Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
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Section 9.2. Supplemental Indentures With Consent of Noteholders.
The Issuer and the Indenture Trustee may, with prior written notice to the
Rating Agencies, with the prior written consent of the Insurer (unless Insurer
Default shall have occurred and be continuing) and with the prior written
consent of the Note Majority 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 Holders of Notes under this Indenture; provided,
however, that, no such supplemental indenture shall, without the consent of the
Insurer and the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the Redemption Price with respect
thereto, change the provisions of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the
Trust Estate to the payment of principal of or interest on the Notes,
or change any 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 the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Note Balance, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of "Outstanding";
(iv) reduce the percentage of the Note Balance required to
direct the Indenture Trustee to sell or liquidate the Trust Estate
pursuant to Section 5.4 or 5.11;
(v) modify any provision of this Section 9.2 except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the other Related Documents
cannot be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the amount of any payment
of interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation);
(vii) 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 otherwise permitted or contemplated
herein, terminate the lien of this Indenture on any property at
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any time subject hereto or deprive any Holder of Notes of the security
provided by the lien of this Indenture; or
(viii) become effective if the Rating Agency Condition in
respect thereof shall have not been satisfied.
The provisions of this Section shall in no event be construed to
require the consent of the Noteholders or the Certificateholders to a reduction
in the Target Overcollateralization Amount or the required level of the Reserve
Account.
The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Indenture or in any other Related Document) and
of evidencing the authorization of the execution thereof by Noteholders shall be
subject to such reasonable requirements as the Indenture Trustee may provide.
Prior to the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section 9.2, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a true copy of such supplemental indenture. Any failure of the
Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
Section 9.3. Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, 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 Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.4. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.5. Conformity With Trust Indenture Act. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
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Section 9.6. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of the Issuer, to any such supplemental indenture may be prepared and executed
by the Issuer and authenticated and delivered by the Indenture Trustee in
exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
Section 10.1. Redemption.
(a) On any Payment Date on which the Servicer exercises its
option to purchase the Receivables and other Trust Property pursuant to Section
10.1 of the Sale and Servicing Agreement, the Notes shall be redeemed in whole,
but not in part, for a purchase price equal to the Redemption Price. Pursuant to
said Section 10.1, the Servicer shall furnish notice of such redemption to the
Indenture Trustee, the Insurer, the Backup Servicer and the Rating Agencies not
later than the Record Date prior to the Redemption Date and the Servicer shall
deposit with the Indenture Trustee in the Collection Account the Redemption
Price of the Notes to be redeemed on or before the Redemption Date.
(b) In the event that the assets of the Trust are sold
pursuant to Section 9.1 of the Trust Agreement, all amounts on deposit in the
Collection Account shall be paid to the Noteholders up to the Note Balance and
all accrued and unpaid interest thereon. If amounts are to be paid to
Noteholders pursuant to this Section 10.1(c), the Servicer or the Issuer shall,
to the extent practicable, furnish notice of such event to the Indenture Trustee
not later than forty-five (45) days prior to the Redemption Date whereupon all
such amounts shall be payable on the Redemption Date.
Section 6.2. Form of Redemption Notice. Notice of redemption under
Section 10.1 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed no later than the fifth (5th) day of the month in which
the applicable Redemption Date occurs to each Holder of Notes, as of the close
of business on the Record Date preceding the applicable Redemption Date, at such
Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered in
accordance with Section 2.7(b)(ii) hereof for payment of the Redemption
Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.2).
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Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
Section 10.3. Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption pursuant
to this Article X, become due and payable on the Redemption Date at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
If there are not sufficient funds in the Collection Account on the
Payment Date on which the Notes are to be redeemed available to pay the
Redemption Price, the notice of redemption shall be deemed to have been revoked
and the Notes shall not be redeemed on the Redemption Date. Payments will be
made on such Payment Date in accordance with Section 4.7 of the Sale and
Servicing Agreement as though no notice of redemption had been given and the
Notes shall continue to bear interest at the Class A Interest Rate.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under this Indenture, the Indenture Trustee shall be entitled to request that
the Issuer furnish to the Indenture Trustee and to the Insurer (i) 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 (ii) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by this Indenture, no additional certificate or opinion
need be furnished.
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<PAGE> 70
(a) Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(i) a statement that each signatory of such
certificate or opinion has read or has caused to be read such covenant
or condition and the definitions herein relating thereto;
(ii) 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;
(iii) a statement that, in the opinion of each
such signatory, such signatory has made (or has caused to be made) such
examination or investigation as is necessary to enable such signatory
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory, such condition or covenant has been complied with.
(b) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made the basis
for the release of any property or securities subject to the Lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
11.1 or elsewhere in this Indenture, furnish to the Indenture Trustee and the
Insurer an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of such
deposit) to the Issuer of the Indenture Collateral or other property or
securities to be so deposited. Such certificate or opinion of fair value shall
satisfy the requirements of Section 314 of the TIA, as amended.
(c) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying or stating
the opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Indenture Trustee and the Insurer an
Independent Certificate as to the same matters, if the fair value to the issuer
of the securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Notes; provided, that such a certificate need not be furnished
with respect to any securities so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is less than $25,000 or
less than 1% percent of the Outstanding Notes.
(d) Other than with respect to the release of any
Purchased Receivables or Liquidated Receivables whenever any property or
securities are to be released from the lien of this Indenture, the Issuer shall
also furnish to the Indenture Trustee and the Insurer an Officer's Certificate
certifying or stating the opinion of each person signing such certificate as to
the fair value (within 90 days of such release) of the property or securities
proposed to be released and
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stating that in the opinion of such person the proposed release will not impair
the security under this Indenture in contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying or stating
the opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee and the Insurer an
Independent Certificate as to the same matters if the fair value of the property
or securities and of all other property other than Purchased Receivables and
Defaulted Receivables, or securities released from the lien of this Indenture
since the commencement of the then current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10% or
more of the Outstanding Notes; provided, that such certificate need not be
furnished in the case of any release of property or securities if the fair value
thereof as set forth in the related Officer's Certificate is less than $25,000
or less than 1 percent of the then Outstanding Notes.
(f) Notwithstanding Section 2.9 or any other provision of
this Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables as and to the extent permitted or required by the Related
Documents and (B) make cash payments out of the Trust Accounts as and to the
extent permitted or required by the Related Documents.
Section 11.2. Form of Documents Delivered to Indenture 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 Authorized Officer of the Issuer 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, opinion or
representations with respect to the matters upon which his certificate or
opinion is based is/are erroneous. Any such certificate of an Authorized Officer
or 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 Servicer, Triad or the Issuer, stating that the information with respect
to such factual matters is in the possession of the Servicer, Triad or the
Issuer, as applicable, unless such Authorized Officer or counsel knows, or in
the exercise of reasonable care should know, that the certificate, opinion or
representations with respect to such matters are erroneous.
Where any Person is required or permitted 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.
Whenever in this Indenture, in connection with any application,
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is
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<PAGE> 72
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 Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
Section 11.3. Acts of Noteholders.
(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
instrument(s) 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(s)
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument(s) (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument(s). 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 6.1) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(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 Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or Act by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof, in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.4. Notices, etc., to the Indenture Trustee, Issuer and
Rating Agency. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders, or other documents provided or permitted by this
Indenture, shall be in writing and, if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the
Issuer, shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its Corporate
Trust Office, or
(b) the Issuer by the Indenture Trustee or by any
Noteholder, shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to the Issuer addressed to: Triad Auto
Receivables Owner Trust 1998-4, 7711 Center Avenue, Suite 100, Huntington Beach,
California 92647, Telecopy No.: (714) 894-8617 or at any other address
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<PAGE> 73
previously furnished in writing to the Indenture Trustee by the Issuer, with a
copy to the Owner Trustee, addressed to: Wilmington Trust Company, 1100 North
Market Street, Wilmington, Delaware 19890. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Indenture Trustee.
(c) The Insurer by the Issuer or the Indenture Trustee
shall be sufficient for any purpose hereunder if in writing and mailed by
registered mail or personally delivered or telexed or telecopied to the
recipient as follows:
To the Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: Triad Auto Receivables Owner
Trust 1998-4
Class A Asset Backed Notes
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518 or
(212) 339-3529
(In each case in which notice or other communication to the Insurer refers to an
Event of Default, a claim on the Note Policy or with respect to which failure on
the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head-- Financial Guaranty
Group "URGENT MATERIAL ENCLOSED.")
Notices required to be given to the Rating Agency by the Issuer or the
Indenture Trustee shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, to the address set forth in Section
10.12(e) of the Sale and Servicing Agreement.
Section 11.5. Notices to Noteholders, Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any 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 Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
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In case, by reason of the suspension of regular mail service, it shall
be impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this Indenture or the Notes for such payments or notices. The Issuer will
furnish to the Indenture Trustee a copy of each such agreement and the Indenture
Trustee will cause payments to be made and notices to be given in accordance
with such agreements to the extent such alternative arrangements are reasonable.
Any additional costs or expenses associated therewith shall be payable by the
Issuer or the applicable Noteholder.
Section 11.7. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 11.8. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not expressly contained herein.
Section 11.9. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents of the
Indenture Trustee.
Section 11.10. Severability. Any provision of this Indenture or the
Notes that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or of the
Notes, as applicable, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 11.11. Benefits of Indenture. The Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture, and shall be entitled to rely upon and to directly enforce such
provisions of this Indenture so long as an Insurer Default shall not have
occurred and be continuing. Nothing in this Indenture or in the Notes, express
or implied,
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shall give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and the Insurer, and any other party secured
hereunder, and any other person with an ownership interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim under
this Indenture. The Insurer may disclaim any of its rights and powers under this
Indenture (in which case the Trustee may exercise such right or power
hereunder), but not its duties and obligations under the Note Policy, upon
delivery of a written notice to the Indenture Trustee.
Section 11.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next Business Day with the same force and effect as if
made on the date on which nominally due, and no interest shall accrue for the
period from and after any such nominal date.
Section 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.15. Recording of Indenture. If this Indenture is subject
to recording in any public recording offices, such recording is to be effected
by the Issuer and, at its expense, accompanied by an Opinion of Counsel (which
may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer or the Indenture
Trustee on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of (a) the Owner Trustee in its individual capacity, (b) any holder of a
beneficial interest in the Issuer or the Indenture Trustee or (c) of any
successor or assign of the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the Owner
Trustee and the Indenture Trustee have no such obligations in their respective
individual capacities) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
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Section 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they shall not at any time institute against the Company or the
Issuer, or join in any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or State bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
other Related Document. The foregoing shall not limit the rights of the
Indenture Trustee to file any claim in or otherwise take any action with respect
to any insolvency proceeding that was instituted against the Issuer by any
Person other than the Indenture Trustee.
Section 11.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or of
the Insurer, during the Issuer's normal business hours, to examine all the books
of account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall cause its representatives to hold in
confidence all such information; provided, however, that the foregoing shall not
be construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Indenture Trustee from
sources other than the Issuer or the Servicer, (ii) disclosure of any and all
information (A) if required to do so by any applicable statute, law, rule or
regulation, (B) to any government agency or regulatory or self-regulatory body
having or claiming authority to regulate or oversee any aspects of the Indenture
Trustee's business or that of its Affiliates, (C) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Indenture Trustee or an
Affiliate thereof or any officer, director, employee or shareholder thereof is
subject, (D) in any preliminary or final placement memorandum, registration
statement or contract or other document pertaining to the transactions
contemplated by the Indenture and approved in advance by the Issuer or (E) to
any Affiliate, independent or internal auditor, agent, employee or attorney of
the Indenture Trustee having a need to know the same; provided, that the
Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed and such recipient agrees to keep such information
confidential, (iii) any other disclosure authorized in writing by the Issuer or
the Servicer or (iv) disclosure to the other parties to the transactions
contemplated by the Related Documents and the Noteholders.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers duly authorized as of the day and
year first above written.
TRIAD AUTO RECEIVABLES OWNER
TRUST 1998-4
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Indenture
Trustee
By:
-----------------------------------
Name:
Title:
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EXHIBIT A
to Indenture
FORM OF CLASS A NOTES
REGISTERED $100,000,000
No. R- CUSIP NO. [____________]
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
or its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE, IS PAYABLE IN INSTALLMENTS AS
SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF
THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
5.98% ASSET BACKED NOTES, CLASS A
Triad Auto Receivables Owner Trust 1998-4, a Delaware business trust
(including any successor, the "Issuer"), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, the principal sum of ONE HUNDRED
MILLION DOLLARS ($100,000,000) partially payable on each Payment Date in an
amount equal to the aggregate amount, if any, payable from the Collection
Account and the Note Distribution Account in respect of principal on the Class A
Notes pursuant to Section 3.1 of the Indenture and Sections 4.6 and 4.7 of the
Sale and Servicing Agreement; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of the
Final Scheduled Payment Date and the Redemption Date, if any, pursuant to
Section 10.1 of the Indenture. The Issuer will pay interest on this Note at the
rate per annum shown above, on each Payment Date until the principal of this
Note is paid or made available for payment, on the principal amount of this Note
outstanding on the close of business on the last day of the calendar month
preceding such Payment Date (the "Collection Period End Date"), subject to
certain limitations contained in Section 3.1 of the Indenture and Sections 4.6
and 4.7 of the Sale and Servicing Agreement to the holders of record as of the
Record Date in the month in which the Payment Date occurs. Interest on this Note
will accrue for each Payment Date from the last day of the most recent
Collection Period on which interest has been paid to but excluding the last day
of the next Collection Period or, if no interest has yet been paid, from
December 15, 1998. Interest will be computed on the basis of a 360-day year of
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<PAGE> 79
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: December 15, 1998
TRIAD AUTO RECEIVABLES OWNER
TRUST 1998-4
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By:
--------------------------------------
Name:
Title:
C-2-2
<PAGE> 80
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: December 15, 1998
THE CHASE MANHATTAN BANK
not in its individual capacity but solely as
Indenture Trustee
By:
----------------------------------------
Authorized Signatory
C-2-3
<PAGE> 81
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 5.98% Asset Backed Notes, Class A (herein called the "Class A
Notes" or the "Notes"), all issued under an Indenture, dated as of November 1,
1998 (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and The Chase Manhattan Bank, not in its
individual capacity but solely as indenture trustee (the "Indenture Trustee",
which term includes any successor Indenture Trustee under the Indenture), for
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Indenture Trustee and the Holders of the Notes. The Notes are
subject to all terms of the Indenture. All terms used in this Note that are not
otherwise defined herein and that are defined in the Indenture shall have the
meanings assigned to them in or pursuant to the Indenture.
The Class A Notes will each be secured by the collateral pledged as
security therefor as provided in the Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class A Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.1 of the Sale and Servicing Agreement, in whole, but not in part, if
the Servicer exercises its option to purchase the Receivables and the other
Trust Property on any Payment Date if, as of the last day of the related
Collection Period,, the Aggregate Principal Balance of Receivables has declined
to less than or equal to 10% of the Original Pool Balance.
Each Noteholder, by acceptance of a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer on the Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Owner Trustee in its
individual capacity, the Indenture Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of (a) the Owner Trustee in
its individual capacity, the Indenture Trustee in its individual capacity, (b)
any holder of a beneficial interest in the Issuer or the Owner Trustee or the
Indenture Trustee or of (c) any successor or assign of the Owner Trustee in its
individual capacity, the Indenture Trustee in its individual capacity, except as
any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
It is the intent of the Issuer, the Servicer and the Noteholders that,
for purposes of Federal and State income tax and any other tax measured in whole
or in part by income, the Notes will qualify as indebtedness of the Issuer. The
Noteholders, by acceptance of a Note, agree to treat, and to take no action
inconsistent with the treatment of, the Notes for such tax purposes as
indebtedness of the Issuer.
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<PAGE> 82
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Issuer, or join in any institution against the Issuer
of, any bankruptcy, reorganization or arrangement, insolvency or liquidation
proceedings under any United States Federal or State bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
Related Documents.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Related Documents, neither Wilmington Trust Company, in its
individual capacity, The Chase Manhattan Bank, in its individual capacity, any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees, successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnification's contained in
this Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnification's have been made by (i) the Owner Trustee for
the sole purpose of binding the assets of the Issuer, and (ii) the Indenture
Trustee for the sole purpose of binding the interests of the Indenture Trustee
in the assets of the Issuer. The Holder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Related Documents, in the case
of an Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
C-2-5
<PAGE> 83
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(name and address of assignee)
-------------------------------------------------
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________ attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated:
---------------- ------------------------------------
Signature Guaranteed:
*/
-----------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the Note
Registrar.
- --------------------------
*/ NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
C-2-6
<PAGE> 1
EXHIBIT 4.4.8
EXECUTION COPY
================================================================================
AMENDED AND RESTATED TRUST AGREEMENT
among
TRIAD FINANCIAL SPECIAL PURPOSE CORPORATION II
TRIAD FINANCIAL CORPORATION
WILMINGTON TRUST COMPANY
OWNER TRUSTEE
and
ASSET BACKED SECURITIES CORPORATION
Dated as of November 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS................................................................................................ 1
ARTICLE I. DEFINITIONS................................................................................. 1
Section 1.1. Capitalized Terms................................................................ 1
Section 1.2. Usage of Terms................................................................... 3
Section 1.2. Material Adverse Effect.......................................................... 3
ARTICLE II. ORGANIZATION............................................................................... 4
Section 2.1. Name............................................................................. 4
Section 2.2. Office........................................................................... 4
Section 2.3. Purposes and Powers.............................................................. 4
Section 2.4. Appointment of Owner Trustee..................................................... 5
Section 2.5. Initial Capital Contribution of Trust Property................................... 5
Section 2.6. Declaration of Trust............................................................. 5
Section 2.7. No Liability of Certificateholder................................................ 6
Section 2.8. Title to Trust Property.......................................................... 6
Section 2.9. Situs of Trust................................................................... 6
Section 2.10. Representations and Warranties of ABSC.......................................... 6
Section 2.11. Representations and Warranties of TFSPC II...................................... 8
Section 2.12. Federal Income Tax Allocations.................................................. 9
Section 2.13. Covenants of ABSC.............................................................. 10
Section 2.14. Covenants of the Holders....................................................... 10
ARTICLE III. CERTIFICATES AND TRANSFER OF INTERESTS................................................... 11
Section 3.1. Initial Ownership............................................................... 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.2. The Certificates................................................................ 12
Section 3.3. Authentication of Certificates.................................................. 12
Section 3.4. Registration of Transfer and Exchange of Certificates........................... 12
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates............................... 14
Section 3.6. Persons Deemed Certificateholder(s)............................................. 14
Section 3.7. Access to List of Certificateholder(s)' Names and Addresses..................... 14
Section 3.8. Maintenance of Office or Agency................................................. 15
Section 3.9. Disposition Only With Consent of Insurer........................................ 15
Section 3.9. ERISA Restrictions.............................................................. 15
ARTICLE IV. VOTING RIGHTS AND OTHER ACTIONS........................................................... 15
Section 4.1. Prior Notice to Holders with Respect to Certain Matters......................... 15
Section 4.2. Action by Certificateholder(s) with Respect to Certain Matters.................. 16
Section 4.3. Action by Certificateholder(s) with Respect to Bankruptcy....................... 16
Section 4.4. Restrictions on Certificateholder(s)' Power..................................... 16
Section 4.5. Majority Control................................................................ 17
ARTICLE V. CERTAIN DUTIES............................................................................. 17
Section 5.1. Accounting and Records to the Noteholders, Certificateholder(s), the Internal
Revenue Service and Others.................................................................... 18
Section 5.2. Signature on Returns; Tax Matters Partner....................................... 18
Section 5.3. Payments to Certificateholders.................................................. 18
ARTICLE VI. AUTHORITY AND DUTIES OF OWNER TRUSTEE..................................................... 18
Section 6.1. General Authority............................................................... 19
Section 6.2. General Duties.................................................................. 19
Section 6.3. Action upon Instruction......................................................... 19
Section 6.4. No Duties Except as Specified in this Agreement or in Instructions.............. 20
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 6.5. No Action Except under Specified Documents or Instructions...................... 20
Section 6.6. Restrictions.................................................................... 21
ARTICLE VII. CONCERNING THE OWNER TRUSTEE.................................................... 21
Section 7.1. Acceptance of Trusts and Duties................................................. 21
Section 7.2 Furnishing of Documents.......................................................... 22
Section 7.3. Representations and Warranties.................................................. 22
Section 7.4. Reliance; Advice of Counsel..................................................... 23
Section 7.5 Not Acting in Individual Capacity................................................ 23
Section 7.6. Owner Trustee Not Liable for Certificates or Receivables........................ 24
Section 7.7. Payments from Trust Property.................................................... 24
Section 7.8. Doing Business in Other Jurisdictions........................................... 24
ARTICLE VIII. COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE....................................... 25
Section 8.1. Owner Trustee's Fees and Expenses............................................... 25
Section 8.2. Indemnification................................................................. 25
Section 8.3. Payments to the Owner Trustee................................................... 25
Section 8.4. Non-recourse Obligations........................................................ 25
ARTICLE IX. TERMINATION OF TRUST AGREEMENT............................................................ 25
Section 9.1. Termination of Trust Agreement.................................................. 25
ARTICLE X. SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES..................................... 27
Section 10.1 Eligibility Requirements for Owner Trustee...................................... 27
Section 10.2 Resignation or Removal of Owner Trustee......................................... 27
Section 10.3 Successor Owner Trustee......................................................... 28
Section 10.4 Merger or Consolidation of Owner Trustee........................................ 28
Section 10.5. Appointment of Co-Trustee or Separate Trustee.................................. 29
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XI. MISCELLANEOUS............................................................................. 30
Section 11.1 Supplements and Amendments...................................................... 30
Section 11.2. No Legal Title to Trust Property in Certificateholder(s)....................... 31
Section 11.3. Limitations on Rights of Others................................................ 31
Section 11.4. Notices........................................................................ 32
Section 11.5. Severability................................................................... 32
Section 11.6. Separate Counterparts.......................................................... 32
Section 11.7. Assignments.................................................................... 33
Section 11.8. No Petition.................................................................... 33
Section 11.9. Bankruptcy Matters............................................................. 33
Section 11.10. No Recourse................................................................... 33
Section 11.11. Headings...................................................................... 33
Section 11.12. Governing Law................................................................. 34
Section 11.13. Servicer...................................................................... 34
Exhibit A Form of Certificate.................................................................. 1
Exhibit B Form of Certificate of Trust......................................................... 1
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT, dated as of November 1,
1998, among TRIAD FINANCIAL CORPORATION, a California corporation ("Triad"),
TRIAD FINANCIAL SPECIAL PURPOSE CORPORATION II, a Delaware corporation, as
Holder of the Certificate ("TFSPC II"), ASSET BACKED SECURITIES CORPORATION, a
Delaware corporation, as depositor, ("ABSC"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as Owner Trustee. This Trust Agreement amends and
restates in its entirety the trust agreement (the "Original Trust Agreement")
entered into among Triad, TFSPC II, ABSC and Wilmington Trust Company, dated as
of November 1, 1998.
RECITALS
WHEREAS, pursuant to the Original Trust Agreement, a business
trust was created under Chapter 38 of Title 12 of the Delaware Code, 12 Del.C
ss. 3801, et seq. (the "Business Trust Statute") named Triad Auto Receivables
Owner Trust 1998-4 (the "Trust");
WHEREAS, Triad, TFSPC II, ABSC and Wilmington Trust Company
desire to amend and restate the Original Agreement as provided in this Amended
and Restated Trust Agreement and to continue the Trust as a business trust under
the Business Trust Statute and that this Trust Agreement constitute the
governing instrument of such business trust; and
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Capitalized Terms. Capitalized terms used but
not defined herein shall have the meanings set forth in the Sale and Servicing
Agreement (as defined below). For all purposes of this Agreement, the following
terms shall have the meanings set forth below:
"ABSC" shall mean Asset Backed Securities Corporation, a
Delaware corporation, as depositor.
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time in accordance with the terms
hereof.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.10.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code ss. 3801 et. seq., as the same may be amended
from time to time.
"Certificate" shall mean a certificate evidencing the
beneficial interest of a Certificateholder in the Issuer, substantially in the
form of Exhibit A.
<PAGE> 7
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Issuer pursuant to Section 3810(a) of
the Business Trust Statute.
"Certificate Percentage Interest" shall mean with respect to
any Certificate, the percentage interest of ownership in the Issuer represented
thereby as set forth on the face thereof.
"Certificate Register" and "Certificate Registrar" shall mean
the register mentioned in and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
1100 North Market Street, Wilmington, Delaware 19890, or at such other address
as the Owner Trustee may designate by notice to the Certificateholder(s), the
Insurer and Triad, or the principal corporate trust office of any successor
Owner Trustee (the address of which the successor owner trustee will notify the
Certificateholder(s), the Insurer and Triad).
"Equity Interests" shall have the meaning assigned to such
term in Section 2.11.
"ERISA" shall have the meaning assigned to such term in
Section 3.10.
"Expenses" shall have the meaning assigned to such term in
Section 8.1.
"Governmental Authority" shall mean any court or federal or
state regulatory body, administrative agency or other tribunal or other
governmental instrumentality.
"Holder" or "Certificateholder" shall mean the Person in whose
name a Certificate is registered on the Certificate Register.
"Initial Certificate Balance" shall have the meaning assigned
to such term in Section 2.5.
"Instructing Party" shall mean the Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or the Holders of
Certificates evidencing not less than a majority of the Certificate Percentage
Interest (if an Insurer Default shall have occurred and be continuing).
"Insurer" shall mean Financial Security Assurance Inc., or its
successor in interest.
"Issuer" shall mean the Trust established by this Agreement.
"Original Trust Agreement" shall mean the Trust Agreement
among Triad, ABSC, TFSPC II and the Owner Trustee, dated as of November 1, 1998.
"Owner Trustee" shall mean Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
2
<PAGE> 8
"Related Documents" shall mean this Agreement, the Indenture,
the Sale and Servicing Agreement, the Certificate of Trust, the Notes, the
Receivables Purchase Agreement, the Insurance Agreement, the Reserve Account
Agreement, the Indemnification Agreement, the Premium Letter, the Underwriting
Agreement, and the other agreements executed in connection with the Closing. The
Related Documents executed by any party are referred to herein as "such party's
Related Documents," "its Related Documents" or by a similar expression.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement, dated as of November 1, 1998, among the Issuer, ABSC,
Triad, in its individual capacity and as Servicer, and The Chase Manhattan Bank,
as Indenture Trustee and Backup Servicer, as the same may be amended or
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"TFSPC II" shall mean Triad Financial Special Purpose
Corporation II, a Delaware corporation, as Certificateholder.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean Triad Auto Receivables Owner Trust 1998-4,
a Delaware business trust.
Section 1.2. Usage of Terms. With respect to all terms used
in this Agreement, the singular includes the plural and the plural includes the
singular, words importing one gender include the other gender, references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form, references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement, references to Persons include their permitted successors and assigns,
and the terms "include" or "including" mean "include without limitation" or
"including without limitation."
Section 1.3. Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given event,
action, course of conduct or set of facts or circumstances could or would have a
material adverse effect on the Noteholders or Certificateholders (or any similar
or analogous determination), such determination shall be made without taking
into account the funds available from claims under the Note Policy.
ARTICLE II.
ORGANIZATION
Section 2.1. Name. There is hereby formed a trust to be
known as "Triad Auto Receivables Owner Trust 1998-4", in which name the Owner
Trustee may conduct the business of the Issuer, make and execute contracts and
other instruments on behalf of the Issuer and sue and be sued on behalf of the
Issuer.
3
<PAGE> 9
Section 2.2. Office. The office of the Issuer shall be (a)in
care of the Owner Trustee at the Corporate Trust Office or at such other address
in Delaware as the Owner Trustee may designate by written notice to the
Certificateholder(s), the Insurer and Triad or (b) at the principal corporate
trust office of any successor Owner Trustee (the address of which the successor
Owner Trustee will notify the Certificateholder(s), the Insurer and Triad).
Section 2.3. Purposes and Powers. (a) The purpose of the
Issuer is, and the Issuer shall have the power and authority, to engage in the
following activities:
(i) to acquire from time to time the Trust Property;
(ii) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell, transfer and
exchange the Notes and the Certificates and to pay interest on and
principal of the Notes and distributions on the Certificates;
(iii) with the proceeds of the sale of the Notes, to fund
the Pre-Funding Account and the Capitalized Interest Account, to pay
the organizational, start-up and transactional expenses of the Issuer
and to pay the balance to ABSC pursuant to the Sale and Servicing
Agreement;
(iv) to assign, grant, transfer, pledge, mortgage and
convey the Trust Property to the Indenture Trustee pursuant to the
Indenture for the benefit of the Insurer and the Noteholders and to
hold, manage and distribute to the Certificateholders pursuant to the
terms of the Sale and Servicing Agreement any portion of the Trust
Property released from the Lien of, and remitted to the Issuer pursuant
to, the Indenture and the Sale and Servicing Agreement;
(v) to enter into and perform its obligations under the
Related Documents to which it is a party;
(vi) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vii) subject to compliance with the Related Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Property and the making of distributions to
the Certificateholder(s) and the Noteholders.
(b) The Issuer is hereby authorized to engage in the foregoing
activities. The Issuer shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the Related Documents.
Section 2.4. Appointment of Owner Trustee. ABSC hereby
appoints the Owner Trustee as trustee of the Issuer effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee by execution hereof accepts such appointment.
4
<PAGE> 10
Section 2.5. Initial Capital Contribution of Trust Property.
ABSC hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $10 (the "Initial Certificate
Balance"). The Owner Trustee hereby acknowledges receipt in trust from ABSC, as
of the date hereof, of the foregoing contribution, which shall constitute the
initial Trust Property and shall be deposited into the Collection Account.
Section 2.6. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the use and benefit of the Holders, subject to
the obligations of the Issuer under the Related Documents. The Issuer shall
constitute a business trust under the Business Trust Statute, and this Agreement
shall constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, until the Certificates are held by more than one person or the Trust
is recharacterized as a separate entity, the Trust will be disregarded as an
entity separate from its beneficial owner and the Notes will be treated as debt
of the Certificateholder. If the Certificates are held by more than one person
or the Trust is recharacterized as a separate entity, it is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Issuer
shall be treated as a partnership with the assets of the partnership being the
Trust Property, the partners of the partnership being the Certificateholders and
the Notes being debt of the partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, until the Certificates are
held by more than one person or the Trust is recharacterized as a separate
entity, the Trust will not file or cause to be filed annual or other necessary
returns, reports and other forms characterizing the Issuer as a partnership for
income and franchise tax purposes. Consistent with the foregoing, neither the
Trust, the Owner Trustee nor any officers, manager, agent , Certificateholder,
holder of other Equity Interests or members of the Trust shall have the power to
elect for purposes of federal, state or local laws to treat the Trust as an
association taxable as a corporation (including the election under Treasury
Regulations section 301.7701-3(c)). Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and, to the
extent not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of the Issuer. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
Section 2.7. No Liability of Certificateholder. To the
fullest extent permitted by law, no Certificateholder shall have any personal
liability for any liability or obligation of the Issuer.
Section 2.8. Title to Trust Property.
(a) Legal title to all the Trust Property shall be vested at
all times in the Issuer as a separate legal entity except where applicable law
in any jurisdiction requires title to any part of the Trust Property to be
vested in a trustee or trustees, in which case title shall be deemed to be
vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the case
may be.
(b) The Holders shall not have legal title to any part of
the Trust Property. The Holders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title or interest by any Certificateholder of its beneficial or other ownership
interest in the Trust Property shall operate to terminate this Agreement or the
trusts
5
<PAGE> 11
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the Trust Property.
Section 2.9. Situs of Trust. The Issuer shall be located and
administered in the State of Delaware. The Issuer's assets shall be segregated.
All bank accounts maintained by the Owner Trustee on behalf of the Issuer shall
be located in the State of Delaware. Payments shall be received by the Issuer
only in Delaware and payments will be made by the Issuer only from Delaware. The
Issuer shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee, the
Servicer or any agent of the Issuer from having employees within or without the
State of Delaware. The only office of the Issuer shall be at the Corporate Trust
Office in Delaware.
Section 2.10. Representations and Warranties of ABSC. ABSC
makes the following representations and warranties upon which the Owner Trustee
relies in accepting the Trust Property in trust and issuing the Certificates and
upon which the Insurer relies in issuing the Note Policy:
(a) Organization and Good Standing. It is duly organized and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power, authority and legal right to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times and now
has power, authority and legal right to acquire and own the Receivables and to
enter into and perform its obligations under this Agreement and its Related
Documents.
(b) Due Qualification. It is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business and the performance of its obligations
under this Agreement and the Related Documents requires or shall require such
qualifications, licenses or approvals, except where the failure to have such
qualifications, licenses or approvals will not have a material adverse effect on
the interest of the Trust or the Insurer in the Receivables or on it's ability
to perform its obligations under this Agreement and the Related Documents, or
its ability to enforce the Receivables and the other property in the Trust
Property.
(c) Power and Authority. It has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry out
its and their terms. It has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer and it has
duly authorized such sale and assignment and deposit to the Issuer by all
necessary corporate action and the execution, delivery and performance of this
Agreement and its Related Documents have been duly authorized by all necessary
corporate action.
(d) No Consent Required. No consent, license, approval,
authorization or order of, or registration, declaration or filing with, any
Governmental Authority or other Person is required to be made in connection with
the execution, delivery or performance of this Agreement or its Related
Documents or the consummation of the transactions contemplated hereby or
thereby, except such as have been duly made, effected or obtained.
6
<PAGE> 12
(e) No Violation. The execution, delivery and performance by
it of this Agreement and its Related Documents, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof, do not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time)
a default under, its certificate of incorporation or bylaws, or any indenture,
agreement, mortgage, deed of trust, license or other instrument to which it is a
party or by which it or its properties are bound, (ii) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, or (iii)
violate any law, order, rule or regulation applicable to it of any Governmental
Authority having jurisdiction over it or any of its properties.
(f) Binding Obligations. Its Related Documents, when duly
executed and delivered by the other parties thereto, shall constitute legal,
valid and binding obligations of it enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) No Proceedings. There are no proceedings or
investigations pending or, to the best of its knowledge, threatened against it
before any Governmental Authority having jurisdiction over it or its properties
(i) asserting the invalidity of any of the Related Documents, (ii) seeking to
prevent the issuance of the Certificates or the Notes or the consummation of any
of the transactions contemplated by the Related Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material
adverse effect on the performance by it of its obligations under, or the
validity or enforceability of, any of the Related Documents or (iv) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Certificates or the Notes or seeking to impose any excise,
franchise, transfer or similar tax upon the Certificates or the Notes or the
sale and assignment of the Receivables under the Related Documents.
Section 2.11. Representations and Warranties of TFSPC II.
(a) Organization and Good Standing. It is duly organized and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power, authority and legal right to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times and now
has power, authority and legal right to acquire and own the Certificates and to
enter into and perform its obligations under this Agreement and its Related
Documents.
(b) Due Qualification. It is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business and the performance of its obligations
under this Agreement and the Related Documents requires or shall require such
qualifications, licenses or approvals, except where the failure to have such
qualifications, licenses or approvals will not have a material adverse effect on
the interest of the Trust or the Insurer in the Receivables or on the it's
ability to perform its obligations under this Agreement and the Related
Documents.
7
<PAGE> 13
(c) Power and Authority. It has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry out
its and their terms. It has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer and it has
duly authorized such sale and assignment and deposit to the Issuer by all
necessary corporate action and the execution, delivery and performance of this
Agreement and its Related Documents have been duly authorized by all necessary
corporate action.
(d) No Consent Required. No consent, license, approval,
authorization or order of, or registration, declaration or filing with, any
Governmental Authority or other Person is required to be made in connection with
the execution, delivery or performance of this Agreement or its Related
Documents or the consummation of the transactions contemplated hereby or
thereby, except such as have been duly made, effected or obtained.
(e) No Violation. The execution, delivery and performance by
it of this Agreement and its Related Documents, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof, do not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time)
a default under, its certificate of incorporation or bylaws, or any indenture,
agreement, mortgage, deed of trust, license or other instrument to which it is a
party or by which it or its properties are bound, (ii) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, or (iii)
violate any law, order, rule or regulation applicable to it of any Governmental
Authority having jurisdiction over it or any of its properties.
(f) Binding Obligations. Its Related Documents, when duly
executed and delivered by the other parties thereto, shall constitute legal,
valid and binding obligations of it enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best of its knowledge, threatened against it before any
Governmental Authority having jurisdiction over it or its properties (i)
asserting the invalidity of any of the Related Documents, (ii) seeking to
prevent the issuance of the Certificates or the Notes or the consummation of any
of the transactions contemplated by the Related Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material
adverse effect on the performance by it of its obligations under, or the
validity or enforceability of, any of the Related Documents or (iv) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Certificates or the Notes or seeking to impose any excise,
franchise, transfer or similar tax upon the Certificates or the Notes or the
sale and assignment of the Receivables under the Related Documents.
Section 2.12. Federal Income Tax Allocations. If
Certificates are held by more than one person or the Trust is recharacterized as
a separate entity, interest payments on the Certificates (or other interests in
the Trust treated as equity in the Trust for applicable tax purposes ("Equity
Interests"), including interest on amounts previously due on the Certificates or
8
<PAGE> 14
Equity Interests but not yet distributed) shall be treated as "guaranteed
payments" under Section 707(c) of the Code. Net income of the Issuer for any
month as determined for Federal income tax purposes (and each item of income,
gain, loss and deduction entering into the computation thereof) shall be
allocated:
(a) among the Certificateholders and Equity Interest holders
as of the close of business on the last day of such month, in proportion to
their ownership of principal amount of Certificates and Equity Interests on such
date, an amount of net income up to the sum of: (i) the portion of the market
discount on the Receivables accrued during such month that is allocable to the
excess, if any, of the initial Certificate Balance over their initial aggregate
issue price, (ii) Certificateholders' and Equity Interest holders' prepayment
premium, if any, payable for such month, (iii) any other amounts of income
payable to the Certificateholders or Equity Interest holders for such month; and
such sum of amounts specified in clauses (i) through (iii) of this sentence
shall be reduced by any amortization by the Trust of premium on Receivables that
corresponds to any excess of the issue price of Certificates or Equity Interests
over their principal amount, and
(b) to the Certificateholders and Equity Interest holders as
of the close of business on the last day of such month, in proportion to their
ownership of principal amount of Certificates and Equity Interests on such date,
and other holders of interests in the Reserve Account, to the extent of any
remaining net income, in accordance with their respective interests therein.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a), subsequent net income shall first be allocated to make
up such shortfall before being allocated as provided in the preceding sentence.
Net losses of the Trust, if any, for any month as determined for Federal income
tax purposes (and each item of income, gain, loss and deduction entering into
the computation thereof) shall be allocated to TFSPC II (or other holders of
interests in the Reserve Account) to the extent TFSPC II (or such holders) are
reasonably expected to bear the economic burden of such net losses, and any
remaining net losses shall be allocated among the remaining Certificateholders
and Equity Interest holders as of the close of business on the last day of such
month in proportion to their ownership of principal amount of Certificates and
Equity Interests on such day. TFSPC II is authorized to modify the allocations
in this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to TFSPC II or
to the Certificateholders or Equity Interest holders, or as otherwise required
by the Code. Notwithstanding anything provided in this Section 2.11, if the
Certificates are held solely by one person or the Trust has not been
recharacterized as a separate entity, the application of this Section 2.11 shall
be disregarded.
Section 2.13. Covenants of ABSC. ABSC agrees and covenants for
the benefit of each Holder, the Insurer and the Owner Trustee, during the term
of this Agreement, and to the fullest extent permitted by applicable law, that:
(a) it shall not, for any reason, institute proceedings for
the Issuer to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Issuer, or file
a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Issuer, or
consent to the
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appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Issuer or a substantial part of the property of the
Issuer or cause or permit the Issuer to make any assignment for the benefit of
creditors, or admit in writing the inability of the Issuer to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Issuer or take any action in furtherance of any such action; and
(b) it shall not, for any reason, prior to the end of the
Funding Period withdraw or attempt to withdraw from this Agreement, dissolve,
institute proceedings for it to be adjudicated a bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against it,
or file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of it or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due, or declare or effect a moratorium on
its debt or take any action in furtherance of any such action.
(c) Covenants of the Holders. This undertaking is made for the
benefit of the Issuer, the Owner Trustee, the Insurer and all other Holders
present and future. Each Holder agrees:
(d) to be bound by the terms and conditions of the
Certificates of which such Holder is the owner and of this Agreement, including
any supplements or amendments hereto, and to perform the obligations of a Holder
as set forth therein or herein, in all respects as if it were a signatory
hereto;
(e) to hereby appoint TFSPC II as such Holder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of the Issuer and agree that, if requested by the Issuer, it will sign
such federal income tax information return in its capacity as holder of an
interest in the Issuer. Each Holder also hereby agrees that in its tax returns
it will not take any position inconsistent with those taken in any tax returns
filed by the Issuer;
(f) if such Holder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales on Form
1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within thirty (30) days of the date of the transfer;
(g) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Issuer or TFSPC II
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Issuer or TFSPC II or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Issuer or TFSPC II or a substantial part of its property, or
cause or permit the Issuer or TFSPC II to make any assignment for the benefit of
its creditors, or admit in writing its inability to pay its debts generally as
they become due, or declare or effect a moratorium on its debt or take any
action in furtherance of any such action; and
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(h) it shall obtain from each counterparty to each Related
Document to which it or the Issuer is a party and each other agreement entered
into on or after the date hereof to which it or the Issuer is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the Issuer, any bankruptcy,
reorganization, arrangement, insolvenc or liquidation proceedings or similar
proceedings under the laws of the United States.
ARTICLE III.
CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.1. Initial Ownership. Upon the formation of the
Issuer by the contribution by ABSC pursuant to Section 2.5 and prior to the
issuance of the Certificates pursuant to Section 3.2, ABSC shall be the sole
initial beneficiary of the Issuer.
Section 3.2. The Certificates. In consideration of payment
of the sum of $74,778.86 to the Trust and upon the written order of ABSC, the
Certificates shall be initially issued to TFSPC II in a Certificate Percentage
Interest of 100%. The Certificates shall be executed on behalf of the Issuer by
manual or facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Issuer shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
Section 3.3. Authentication of Certificates. Concurrently
with the initial sale of the Receivables to the Issuer pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Certificates in an
aggregate Certificate Percentage Interest equal to 100% to be executed on behalf
of the Issuer, authenticated and delivered to or upon the written order of ABSC,
signed by its chairman of the board, its president or any vice president, its
treasurer or any assistant treasurer without further corporate action by ABSC,
in authorized denominations. No Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Owner Trustee by manual
signature. Such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 3.4. Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
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exchanges of Certificates as herein provided. Wilmington Trust Company shall be
the initial Certificate Registrar.
The Certificate Registrar shall provide the Indenture Trustee
with a list of the names and addresses of the Certificateholder(s) on the
Closing Date. Upon any transfers of Certificates, the Certificate Registrar
shall notify the Servicer, the Insurer and the Indenture Trustee of the name and
address of the transferee in writing, by facsimile, on the day of such transfer.
Upon surrender for registration of transfer of any Certificate
at the office or agency maintained pursuant to Section 3.8, the Owner Trustee
shall execute, authenticate and deliver (or shall cause its authenticating agent
to authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
class and aggregate Certificate Percentage Interest dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of a Holder, Certificates may be exchanged for other Certificates of the same
class in authorized denominations of a like aggregate amount upon surrender of
the Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securitie Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by the
Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
Notwithstanding the preceding provisions of this Section 3.4,
the Owner Trustee shall not be required to make, and the Certificate Registrar
shall not be required to register, transfers or exchanges of Certificates for a
period of fifteen (15) days preceding the due date for any payment with respect
to the Certificates.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held pursuant to
the Reserve Account Agreement or prior to the release of such monies pursuant to
Section 4.6(b) of the Sale and Servicing Agreement, such monies being held in
trust for the benefit of the Noteholders and the Insurer. Notwithstanding the
foregoing, in the event that it i ever determined that the monies held in the
Reserve Account constitute a pledge of collateral, then the provisions of the
Sale and Servicing Agreement and the Reserve
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Account Agreement shall be considered to constitute a security agreement and
TFSPC II and the Certificateholders hereby grant to the Collateral Agent for the
benefit of the Noteholders and the Insurer a first priority perfected security
interest in such amounts, to be applied as set forth in Section 3.03 of the
Reserve Account Agreement. In addition, each Certificateholder, by acceptance of
its Certificate, hereby appoints TFSPC II as its agent to pledge a first
priority perfected security interest in the Reserve Account, and any amounts
held therein from time to time to the Collateral Agent for the benefit of the
Indenture Trustee and the Insurer pursuant to the Reserve Account Agreement and
agrees to execute and deliver such instruments of conveyance, assignment, grant
and confirmation, as well as any financing statements, in each case the Insurer
shall consider reasonably necessary in order to perfect the Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Reserve
Account Agreement).
Section 3.5. Legending of Certificates. Each Certificate
shall bear a legend in substantially the following form:
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION.
Section 3.6. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar, the Owner Trustee and
(unless an Insurer Default shall have occurred and be continuing) the Insurer,
such security or indemnity as may be reasonabl required by them to save each of
them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Issuer shall execute and the Owner Trustee, or the Owner Trustee's
authenticating agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like class, tenor and Certificate Percentage Interest. In connection with the
issuance of any new Certificate under this Section 3.5, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any replacement Certificate issued pursuant to this Section 3.6 shall constitute
conclusive evidence of an ownership interest in the Issuer, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 3.7. Persons Deemed Certificateholder(s). Every
Person by virtue of becoming a Certificateholder in accordance with this
Agreement shall be deemed to be bound by the terms of this Agreement. Prior to
due presentation of a Certificate for registration of transfer, the Owner
Trustee, the Certificate Registrar, and the Insurer and any agent of the Owner
Trustee, the Certificate Registrar and the Insurer, may treat the Person in
whose name any Certificate shall be registered in the Certificate Register as
the owner of such Certificate for the purpose of receiving distributions
pursuant to the Sale and Servicing Agreement and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar, the
Insurer or any
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agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be
bound by any notice to the contrary.
Section 3.8. Access to List of Certificateholder(s)' Names
and Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, ABSC, TFSPC II or (unless an Insurer Default shall have occurred and
be continuing), the Insurer, within fifteen (15) days after receipt by the Owner
Trustee of a request therefor from such Person in writing, a list of the names
and addresses of the Certificateholder(s) as of the most recent Record Date. If
three or more Holders of Certificates or one or more Holders of Certificates
evidencing not less than a Certificate Percentage Interest equal to 25% apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholder(s) with respect to their
rights under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five (5) Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholder(s). Each Holder or
Owner, by receiving and holding a Certificate, shall be deemed to have agreed
not to hold any of Triad, TFSPC II, the Servicer, the Owner Trustee, the Insurer
or any agent thereof accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
Section 3.9. Maintenance of Office or Agency. The Owner
Trustee shall maintain in Wilmington, Delaware, an office or offices or agency
or agencies where Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Owner Trustee in
respect of the Certificates and the Related Documents may be served. The Owner
Trustee initially designates its Corporate Trust Office for such purposes. The
Owner Trustee shall give prompt written notice to Triad, the
Certificateholder(s) and (unless an Insurer Default shall have occurred and be
continuing) the Insurer of any change in the location of the Certificate
Register or any such office or agency.
Section 3.10. Disposition Only With Consent of Insurer. The
Certificate is only transferable (i) to an Affiliate of Triad Financial
Corporation whose stock has been pledged to the Insurer or (ii) to another
entity with the prior written consent of the Insurer in its sole discretion and,
in each case in accordance with the restrictions set forth in Section 2.6(m) of
the Insurance Agreement. The Owner Trustee shall cause any Certificate issued to
contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE, EXCEPT UNDER THE
LIMITED CONDITIONS SPECIFIED IN THE TRUST AGREEMENT".
Section 3.11. ERISA Restrictions. No Certificateholder may
transfer its interest in or to any Certificate to or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended "ERISA")) that is subject to the
provisions of Title 1 of ERISA, (ii) a plan described in Section 4975(e)(1) of
the Code, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding its beneficial ownership interest in its Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
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ARTICLE IV.
VOTING RIGHTS AND OTHER ACTIONS
Section 4.1. Prior Notice to Holders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
any of the actions set forth below unless at least thirty (30) days before the
taking of such action, the Owner Trustee shall have notified the
Certificateholder(s) and the Insurer in writing of the proposed action and the
Instructing Party (pursuant to Section 4.5, if applicable) shall have notified
the Owner Trustee in writing that such Certificateholder(s) have consented
thereto:
(a) the election by the Issuer to file an amendment to
the Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Certificateholders);
(b) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is not required
and such amendment would not materially and adversely affect the interests of
the Certificateholder(s); or
(d) the amendment, change or modification of the Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially and adversely
affect the interests of the Certificateholder(s).
The Owner Trustee shall notify the Certificateholder(s) in writing of any
appointment of a successor Note Registrar, Indenture Trustee or Certificate
Registrar within five Business Days thereof.
Section 4.2. Action by Certificateholder(s) with Respect to
Certain Matters. The Owner Trustee shall not have the power, except upon the
direction of the Insurer or, in the event that an Insurer Default shall have
occurred and be continuing, the Certificateholder(s) in accordance with the
Related Documents, to (a) remove the Servicer under the Sale and Servicing
Agreement or (b) except as expressly provided in the Related Documents, sell the
Receivables after the termination of the Indenture. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Insurer or the Certificateholder(s) pursuant to Section 4.5, as
the case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee by the Certificateholder(s).
Section 4.3. Action by Certificateholder(s) with Respect to
Bankruptcy. To the fullest extent permitted by applicable law, the Owner Trustee
shall not have the power to, and shall not, commence any proceeding or other
actions contemplated by Section 2.13(a) relating to the Issuer.
Section 4.4. Restrictions on Certificateholder(s)' Power.
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(a) No Certificateholder(s) shall direct the Owner Trustee
to take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Issuer or the Owner Trustee under this
Agreement or any of the Related Documents or would be contrary to Section 2.3 or
otherwise contrary to law nor shall the Owner Trustee be obligated to follow any
such direction, if given.
(b) No Certificateholder shall have any right by virtue or
by availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement or any Related Document, unless: (i) the Certificateholder(s) are the
Instructing Party pursuant to Section 6.3 and shall previously have given to the
Owner Trustee a written notice of default and of the continuance thereof, as
provided in this Agreement; (ii) Certificateholder(s) evidencing not less than a
Certificate Percentage Interest equal to 25% shall have made written request to
the Owner Trustee to institute such action, suit or proceeding in its own name
as Owner Trustee under this Agreement and shall have offered to the Owner
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby; (iii) the Owner Trustee, for
thirty (30) days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; and (iv) during such thirty (30) day period no request or waiver
inconsistent with such written request has been given to the Owner Trustee
pursuant to and in compliance with this Section 4.4(b) or Section 6.3; provided,
however, that each Certificateholder hereby agrees with every other
Certificateholder and the Owner Trustee that no one or more Holders shall have
any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of this Agreement to affect, disturb or prejudice the rights
of any other Holders, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner provided in this Agreement and for the equal, ratable and common
benefit of all Certificateholder(s). For the protection and enforcement of the
provisions of this Section 4.4, each and every Certificateholder and the Owner
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 4.5. Majority Control. No Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Issuer except as expressly provided in this Agreement. Except
as expressly provided herein, any action that may be taken by the
Certificateholder(s) under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority of the Certificate Percentage
Interest. Except as expressly provided herein, any written notice of the
Certificateholder(s) delivered pursuant to this Agreement shall be effective if
signed by Certificateholder(s) evidencing not less than a majority of the
Certificate Percentage Interest at the time of the delivery of such notice.
Section 4.6. Rights of Insurer. Notwithstanding anything to
the contrary in the Related Documents, without the prior written consent of the
Insurer (so long as no Insurer Default shall have occurred and be continuing),
the Owner Trustee shall not (i) remove the Servicer, (ii) initiate any claim,
suit or proceeding by the Issuer or compromise any claim, suit or proceeding
brought by or against the Issuer, other than with respect to the enforcement of
any Receivable or any rights of the Issuer thereunder, (iii) authorize the
merger or consolidation of the Issuer with or into any other business trust or
other entity (other than in accordance with Section 3.10 of the Indenture), (iv)
amend the Certificate of Trust.
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ARTICLE V.
CERTAIN DUTIES
Section 5.1. Accounting and Records to the Noteholders,
Certificateholder(s), the Internal Revenue Service and Others. Subject to
Section 2.6 of this Agreement, Triad shall: (a) maintain (or cause to be
maintained) the books of the Issuer on a calendar year basis on the accrual
method of accounting (including the allocations, net income and net loss under
Section 2.11); (b) prepare and deliver (or cause to be delivered) to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1) to
enable each Certificateholder to prepare its federal and state income tax
returns; (c) prepare and file or cause to be filed such tax returns relating to
the Issuer (including a partnership information return, Form 1065), and direct
the Owner Trustee or the Servicer, as the case may be, to make such elections as
may from time to time be required or appropriate under any applicable state or
federal statute or rule or regulation thereunder so as to maintain the Issuer's
characterization as a partnership for federal income tax purposes; and (d)
collect or cause to be collected any withholding tax as required under the Code
with respect to income or distributions to Certificateholder(s) and the
appropriate forms relating thereto. Subject to Section 2.6, the Owner Trustee
shall make all elections pursuant to this Section 5.1 as directed by Triad. The
Owner Trustee shall sign all tax information returns filed pursuant to this
Section 5.1 and any other returns as may be required by law, and in doing so
shall rely entirely upon, and shall have no liability for information provided
by, or calculations provided by, Triad or the Servicer, as the case may be. The
Owner Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Receivables. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
Section 5.2. Signature on Returns; Tax Matters Partner.
(a) Notwithstanding the provisions of Section 5.1 and
subject to Section 2.6, the Owner Trustee shall sign on behalf of the Issuer the
tax returns of the Issuer, if any, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by TFSPC II.
(b) Subject to Section 2.6, TFSPC II shall be the "tax
matters partner" of the Issuer pursuant to the Code.
Section 5.3. Payments to Certificateholders. On each Payment
Date, the Indenture Trustee will distribute to the Certificateholder(s) as of
the related Determination Date each such Certificateholder's Certificate
Percentage Interest in the amount to be distributed on such Payment Date
pursuant to Section 4.6(b)(x) of the Sale and Servicing Agreement by wire
transfer or check mailed to such Certificateholder.
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ARTICLE VI.
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1. General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Related Documents to which
the Issuer is named as a party and each certificate or other document attached
as an exhibit to or contemplated by the Related Documents to which the Issuer is
named as a party and any amendment thereto, in each case in such form as ABSC
shall approve as evidenced conclusively by the Owner Trustee's execution
thereof, and on behalf of the Issuer to direct the Indenture Trustee to
authenticate and deliver the Notes in the aggregate principal amount of
$100,000,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Issuer pursuant to
the Related Documents. The Owner Trustee is further authorized from time to time
to take such action as the Instructing Party recommends with respect to the
Related Documents so long as such activities are consistent with the terms of
the Related Documents.
Section 6.2. General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the term of this Agreement and to administer the
Issuer in the interest of the Holders, subject to the Related Documents to which
the Issuer is a party and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Related
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement or TFSPC II has agreed in this Agreement to perform any act or to
discharge any duty of the Owner Trustee hereunder or under any Related Document,
and the Owner Trustee shall not be liable for the default or failure of the
Servicer, TFSPC II to carry out any of their obligations under the Sale and
Servicing Agreement or this Agreement, respectively, except with respect to
obligations redelegated back to the Owner Trustee.
Section 6.3. Action upon Instruction. (a) Subject to
Article IV, the Instructing Party shall have the exclusive right to direct the
actions of the Owner Trustee in the management of the Issuer, so long as such
instructions are not inconsistent with the express terms set forth herein or in
any Related Document. The Instructing Party shall not instruct the Owner Trustee
in a manner inconsistent with this Agreement or the Related Documents.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Related Document, other than its express duties,
if the Owner Trustee shall have reasonably determined, or shall have been
advised by counsel, that such action is likely to result in liability on the
part of the Owner Trustee or is contrary to the terms hereof or of any Related
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Related Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of
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such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten (10) days of delivery of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, as it shall deem to be in the best
interests of the Certificateholder(s), and shall have no liability to any Person
for such action or inaction.
(d) If the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Related Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or if this Agreement permits any determination by
the Owner Trustee or is silent or is incomplete as to the course of action that
the Owner Trustee is required to take with respect to a particular set of facts,
the Owner Trustee may give notice (in such form as shall be appropriate under
the circumstances) to the Instructing Party requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received (so long as the same is not
manifestly inconsistent with this Agreement or a Related Document), the Owner
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the Owner Trustee shall not have received appropriate instruction
within ten (10) days of delivery of such notice (or within such shorter period
of time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, as it shall deem to be in the best interests of the
Certificateholder(s), and shall have no liability to any Person for such action
or inaction.
Section 6.4. No Duties Except as Specified in this Agreement
or in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Property, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any Related Document, document or written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Related Document against
the Owner Trustee. The Owner Trustee nevertheless agrees that it will, at its
own cost and expense, promptly take all action as may be necessary to discharge
any Liens on any part of the Trust Property that result from actions by, or
claims against, the Owner Trustee (solely in its individual capacity and that
are not related to the ownership or the administration of the Trust Property.
Section 6.5. No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Property or take any action on the
part of the Issuer except (a) in accordance with the powers granted to and the
authority conferred upon the Owner Trustee pursuant to this Agreement, (b) in
accordance with the Related Documents and (c) in accordance with any document or
instruction conforming with and delivered to the Owner Trustee pursuant to
Section 6.3.
Section 6.6. Restrictions. The Owner Trustee shall not take
any action that, to the actual knowledge of a Responsible Officer the Owner
Trustee, would result in the Issuer's becoming taxable as a corporation for
federal income tax purposes or for the purposes of any
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applicable state tax on corporations. The Certificateholder(s) shall not direct
the Owner Trustee to take action that would violate the provisions of this
Section 6.6.
ARTICLE VII.
CONCERNING THE OWNER TRUSTEE
Section 7.1. Acceptance of Trusts and Duties. The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Trust Property upon the terms of the Related Documents
and this Agreement. The Owner Trustee (in its individual or trust capacities)
shall not be answerable or accountable hereunder or under any Related Document
under any circumstances, except (i) for its own willful misconduct, bad faith or
negligence (other than errors in judgment), (ii) in the case of the inaccuracy
of any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4, (iv) for taxes, fees or other charges on,
based on or measured by, any fees, commissions or compensation received by the
Owner Trustee or (v) for any investments issued by the Owner Trustee or any
branch or affiliate thereof in its commercial capacity. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee (in its individual or trust capacities)
shall not be liable for any error of judgment made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee (in its individual or trust capacities)
shall not be liable with respect to any action taken or omitted to be taken by
it in accordance with the instructions (not inconsistent with this Agreement or
any Related Document) of the Instructing Party, the Servicer or any
Certificateholder;
(c) no provision of this Agreement or any Related Document
shall require the Owner Trustee (in its individual or trust capacities) to
expend or risk funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder or under any Related
Document if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;
(d) the Owner Trustee (in its individual or trust capacities)
shall not be responsible for or in respect of the validity or sufficiency of
this Agreement or for the due execution hereof by TFSPC II, Triad or ABSC or for
the form, character, genuineness, sufficiency, value or validity of any of the
Trust Property or for or in respect of the validity or sufficiency of the
Related Documents, other than the certificate of authentication on the
Certificates, and the Owner Trustee shall i no event assume or incur any
liability, duty or obligation to Triad or ABSC, the Insurer, the Indenture
Trustee, any Noteholder or to any Certificateholder, other than as expressly
provided for herein and in the Related Documents;
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(e) the Owner Trustee (in its individual or trust capacities)
shall not be liable for the default or misconduct of Triad, TFSPC II, ABSC, the
Insurer, the Indenture Trustee, or the Servicer under any of the Related
Documents or otherwise, and the Owner Trustee shall have no obligation or
liability to perform the obligations under this Agreement or the Related
Documents that are required to be performed by Triad, TFSPC II, or ABSC under
this Agreement, the Indenture Trustee under the Indenture or the Servicer under
the Sale and Servicing Agreement; and
(f) the Owner Trustee (in its individual or trust capacities)
shall be under no obligation to exercise any of the rights or powers vested in
it by this Agreement, other than its express duties, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Related Document, at the request, order or direction of the
Instructing Party or any of the Certificateholder(s), unless such Instructing
Party or Certificateholder(s) have offered to the Owner Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities that may reasonably be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Related Document shall not be construed
as a duty, and the Owner Trustee (in its individual or trust capacities) shall
not be answerable for other than its negligence (other than errors in judgment),
bad faith or willful misconduct in the performance of any such act.
Section 7.2. Furnishing of Documents. The Owner Trustee
shall furnish to the Certificateholder(s), promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Owner Trustee under the Related Documents.
Section 7.3. Representations and Warranties. The Owner
Trustee hereby represents and warrants in its individual capacity to Triad, the
Holders and the Insurer (which shall have relied on such representations and
warranties in issuing the Note Policy), that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation or any
judgment or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.
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(d) This Agreement has been duly authorized, executed and
delivered by it and constitutes a legal, valid and binding obligation of it,
enforceable against it, in accordance with its terms.
(e) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental agency or
commission of the State of Delaware is required by or with respect to it for the
valid execution and delivery of this Agreement, or for the validity or
enforceability thereof, other than the filing of the Certificate of Trust.
Section 7.4. Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate signed by the president or any vice president or by
the treasurer, secretary or other authorized officers of the relevant party, as
to such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee (with respect to acts or omissions of attorneys that are not employees
of the Owner Trustee) shall not be liable for the conduct or misconduct of such
attorneys if such attorneys shall have been selected by the Owner Trustee with
reasonable care, and (ii) may consult with counsel, accountants and other
skilled persons to be selected with reasonable care and employed by it. The
Owner Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and according to such opinion not
contrary to this Agreement or any Related Document.
Section 7.5. Not Acting in Individual Capacity. Except
as provided in this Article VII, in accepting the trusts hereby created, the
Owner Trustee acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Related Document shall
look only to the Trust Property for payment or satisfaction thereof.
Section 7.6. Owner Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of TFSPC II and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, any Related
Document, the Certificates (other than the signature and countersignature of the
Owner Trustee on the
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Certificates), the Notes (other than the signature of the Owner Trustee on the
Notes) or any Receivable or related documents (other than enforceability against
the Owner Trustee). The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
any Receivable, or the perfection and priority of any security interest created
by any Receivable in any Financed Vehicle or (except as required by the
Indenture) the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust Property or its ability to generate the
payments to be distributed to Certificateholder(s) under this Agreement or the
Noteholders under the Indenture, including: the existence, condition and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable on any computer
or other record thereof; the validity of the assignment of any Receivable to the
Issuer or of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by ABSC, TFSPC II,
the Servicer or any other Person with any warranty or representation made under
any Related Document or in any related document or the accuracy of any such
warranty or representation or any action of the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.7. Payments from Trust Property. All payments
to be made by the Owner Trustee under this Agreement or any of the Related
Documents to which the Issuer or the Owner Trustee is a party shall be made only
from the income and proceeds of the Trust Property, only to the extent not
otherwise directed to be made by the Indenture Trustee and only to the extent
that the Owner Trustee shall have received income or proceeds from the Trust
Property to make such payments in accordance with the terms hereof. Wilmington
Trust Company or any successor thereto, in its individual capacity, shall not be
liable for any amounts payable under this Agreement or any of the Related
Documents to which the Issuer or the Owner Trustee is a party, except any
expenses arising from or resulting from any of the matters described in the
third sentence of Section 7.1.
Section 7.8. Doing Business in Other Jurisdictions.
Notwithstanding anything contained herein to the contrary, neither Wilmington
Trust Company or any successor thereto, nor the Owner Trustee shall be required
to take any action in any jurisdiction other than in the State of Delaware if
the taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5, (a) require the consent or
approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; or (b) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee as the case may be, contemplated hereby.
ARTICLE VIII.
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
Section 8.1. Owner Trustee's Fees and Expenses. The
Owner Trustee shall receive as compensation for its services hereunder such fees
as have been separately agreed upon
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between the Servicer and the Owner Trustee, and the Owner Trustee shall be
entitled to be reimbursed by the Issuer or TFSPC II for its other reasonable
expenses hereunder, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights
and its duties hereunder and under the Related Documents ("Expenses"). The Owner
Trustee shall also be entitled to be reimbursed by TFSPC II for any
organizational expenses of the Issuer.
Section 8.2. Indemnification. Triad shall defend,
indemnify and hold harmless the Owner Trustee to the extent provided in Section
8.1 of the Sale and Servicing Agreement, as dated the date hereof and
incorporated herein by reference.
Section 8.3. Payments to the Owner Trustee. Any amounts
paid to the Owner Trustee pursuant to this Article VIII shall be deemed not to
be a part of the Trust Property immediately after such payment.
Section 8.4. Non-recourse Obligations. Notwithstanding
anything in this Agreement or any Related Document, the Owner Trustee agrees in
its individual capacity and in its capacity as Owner Trustee for the Issuer that
all obligations of the Issuer to the Owner Trustee individually or as Owner
Trustee for the Issuer shall be recourse to the Trust Property only and
specifically shall not be recourse to the assets of any Holder.
ARTICLE IX.
TERMINATION OF TRUST AGREEMENT
Section 9.1. Termination of Trust Agreement. (a) The
Issuer shall dissolve and this Agreement shall terminate and be of no further
force or effect upon the latest of (i) the maturity or other liquidation of the
last Receivable (including the purchase by the Servicer at its option of the
Receivables and other Trust Property of the Issuer as described in Section 10.1
of the Sale and Servicing Agreement) and the subsequent distribution of amounts
in respect of such Receivables as provided in the Related Documents, (ii) the
payment to Certificateholders and Noteholders of all amounts required to be paid
to them pursuant to this Agreement, the Indenture and the Sale and Servicing
Agreement and the payment to the Insurer of all amounts payable or reimburseable
to it pursuant to the Sale and Servicing Agreement, (iii) the expiration of the
Note Policy in accordance with its terms, or (iv) payment to the Insurer of all
amounts due to the Insurer under the Insurance Agreement; provided, however,
that the rights to indemnification under Section 8.1 and the rights under
Section 10.1 shall survive the dissolution of the Issuer. The Servicer shall
promptly notify the Owner Trustee and the Insurer of any prospective termination
or dissolution pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, shall not (x) operate
to terminate this Agreement or dissolve the Issuer, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the affairs of the Issuer or Trust Property nor (z) otherwise
affect the rights, obligations and liabilities of the parties hereto.
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(b) Except as provided in Section 9.1(a), neither Triad, ABSC
nor any Certificateholder shall be entitled to revoke the trust created hereby
or otherwise dissolve the Issuer.
(c) Notice of any dissolution of the Issuer, specifying the
Payment Date upon which the Certificateholder(s) shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholder(s) mailed within five (5) Business Days of receipt of notice
of such termination from the Servicer given pursuant to Section 10.1(c) of the
Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect
to which final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Indenture Trustee therein
designated, (ii) the amount of any such final payment, (iii) that the Record
Date otherwise applicable to such Payment Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Indenture Trustee therein specified and (iv) that no amount will thereafter
be payable under the Certificates. The Owner Trustee shall give such notice to
the Certificate Registrar (if other than the Owner Trustee) and the Indenture
Trustee at the time such notice is given to Certificateholder(s). Upon
presentation and surrender of the Certificates, the Indenture Trustee shall
cause to be distributed to Certificateholder(s) amounts distributable on such
Payment Date pursuant to Section 4.6(b)(x) of the Sale and Servicing Agreement.
In the event that all of the Certificateholder(s) shall not
surrender their Certificates for cancellation within two months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholder(s) to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholder(s) concerning surrender of their Certificates,
and the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds held by the Issuer after exhaustion
of such remedies shall be distributed, subject to applicable escheat laws, by
the Owner Trustee to TFSPC II and Holders shall look solely to TFSPC II for
payment.
(d) Any funds held by the Issuer after funds for final
payment have been distributed or set aside for payment shall be distributed by
the Owner Trustee to TFSPC II.
(e) Upon the winding up of the Issuer and its termination,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation: (a) satisfying the
provisions of Section 3807(a) of the
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Business Trust Statute; (b) authorized to exercise corporate trust powers; (c)
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and (iv) acceptable
to the Insurer in its reasonable discretion, so long as an Insurer Default shall
not have occurred be continuing. If such corporation shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.1, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Owner Trustee shall cease
to be eligible in accordance with the provisions of this Section 10.1, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.2.
Section 10.2. Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to TFSPC II, the Insurer and the
Servicer. Upon receiving such notice of resignation, TFSPC II shall, with the
prior written consent of the Insurer, promptly appoint a successor Owner Trustee
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee, provided that TFSPC II shall have received written confirmation from
each of the Rating Agencies that the proposed appointment will not result in an
increased capital charge to the Insurer by either of the Rating Agencies. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within thirty (30) days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by TFSPC II or any other entity authorized to make such
request, or if at any time the Owner Trustee shall be legally unable to act, or
shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or
of its property shall be appointed, or any public officer shall take charge or
control of the Owner Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then such requesting party may
remove the Owner Trustee. If TFSPC II shall remove the Owner Trustee under the
authority of the immediately preceding sentence, TFSPC II, with the prior
written consent of the Insurer, shall promptly appoint a successor Owner Trustee
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed, one copy to the Insurer and
one copy to the successor Owner Trustee and all fees owed to the outgoing Owner
Trustee shall be paid.
Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section 10.2 shall not become effective until acceptance of appointment by
the successor Owner Trustee pursuant to Section 10.3 and payment of all fees and
expenses owed to the outgoing Owner Trustee. The successor Owner Trustee shall
provide notice of such resignation or removal of the Owner Trustee each of the
Rating Agencies.
Section 10.3. Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to TFSPC II, the Servicer, the Insurer and to its predecessor Owner
Trustee an instrument accepting such
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appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement. TFSPC II
and the predecessor Owner Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Owner Trustee all such rights, powers,
duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the successor Owner Trustee shall mail notice of the
successor of such Owner Trustee to all Certificateholder(s), the Indenture
Trustee, and the Rating Agencies. If the Servicer shall fail to mail such notice
within ten (10) days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 10.4. Merger or Consolidation of Owner Trustee.
Any corporation into which the Owner 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 Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing (other than the filing of an amendment to the
Certificate of Trust with the Secretary of State) of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 10.5. Appointment of Co-Trustee or Separate
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Property or any Financed Vehicle may at the time be
located, the Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Instructing Party to act as co-trustee,
jointly with the Owner Trustee, or separate trustee or separate trustees, of all
or any part of the Trust Property, and to vest in such Person, in such capacity,
such title to the Issuer, or any part thereof, and, subject to the other
provisions of this Section 10.5, such powers, duties, obligations, rights and
trusts as the Servicer and the Owner Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment within
fifteen (15) days after the receipt by it of a request so to do, the Owner
Trustee, subject, unless an Insurer Default shall have occurred and be
continuing, to the approval of the Insurer (which approval shall not be
unreasonably withheld), shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.1 and no
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notice of the appointment of any co-trustee or separate trustee shal be required
pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Issuer or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Section 10.5. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Servicer and the Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to th extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Supplements and Amendments. (a) This
Agreement may be amended by Triad, TFSPC II, ABSC and the Owner Trustee, with
the prior written consent of the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) and with prior
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<PAGE> 34
written notice to the Rating Agencies, without the consent of any of the
Noteholders or any other Certificateholder(s): (i) to cure any ambiguity or
defect; or (ii) to correct or supplement any provisions in thi Agreement;
provided, however, that such action under this clause (ii) shall not, as
evidenced by an Opinion of Counsel (which may be based upon a certificate of the
Servicer) delivered to the Owner Trustee and the Rating Agency adversely affect
in any material respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time
with the prior written consent of the Insurer (so long as an Insurer Default
shall not have occurred and be continuing) by Triad, TFSPC II, ABSC and the
Owner Trustee, with prior written notice to the Rating Agencies and with the
consent of the Holders of Notes evidencing not less than the Note Majority and
the consent of the Certificateholder(s) evidencing not less than a majority
Certificate Percentage Interest (which consent of any Holder of a Certificate or
Note given pursuant to this Section 11.1(b) or pursuant to any other provision
of this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Certificate or Note and of any Certificate or Note issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Certificate or Note) for the
purpose of adding any provisions to or changing in an manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholder(s); provided, however, that, the Rating
Agency Condition shall have been satisfied with respect to any such amendment
prior to the execution thereof; and provided, further, that, subject to the
express rights of the Insurer under the Related Documents, no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
th timing of, collections of payments on Receivables, payments that shall be
required to be made on any Certificate or Note, or yield on the Certificates or
the Class A Interest Rate, or (ii) reduce the aforesaid percentage required to
consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all Certificates and Notes then outstanding.
Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Noteholders, the Indenture
Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of
Certificateholder(s), the Noteholders or the Indenture Trustee pursuant to this
Section 11.1(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholder(s) or Noteholders provided for in this Agreement or in any
other Related Document) and of evidencing the authorization of the execution
thereof by Certificateholder(s) or Noteholders shall be subject to such
reasonable requirements as the Owner Trustee may prescribe. Promptly after the
execution of any amendment to the Certificate of Trust, the Owner Trustee shall
cause the filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Section 11.1 and that all conditions precedent
to the execution and delivery of such amendment have been satisfied. The
29
<PAGE> 35
Owner Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
Section 11.2. No Legal Title to Trust Property in
Certificateholder(s). The Certificateholder(s) shall not have legal title to any
part of the Trust Property. The Certificateholder(s) shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholder(s) to and in
their ownership interest in the Trust Property shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Trust Property.
Section 11.3. Limitations on Rights of Others. The
provisions of this Agreement are solely for the benefit of the Owner Trustee (in
its individual and trust capacities), Triad, TFSPC II, ABSC, the
Certificateholder(s), the Servicer, the Indenture Trustee and, to the extent
expressly provided herein, the Insurer, the Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Property or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 11.4. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt: (i)
if to the Trust or the Owner Trustee, addressed to the Corporate Trust Office
with a copy to Triad; (ii) if to ABSC, addressed to Asset Backed Securities
Corporation, 11 Madison Avenue, New York, NY 10010, Attention: Secretary; (iii)
if to Triad, addressed to Triad Financial Corporation, 7711 Center Avenue, Suite
100, Huntington Beach, California 92647; (iv) if to TFSPC II, addressed to Triad
Financial Special Purpose Corporation II, 7711 Center Avenue, Suite 395,
Huntington Beach, California 92647, and (v) if to the Insurer, addressed to
Insurer, Financial Security Assurance Inc., 350 Park Avenue, New York, New York
10022, Attention: Surveillance Department, Telex No.: (212) 688-3101,
Confirmation: (212) 826-0100, Telecopy Nos.: (212) 339-3518, (212) 339-3529 (in
each case in which notice or other communication to Financial Security refers to
an Event of Default, a claim on the Note Policy or with respect to which failure
on the part of Financial Security to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other communication shall
also be sent to the attention of the General Counsel and the Head-Financial
Guaranty Group "URGENT MATERIAL ENCLOSED"); or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificate holder receives
such notice.
30
<PAGE> 36
Section 11.5. Severability. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 11.6. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.7. Assignments. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Insurer for so long as an Insurer Default shall not have occurred and be
continuing. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement which confer rights upon the Insurer shall be for
the benefit of and run directly to the Insurer, and the Insurer shall be
entitled to rely on and enforce such covenants and agreements, subject, however,
to the limitations on such rights provided in this Agreement and the Related
Documents. The Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee.
Section 11.8. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against ABSC or
TFSPC II, or join in any institution against ABSC or TFSPC II of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates, the
Notes, this Agreement or any of the Related Documents.
Section 11.9. Bankruptcy Matters. To the fullest extent
permitted by law, no Certificateholder or any party to this Agreement shall take
any action to cause the Issuer to dissolve in whole or in part or file a
voluntary petition or otherwise initiate proceedings to have the Issuer
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Issuer, or file a petition seeking or
consenting to reorganization or relief of the Issuer as debtor under any
applicable federal or state law relating to bankruptcy, insolvency or other
relief for debtors with respect to the Issuer; or seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, liquidator (or other similar official) of the Issuer or of all or any
substantial part of the properties and assets of the Issuer, or cause the Issuer
to make any general assignment for the benefit of creditors of the Issuer or
take an action in furtherance of any of the above actions unless each
Certificateholder and the Indenture Trustee shall have provided its written
consent.
Section 11.10. No Recourse. Each Certificateholder by
accepting a Certificate acknowledges that such Certificateholder's Certificates
represent beneficial interests in the Issuer only and do not represent interests
in or obligations of Triad, the Servicer, TFSPC II, ABSC, the Owner Trustee, the
Insurer, the Indenture Trustee or any Affiliate thereof and no
31
<PAGE> 37
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated i this Agreement, the Certificates or the
Related Documents.
Section 11.11. Headings. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
Section 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.13. Servicer. The Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Issuer
all such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer or Owner Trustee to prepare, file or deliver
pursuant to the Related Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Servicer a limited power of attorney appointing the
Servicer the Issuer's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
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<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
-----------------------------
Name:
------------------------
Title:
------------------------
TRIAD FINANCIAL SPECIAL PURPOSE
CORPORATION II, as Holder of the
Certificate
By:
-----------------------------
Name:
------------------------
Title:
------------------------
TRIAD FINANCIAL CORPORATION, as Servicer
By:
-----------------------------
Name:
------------------------
Title:
------------------------
ASSET BACKED SECURITIES
CORPORATION, as Company
By:
-----------------------------
Name:
------------------------
Title:
------------------------
<PAGE> 39
EXHIBIT A
___% Certificate Percentage Interest
NUMBER
R-
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT UNDER THE LIMITED CIRCUMSTANCES
SPECIFIED IN THE TRUST AGREEMENT.
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Issuer, as defined below, the property of which includes a pool of motor vehicle
retail installment contracts secured by new or used automobiles or light-duty
trucks and sold by Triad Financial Corporation, a California corporation
("Triad" or in its capacity as Servicer under the Sale and Servicing Agreement
(as defined below), the "Servicer") to Asset Backed Securities Corporation, a
Delaware corporation ("ABSC"), and by ABSC to the Issuer.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR
OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION
MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION.
THIS CERTIFICATE MAY NOT BE PURCHASED BY EMPLOYEE BENEFIT PLANS THAT ARE SUBJECT
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
PERSONS USING ASSETS OF SUCH PLANS.
(THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF TRIAD, THE
SERVICER, ABSC OR ANY AFFILIATE THEREOF, EXCEPT TO THE LIMITED EXTENT DESCRIBED
BELOW.)
- ------------------
* [To be inserted on the Certificate to be held by TFSPC II.
<PAGE> 40
THIS CERTIFIES THAT ____________________ is the registered
owner of a ___% Certificate Percentage Interest that is a nonassessable,
fully-paid, beneficial ownership interest in certain distributions of Triad Auto
Receivables Owner Trust 1998-4 (the "Issuer") formed by ABSC.
The Issuer was created pursuant to a Trust Agreement, dated as
of November 1, 1998 (the "Trust Agreement"), between Triad, TFSPC II, ABSC and
Wilmington Trust Company, as owner trustee (the "Owner Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Asset Backed Certificates" (herein called the "Certificates").
Also issued under the Indenture, dated as of November 1, 1998, between the
Issuer, The Chase Manhattan Bank, as Indenture Trustee (the "Indenture
Trustee"), is one class of Notes designated as "Class A Asset Backed Notes" (the
"Class A Notes" or the "Notes"). This Certificate is issued under and is subject
to the terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property subject to the Trust
Agreement includes a pool of motor vehicle retail installment contracts secured
by new and used automobiles and light-duty trucks (the "Receivables"), all
monies received thereunder or in respect thereof on or after the Cutoff Date,
security interests in the vehicles financed thereby, certain bank accounts and
the proceeds thereof, proceeds from claims on certain insurance policies and
certain other rights under the Trust Agreement and the Sale and Servicing
Agreement, dated as of November 1, 1998 (the "Sale and Servicing Agreement"),
between Triad, ABSC and the Indenture Trustee, all right to and interest of ABSC
in and to the Receivables Purchase Agreement, dated as of November 1, 1998,
between Triad and ABSC, and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the
17th day of each month (or, if such 17th day is not a Business Day, the next
Business Day) (the "Payment Date"), commencing on December 17, 1998, to the
Person in whose name this Certificate is registered at the close of business on
the Business Day preceding such Payment Date (the "Record Date"), such
Certificateholder's Certificate Percentage Interest in the amount to be
distributed to Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this
Certificate, specifically acknowledges that it has no right to or interest in
any monies at any time held pursuant to the Reserve Account Agreement or prior
to the release of such monies pursuant to Section 4.6(b)(x) of the Sale and
Servicing Agreement, such monies being held in trust for the benefit of the
Noteholders and the Insurer. Notwithstanding the foregoing, in the event that it
is ever determined that the monies held in the Reserve Account constitute a
pledge of collateral, then the
A-2
<PAGE> 41
provisions of the Sale and Servicing Agreement and the Reserve Account Agreement
shall be considered to constitute a security agreement and the holder this
Certificate hereby grants to the Collateral Agent for the benefit of the
Noteholders and the Insurer a first priority perfected security interest in such
amounts, to be applied as set forth in Section 3.03 of the Reserve Account
Agreement. In addition, each Certificateholder, by acceptance of its
Certificate, hereby appoints TFSPC II as its agent to pledge a first priority
perfected security interest in the Reserve Account, and any amounts held therein
from time to time to the Collateral Agent for the benefit of the Indenture
Trustee and the Insurer pursuant to the Reserve Account Agreement and agrees to
execute and deliver such instruments of conveyance, assignment, grant, and
confirmation, as well as any financing statements, in each case as the Insurer
shall consider reasonably necessary in order to perfect the Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Reserve
Account Agreement).
It is the intent of Triad, the Servicer, ABSC and the
Certificateholders that, for purposes of all applicable federal and state income
taxes, until the Certificates are held by more than one person or the Trust is
recharacterized as a separate entity, the Trust will be disregarded as an entity
separate from its owner. If the Certificates are held by more than one person or
the Trust is recharacterized as a separate entity, it is the intent of TFSPC II,
the Servicer and the Certificateholder that, for purposes of all applicable
federal and state income taxes, the Issuer will be treated as a partnership and
the Certificateholders (including TFSPC II) will be treated as partners in that
partnership. TFSPC II and any other Certificateholders by acceptance of a
Certificate, agree to treat, and to take no action inconsistent with such
treatment of, the Certificates for such tax purposes.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Issuer or TFSPC II, or join in any institution against the Issuer or
TFSPC II of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Related
Documents.
Distributions on this Certificate will be made on behalf of
the Owner Trustee by the Indenture Trustee as provided in the Sale and Servicing
Agreement by wire transfer or check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise provided
in the Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the City of Wilmington, State of Delaware.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the
A-3
<PAGE> 42
holder hereof to any benefit under the Trust Agreement or the Sale and Servicing
Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-4
<PAGE> 43
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer
and not in its individual capacity, has caused this Certificate to be duly
executed.
TRIAD AUTO RECEIVABLES OWNER
TRUST 1998-4
By: Wilmington Trust Company, not in its
individual capacity, but solely
as Owner Trustee
Dated: December 15, 1998 By:
------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
Wilmington Trust Company, Wilmington Trust Company,
as Owner Trustee or as Owner Trustee
By: By:
----------------------- ----------------------
Authenticating Agent
By:
----------------------
A-5
<PAGE> 44
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, Triad, the Servicer, TFSPC II, the Owner Trustee or any Affiliates
of any of them and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated herein or in the Trust
Agreement, the Sale and Servicing Agreement or the Related Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Receivables, all as more specifically set forth herein and in the
Trust Agreement and the Sale and Servicing Agreement. A copy of each of the Sale
and Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Seller, and at such other places,
if any, designated by the Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of Triad and the rights of the Certificateholder(s) under the Trust
Agreement at any time by Triad, ABSC and the Owner Trustee with the consent of
Holders of Certificates evidencing not less than a majority of the outstanding
Certificate Percentage Interest of the Certificates. Any such consent by the
holder of this Certificate shall be conclusiv and binding on such holder and on
all future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Trust Agreement also permits
the amendment thereof, in certain limited circumstances, without the consent of
the holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the City of Wilmington, State of Delaware, accompanied
by a written instrument of transfer in form satisfactory to the Owner Trustee
and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations evidencing the same aggregate interest
in the Issuer will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is Wilmington Trust
Company.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates in authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and
any agent of the Owner Trust, the Certificate Registrar or the Insurer may treat
the person in whose name this Certificate is registered as the owner hereof for
all purposes, and none of the Owner Trustee, the
A-6
<PAGE> 45
Certificate Registrar, the Insurer, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Sale and Servicing Agreement and the Trust created by the
Trust Agreement shall terminate upon the payment to Certificateholder(s) and
Noteholders of all amounts required to be paid to them pursuant to the Trust
Agreement and the Sale and Servicing Agreement. The Servicer of the Receivables
may at its option purchase Receivables and other property of the Issuer at a
price specified in the Sale and Servicing Agreement, and such purchase of the
Receivables and other property of the Issuer will effect early retirement of the
Certificates; provided, however, such right of purchase is exercisable, subject
to certain restrictions, only as of the last day of any Collection Period as of
which the Aggregate Principal Balance has declined to less than 10% of the
Original Pool Balance.
The Certificates may not be purchased by (a) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of
the Code or (c) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding this Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements
of Triad, TFSPC II or the Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Receivable or related document.
A-7
<PAGE> 46
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
Signature Guaranteed:
- -----------------------
* NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears on the face of
the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature
must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Certificate Registrar, which
requirements include membership or participation in STAMP or
such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-8
<PAGE> 47
EXHIBIT B
FORM OF
CERTIFICATE OF TRUST OF
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
This Certificate of Trust of Triad Auto Receivables Owner
Trust 1998-4 (the "Trust"), dated as of November 1, 1998, is being duly executed
and filed by Wilmington Trust Company, a Delaware banking corp., to form a
business trust under the Delaware Business Trust Act (12 Del, Code, ss. 3801 et
seq.).
1. Owner Name. The name of the business trust formed
hereby is "Triad Auto Receivables Owner Trust 1998-4."
2. Trustee. The name and principal place of business of
the trustee of the Trust in the State of Delaware is 1100 Market Street,
Wilmington, Delaware 19890.
3. Effective Date. This Certificate of Trust will be
effective December __, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
-------------------------
Name:
---------------------
Title:
--------------------
B-1
<PAGE> 1
FINANCIAL GUARANTY
INSURANCE POLICY
<TABLE>
<S> <C>
OBLIGOR: Triad Auto Receivables Owner Trust 1998-4 Policy No.: 50756-N
OBLIGATIONS: $100,000,000 5.98% Asset Backed Notes, Class A Date of Issuance:
December 15, 1998
</TABLE>
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration
received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to each Holder,
subject only to the terms of this Policy (which includes each endorsement
hereto), the full and complete payment by the Obligor of Scheduled Payments of
principal of, and interest on, the Obligations.
For the further protection of each Holder, Financial Security irrevocably
and unconditionally guarantees:
(a) payment of the amount of any distribution of principal of, or
interest on, the Obligations made during the Term Of This Policy to such
Holder that is subsequently avoided in whole or in part as a preference
payment under applicable law (such payment to be made by Financial Security
in accordance with Endorsement No. 1 hereto).
(b) payment of any amount required to be paid under this Policy by
Financial Security following Financial Security's receipt of notice as
described in Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive payments under the Obligations to the extent of any payment by Financial
Security hereunder.
Except to the extent expressly modified by an endorsement hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Obligation as indicated on
the registration books maintained by or on behalf of the Obligor for such
purpose or, if the Obligation is in bearer form, the holder of the Obligation.
"Scheduled Payments" means payments which are scheduled to be made during the
Term Of This Policy in accordance with the original terms of the Obligations
when issued and without regard to any amendment or modification of such
Obligations thereafter; payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) an election by the Obligor to pay
principal on an accelerated basis or (c) any other cause, shall not constitute
"Scheduled Payments" unless Financial Security shall elect, in its sole
discretion, to pay such principal due upon such acceleration together with any
accrued interest to the date of acceleration. "Term Of This Policy" shall have
the meaning set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security, and
shall not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment thereto, or by the merger, consolidation
or dissolution of the Obligor. Except to the extent expressly modified by an
endorsement hereto, the premiums paid in respect of this Policy are
nonrefundable for any reason whatsoever, including payment, or provision being
made for payment, of the Obligations prior to maturity. This Policy may not be
canceled or revoked during the Term Of This Policy. THIS POLICY IS NOT COVERED
BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE
NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By_______________________________
Authorized Officer
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 100NY (5/89)
<PAGE> 2
ENDORSEMENT NO. 1 TO FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY 350 Park Avenue
ASSURANCE INC. New York, New York 10022
OBLIGOR: TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
OBLIGATIONS: $100,000,000.00 5.98% Asset Backed Notes, Class A
Policy No.: 50756-N
Date of Issuance: December 15, 1998
1. Definitions. For all purposes of this Policy, the terms specified below
shall have the meanings or constructions provided below. Capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in the
Indenture unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday or (ii) a
day on which banking institutions in the City of New York or Wilmington,
Delaware or any other location of the Servicer, any successor Servicer,
successor Owner Trustee or successor Indenture Trustee are authorized or
obligated by law, executive order or government decree to be closed.
"Class A Noteholder" shall mean the Holder of a Class A Note; provided,
however Class A Noteholder shall not include the Obligor or any affiliates or
successors thereof in the event the Obligor, or any such affiliate or successor,
is a registered or beneficial owner of the Obligation.
"Financial Security" means Financial Security Assurance Inc., a New York
stock insurance company.
"Holder" shall have the meaning set forth in the Indenture.
"Indenture" means the Indenture, dated as of November 1, 1998, between
Triad Auto Receivables Owner Trust 1998-4, a Delaware business trust, and The
Chase Manhattan Bank as Indenture Trustee, as amended from time to time in
accordance with its terms.
"Indenture Trustee" means The Chase Manhattan Bank, a New York banking
corporation, in its capacity as Indenture Trustee under the Indenture and any
successor in such capacity.
"Interest Carryover Shortfall" shall have the meaning set forth in the Sale
and Servicing Agreement.
<PAGE> 3
Policy No.: 50756-N Date of Issuance: December 15, 1998
"Interest Payment Amount" shall have the meaning set forth in the Sale and
Servicing Agreement.
"Policy" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.
"Principal Payment Amount" shall have the meaning set forth in the Sale and
Servicing Agreement.
"Receipt" and "Received" mean actual delivery to Financial Security and to
its Fiscal Agent (as defined below), if any, prior to 12:00 noon, New York City
time, on a Business Day; delivery either on a day that is not a Business Day, or
after 12:00 noon, New York City time, shall be deemed to be "Receipt" on the
next succeeding Business Day. If any notice or certificate given hereunder by
the Indenture Trustee is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received, and
Financial Security or its Fiscal Agent shall promptly so advise the Indenture
Trustee and the Indenture Trustee may submit an amended notice.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of November 1, 1998, among the Obligor, as Purchaser, Asset Backed
Securities Corporation, as Company, Triad Financial Corporation, in its
individual capacity and as Servicer, and The Chase Manhattan Bank as Indenture
Trustee and Backup Servicer, as amended from time to time in accordance with its
terms.
"Scheduled Payments" means, with respect to each Payment Date, the
distribution to be made to the Class A Noteholders in an aggregate amount equal
to the Interest Payment Amount and the Principal Payment Amount due and payable
on such Payment Date, in each case in accordance with the original terms of the
Class A Notes when issued and without regard to any amendment or modification of
the Class A Notes, the Indenture, or the Sale and Servicing Agreement, except
amendments or modifications to which Financial Security has given its prior
written consent; provided, however, that Scheduled Payments shall not include
(w) any amounts due to Class A Noteholders pursuant to Section 4.6(b)(vii) of
the Sale and Servicing Agreement, (x) any portion of the Interest Payment Amount
due to Class A Noteholders because the appropriate notice and certificate for
payment in proper form was not timely Received by Financial Security, (y) any
portion of the Interest Payment Amount due to Class A Noteholders representing
interest on any Interest Carryover Shortfall or (z) the Class A Prepayment
Amount, unless, in each case, Financial Security elects, in its sole discretion,
to pay such amount in whole or in part. Scheduled Payments do not include
payments (including, without limitation, the amounts set forth in clauses (w)
and (z) above) that become due on an accelerated basis as a result of (a) a
default by the Obligor, (b) an election by the Obligor to pay principal on an
2
<PAGE> 4
Policy No.: 50756-N Date of Issuance: December 15, 1998
accelerated basis, (c) the occurrence of an Event of Default under the Indenture
or (d) any other cause, unless, in each case, Financial Security elects, in its
sole discretion, to pay in whole or in part such principal due upon
acceleration, together with any accrued interest to the date of acceleration.
Scheduled Payments shall not include any amounts due in respect of the Class A
Notes attributable to any increase in interest rate, penalty or other sum
payable by the Obligor by reason of any default or event of default in respect
of the Obligations, or by reason of any deterioration of the creditworthiness of
the Obligor nor shall Scheduled Payments include, nor shall coverage be provided
under the Policy in respect of, any taxes, withholding or other charge imposed
by any governmental authority due in connection with the payment of any
Scheduled Payment to a Class A Noteholder.
"Term Of This Policy" means the period from and including the Date of
Issuance to and including the latest of the date on which (i) the outstanding
principal amount of Class A Notes has been reduced to zero and all distributions
of the Interest Payment Amount have been paid on the Class A Notes, (ii) any
period during which any payment on the Class A Notes could have been avoided in
whole or in part as a preference payment under applicable bankruptcy,
insolvency, receivership or similar law has expired, and (iii) if any
proceedings requisite to avoidance as a preference payment have been commenced
prior to the occurrence of (i) and (ii), a final and nonappealable order in
resolution of each such proceeding has been entered.
2. Notices and Conditions to Payment in Respect of Scheduled Payments.
Following Receipt by Financial Security of a notice and certificate from the
Indenture Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of Scheduled
Payments on the Obligations out of the funds of Financial Security on the later
to occur of (a) 12:00 noon, New York City time, on the third Business Day
following such Receipt; and (b) 12:00 noon, New York City time, on the Payment
Date to which such claim relates. Payments due hereunder in respect of Scheduled
Payments will be disbursed by wire transfer of immediately available funds to
the Policy Payments Account established pursuant to the Sale and Servicing
Agreement or, if no such Policy Payments Account has been established, to the
Indenture Trustee.
Financial Security shall be entitled to pay any amount hereunder in respect
of Scheduled Payments on the Obligations, including any amount due on the
Obligations on an accelerated basis, whether or not any notice and certificate
shall have been Received by Financial Security as provided above; provided,
however, that by acceptance of this Policy the Indenture Trustee agrees to
provide upon request to Financial Security a notice and certificate in respect
of any such payments made by Financial Security. Financial Security shall be
entitled to pay hereunder any amount due on the Obligations on an accelerated
basis at any time or from time to time, in whole or in part, prior to the
scheduled date of payment thereof; Scheduled Payments insured hereunder shall
not include interest, in respect of principal paid hereunder on an accelerated
basis, accruing from and after the date of such payment of principal. Financial
Security's
3
<PAGE> 5
Policy No.: 50756-N Date of Issuance: December 15, 1998
obligations hereunder in respect of Scheduled Payments shall be discharged to
the extent funds are disbursed by Financial Security as provided herein whether
or not such funds are properly applied by the Indenture Trustee.
3. Notices and Conditions to Payment in Respect of Scheduled Payments
Avoided as Preference Payments. If any Scheduled Payment is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order (as defined below) or (b) the first to occur of (i) the fourth
Business Day following Receipt by Financial Security from the Indenture Trustee
of (A) a certified copy of the order (the "Order") of the court or other
governmental body that exercised jurisdiction to the effect that the Class A
Noteholder is required to return the amount of any Scheduled Payment distributed
with respect to the Class A Notes during the Term Of This Policy because such
distributions were avoidable as preference payments under applicable bankruptcy
law, (B) a certificate of the Class A Noteholder that the Order has been entered
and is not subject to any stay and (C) an assignment duly executed and delivered
by the Class A Noteholder, in such form as is reasonably required by Financial
Security and provided to the Class A Noteholder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the Class A
Noteholder relating to or arising under the Class A Notes against the debtor
that made such preference payment or otherwise with respect to such preference
payment, or (ii) the date of Receipt by Financial Security from the Indenture
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, Financial Security shall have
Received written notice from the Indenture Trustee that such items were to be
delivered on such date and such date was specified in such notice. Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order and not to the Indenture Trustee or any Class A
Noteholder directly (unless a Class A Noteholder has previously paid such amount
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order, in which case such payment shall be disbursed to the
Indenture Trustee for distribution to such Class A Noteholder upon proof of such
payment reasonably satisfactory to Financial Security). In connection with the
foregoing, Financial Security shall have the rights provided pursuant to Section
6.2 of the Sale and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term Of This Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Indenture Trustee at the notice address
specified in the Sale and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of
4
<PAGE> 6
Policy No.: 50756-N Date of Issuance: December 15, 1998
such notice by the Indenture Trustee, (i) copies of all notices and documents
required to be delivered to Financial Security pursuant to this Policy shall be
simultaneously delivered to the Fiscal Agent and to Financial Security and shall
not be deemed Received until Received by both and (ii) all payments required to
be made by Financial Security under this Policy may be made directly by
Financial Security or by the Fiscal Agent on behalf of Financial Security. The
Fiscal Agent is the agent of Financial Security only and the Fiscal Agent shall
in no event be liable to any Class A Noteholder for any acts of the Fiscal Agent
or any failure of Financial Security to deposit, or cause to be deposited,
sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable law,
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Class A Noteholder, all rights (whether by counterclaim, setoff or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.
7. Notices. All notices to be given hereunder shall be in writing (except
as otherwise specifically provided herein) and shall be mailed by registered
mail or personally delivered or telecopied to Financial Security as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President-Transaction Oversight
Re: Triad Auto Receivables Owner Trust 1998-4
$100,000,000.00, 5.98% Asset Backed Notes, Class A
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Indenture Trustee.
8. Priorities. In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not covered by
the Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not covered by the Florida Insurance Guaranty
Association created under Part II of Chapter 631 of the Florida Insurance Code.
In the event Financial Security were to become insolvent, any claims arising
under this Policy are excluded from coverage by the
5
<PAGE> 7
Policy No.: 50756-N Date of Issuance: December 15, 1998
California Insurance Guaranty Association, established pursuant to Article 14.2
of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Indenture Trustee shall surrender this Policy
to Financial Security for cancellation upon expiration of the Term Of This
Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:
Authorized Officer
6
<PAGE> 8
Policy No.: 50756-N Date of Issuance: December 15, 1998
Exhibit A To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
(Letterhead of Indenture Trustee)
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: Triad Auto Receivables Owner Trust 1998-4
$100,000,000.00, 5.98% Asset Backed Notes, Class A
--------------------------------------------------
The undersigned, a duly authorized officer of The Chase Manhattan Bank (the
"Indenture Trustee") hereby certifies to Financial Security Assurance Inc.
("Financial Security"), with reference to Financial Guaranty Insurance Policy
No. 50756-N dated December 15, 1998 (the "Policy") issued by Financial Security
in respect of the $100,000,000.00, 5.98% Asset Backed Notes, Class A of the
above referenced Trust (the "Class A Notes"), that:
(i) The Indenture Trustee is the Indenture Trustee under the Indenture
for the Class A Noteholders.
(ii) The sum of all amounts on deposit (or scheduled to be on deposit)
in the Note Distribution Account and available for distribution to the
Class A Noteholders pursuant to the Sale and Servicing Agreement will be
$___________ (the "Shortfall") less than the Scheduled Payments with
respect to the Payment Date occurring _______ __, 19__.
(iii) The Indenture Trustee is making a claim under the Policy for the
Shortfall to be applied to distributions of Scheduled Payments with respect
to the Class A Notes.
(iv) The Indenture Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and apply
the same directly to the payment of Scheduled Payments on the Obligations
when due; (b) not apply such funds for any other purpose; (c) not commingle
such funds with other funds held by the Indenture Trustee and (d) maintain
an accurate record of such payments with respect to each Class A Note and
the corresponding claim on the Policy and proceeds thereof and, if the
Class A Note is required to be surrendered or presented for such payment,
shall stamp
A-7
<PAGE> 9
Policy No.: 50756-N Date of Issuance: December 15, 1998
on each such Class A Note the legend "$[insert applicable amount] paid by
Financial Security and the balance hereof has been canceled and reissued"
and than shall deliver such Class A Note to Financial Security.
(v) The Indenture Trustee, on behalf of the Class A Noteholders,
hereby assigns to Financial Security the rights of the Class A Noteholders
with respect to the Class A Notes to the extent of any payments under the
Policy, including, without limitation, any amounts due to the Class A
Noteholders in respect of securities law violations arising from the offer
and sale of the Class A Notes. The foregoing assignment is in addition to,
and not in limitation of, rights of subrogation otherwise available to
Financial Security in respect of such payments. The Indenture Trustee shall
take such action and deliver such instruments as may be reasonably
requested or required by Financial Security to effectuate the purpose or
provisions of this clause (v).
(vi) The Indenture Trustee, on its behalf and on behalf of the Class A
Noteholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Indenture Trustee and each such Class A Noteholder
in any legal proceeding with respect to the Class A Notes. The Indenture
Trustee hereby agrees that Financial Security may at any time during the
continuation of any proceeding by or against any debtor with respect to
which a Preference Claim (as defined below) or other claim with respect to
the Class A Notes is asserted under the United States Bankruptcy Code or
any other applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (an "Insolvency Proceeding") direct all matters relating to
such Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding seeking
the avoidance as a preferential transfer of any payment made with respect
to the Class A Notes (a "Preference Claim"), (B) the direction of any
appeal of any order relating to any Preference Claim at the expense of
Financial Security but subject to reimbursement as provided in the
Insurance Agreement and (C) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition, the Indenture
Trustee hereby agrees that Financial Security shall be subrogated to, and
the Indenture Trustee on its behalf and on behalf of each Class A
Noteholder, hereby delegates and assigns, to the fullest extent permitted
by law, the rights of the Indenture Trustee and each Class A Noteholder in
the conduct of any Insolvency Proceeding, including, without limitation,
all rights of any party to an adversary proceeding or action with respect
to any court order issued in connection with any such Insolvency
Proceeding.
(vii) Payment should be made by wire transfer directed to [Specify
Account].
A-8
<PAGE> 10
Policy No.: 50756-N Date of Issuance: December 15, 1998
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
A-9
<PAGE> 11
Policy No.: 50756-N Date of Issuance: December 15, 1998
IN WITNESS WHEREOF, the Indenture Trustee has executed and delivered this Notice
of Claim and Certificate as of the ____ day of _______________, ____.
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely as
Indenture Trustee
By:________________________________________
Title:_____________________________________
- -------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on by ____________________ by______________________
Confirmation Number_____________________
<PAGE> 1
Exhibit 10.1.5
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
between
TRIAD FINANCIAL CORPORATION
as Seller
and
ASSET BACKED SECURITIES CORPORATION
as Purchaser
-----------------------------------
Dated as of November 1, 1998
-----------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS........................................................................................... 1
SECTION 1.1 DEFINITIONS................................................................................. 1
SECTION 1.2. USAGE OF TERMS.............................................................................. 4
SECTION 1.3. SECTION REFERENCES.......................................................................... 4
SECTION 1.4. ACTION BY OR CONSENT OF NOTEHOLDERS......................................................... 4
SECTION 1.5. NO RECOURSE................................................................................. 5
SECTION 1.6. MATERIAL ADVERSE EFFECT..................................................................... 5
ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY........................................ 5
SECTION 2.1. CONVEYANCE OF THE INITIAL RECEIVABLES AND THE INITIAL OTHER CONVEYED PROPERTY............... 5
SECTION 2.2. CONVEYANCE OF THE SUBSEQUENT RECEIVABLES AND THE SUBSEQUENT OTHER CONVEYED PROPERTY......... 6
SECTION 2.3. CONDITIONS OF THE COMPANY'S OBLIGATIONS.................................................... 6
SECTION 2.4. TRUE SALES................................................................................. 8
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................................................... 9
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF TRIAD AS SELLER .......................................... 9
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AS PURCHASER ................................. 11
SECTION 3.3. INDEMNIFICATION............................................................................. 13
ARTICLE IV COVENANTS OF TRIAD................................................................................... 17
SECTION 4.1. PROTECTION OF TITLE OF THE COMPANY AND THE TRUST ........................................... 17
SECTION 4.2. OTHER LIENS OR INTERESTS.................................................................... 18
SECTION 4.3. COSTS AND EXPENSES.......................................................................... 19
ARTICLE V REPURCHASES OR REPLACEMENTS........................................................................... 19
SECTION 5.1. REPURCHASE OR REPLACEMENT OF RECEIVABLES UPON BREACH OF WARRANTY............................ 19
SECTION 5.2. REASSIGNMENT OF PURCHASED RECEIVABLES....................................................... 20
SECTION 5.3. WAIVERS..................................................................................... 21
ARTICLE VI MISCELLANEOUS........................................................................................ 21
SECTION 6.1. LIABILITY OF TRIAD.......................................................................... 21
SECTION 6.2. MERGER OR CONSOLIDATION OF TRIAD............................................................ 21
SECTION 6.3. LIMITATION ON LIABILITY OF TRIAD AND OTHERS................................................. 22
SECTION 6.4. CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY TO THE TRUST ................. 22
SECTION 6.5. AMENDMENT................................................................................... 23
SECTION 6.6. NOTICES..................................................................................... 23
SECTION 6.7. MERGER AND INTEGRATION...................................................................... 24
SECTION 6.8. SEVERABILITY OF PROVISIONS.................................................................. 24
SECTION 6.9. GOVERNING LAW............................................................................... 25
SECTION 6.10. COUNTERPARTS............................................................................... 25
SECTION 6.11. NONPETITION COVENANT....................................................................... 25
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 6.12. ASSIGNMENT................................................................................. 25
SECTION 6.13. THIRD-PARTY BENEFICIARIES.................................................................. 25
SECTION 6.14. SUCCESSORS AND ASSIGNS..................................................................... 26
SCHEDULE A - SCHEDULE OF RECEIVABLES
SCHEDULE B - REPRESENTATIONS AND WARRANTIES OF THE SELLER
SCHEDULE C - LEGAL PROCEEDINGS
</TABLE>
<PAGE> 4
RECEIVABLES PURCHASE AGREEMENT, dated as of November 1, 1998 (this
"Agreement"), between Triad Financial Corporation, a California corporation, as
seller ("Triad"), and Asset Backed Securities Corporation, a Delaware
corporation, as purchaser (the "Company").
WHEREAS, the Company, as Purchaser, has agreed to purchase from Triad,
as Seller, and Triad has agreed to sell and transfer to the Company, the Initial
Receivables and the Initial Other Conveyed Property on the Closing Date, and
with respect to Subsequent Receivables, will transfer on the related Subsequent
Transfer Date the Subsequent Receivables and the Subsequent Other Conveyed
Property.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Company and Triad hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions
Capitalized terms used but not defined herein shall have the meanings
set forth in the Sale and Servicing Agreement (as defined below). Whenever
capitalized and used in this Agreement, the following words shall have the
following meanings:
"Initial Other Conveyed Property" means the Other Conveyed Property
conveyed by Triad to the Company on the Closing Date pursuant to this Agreement
other than the Initial Receivables.
"Initial Receivables" means the Receivables listed on the Schedule of
Receivables attached hereto and transferred by the Seller to the Company on the
Closing Date.
"Issuer" means Triad Auto Receivables Owner Trust 1998-4, a Delaware
business trust.
"Other Conveyed Property" means, with respect to the Receivables: (1)
all of the right, title and interest of Triad in and to all monies due or
received under the Receivables or in respect thereof after the applicable Cutoff
Date including amounts due on or before the applicable Cutoff Date but received
by the Seller after the applicable Cutoff Date (including without limitation all
Liquidation Proceeds and Recoveries received with respect to such Receivables);
and (2) all of the right, title an interest of Triad in and to (i) the security
interests of Triad in the related Financed Vehicles and any other interest of
Triad in the related Financed Vehicles, including the certificates of title with
respect to such Financed Vehicles, (ii) the Insurance Policies and any proceeds
from any Insurance Policies relating to the Receivables, the Obligors or the
related Financed Vehicles, including rebates or refunds of premiums relating to
the Receivables, (iii) the rights of Triad against Dealers with respect to the
Receivables under the Dealer Agreements and the Dealer Assignments, (iv) the
rights of Triad with respect to the Receivables under the Correspondent
Agreements and the Correspondent Assignments, (v) all items contained in the
related Receivable Files and any and all other documents that Triad keeps on
file in accordance with its customary
<PAGE> 5
procedures relating to the Receivables, the Obligors or the related Financed
Vehicles, (vi) property (including the right to receive future Liquidation
Proceeds) that secures any of the Receivables and that has been acquired by or
on behalf of Triad pursuant to liquidation of any such Receivable, (vii) all of
the right, title and interest of the Seller in and to refunds for the costs of
extended service contracts with respect to the Financed Vehicles, and (viii) all
proceeds and investments of any of the foregoing, all present and future claims,
demands, causes and choses in action in respect of any or all of the foregoing
and all payments on or under an all proceeds of every kind and nature whatsoever
in respect of any of the foregoing.
"Prospectus" means the Prospectus dated November 19, 1998 relating to
the offering by the Company from time to time of its asset backed notes and
asset backed certificates in the form in which it was or will be filed with the
Commission pursuant to Rule 424(b) under the Securities Act filed with the
Commission pursuant to Rule 424(b) under the Securities Act.
"Prospectus Supplement" means the Prospectus Supplement dated December
10, 1998, relating to the Notes in the form in which it was or will be filed
with the Commission pursuant to rule 424(b) under the Securities Act.
"Purchase Price" means, with respect to Receivables to be sold by Triad
to the Purchaser on the Closing Date or any Subsequent Transfer Date, as the
case may be, the total principal amount of such Receivables (as reflected on the
books of Triad as of the Initial Cutoff Date or the related Subsequent Cutoff
Date, as applicable).
"Purchaser" means Asset Backed Securities Corporation.
"Receivables" means a retail installment contract (including any
related promissory note and the related security agreement), and all rights and
obligations under such contract, for a Financed Vehicle that is included in the
Schedule of Receivables (except for Receivables that shall have become Purchased
Receivables or Receivables that are replaced in accordance with the terms
hereof.)
"Registration Statement" means that certain registration statement on
Form S-3, as amended (Registration No. 333-64351) relating to the offering by
the Company from time to time of its asset backed notes and asset backed
certificates as previously declared effective by the Commission.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of November 1, 1998, among Triad Financial Corporation, in its
individual capacity and as Servicer, Asset Backed Securities Corporation, as the
Company, the Trust and The Chase Manhattan Bank, as Indenture Trustee and as
Backup Servicer, as the same may be amended or supplemented from time to time in
accordance with the terms thereof.
"Schedule of Representations" means the Schedule of Representations and
Warranties attached hereto as Schedule B.
"Schedule of Receivables" means the Schedule of Initial Receivables
sold and transferred pursuant to this Agreement on the Closing Date which is
attached hereto as Schedule A as it may
2
<PAGE> 6
be amended from time to time, including to remove Purchased Receivables or
replaced Receivables or add Replacement Receivables pursuant to Section 5.1 or
add Subsequent Receivables.
"Seller" means Triad Financial Corporation.
"Subsequent Cutoff Date" means the date specified in the related
Subsequent Transfer Agreement, provided, however that such date shall be on or
before the Subsequent Transfer Date.
"Subsequent Other Conveyed Property" means Other Conveyed Property
conveyed by Triad to the Company on the Subsequent Transfer other than the
Subsequent Receivables pursuant to the Subsequent Purchase Agreement on the
Subsequent Transfer Date.
"Subsequent Purchase Agreement" means an agreement by and between Triad
and the Company pursuant to which the Company will acquire Subsequent
Receivables.
"Subsequent Receivables" means the Receivables transferred to the
Company pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Purchase Agreement.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once a month, during
the Funding Period on which Subsequent Receivables are to be transferred to the
Company pursuant to this Agreement, and a Subsequent Purchase Agreement is
executed and delivered on or before January 18, 1999.
"Termination Event" means the existence of any one or more of the
following conditions on or prior to the Closing Date:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall have
been initiated or threatened by the Commission; or
(b) after the execution and delivery of this Agreement but prior to
the Closing Date, a downgrading, or public notification of a possible change
without indication of direction, shall have occurred in the rating afforded any
of the debt securities or claims paying ability of Triad by any Rating Agency;
or
(c) after the execution and delivery of this Agreement but prior to
the Closing Date, there shall have occurred an adverse change in the condition,
financial or otherwise, in the earnings, regulatory situation or business
prospects of Triad reasonably determined by the Company to be material; or
(d) after the date of this Agreement but prior to the Closing Date,
there shall have occurred any of the following: (i) any suspension or material
limitation in trading in securities generally on the New York Stock Exchange, or
any suspension of trading of any securities of Triad or its parent or affiliate
if so traded on any exchange or in the over-the-counter market; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the engagement by the United
States in hostilities, or the
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escalation of such hostilities, or any calamity or crisis, if the effect of any
such event specified in this clause (iv) in the reasonable judgment of the
Company makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Notes on the terms and in the manner
contemplated in the Prospectus Supplement.
"Triad Repurchase Event" means the occurrence of a breach of any of
Triad's representations and warranties under Section 3.1(a).
SECTION 1.2. Usage of Terms.
With respect to all terms used in this Agreement, the singular includes
the plural and the plural the singular; words importing one gender include the
other gender; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement or th Sale and Servicing Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.3. Section References.
All references to Articles, Sections, paragraphs, subsections, exhibits
and schedules shall be to such portions of this Agreement unless otherwise
specified.
SECTION 1.4. Action by or Consent of Noteholders.
Whenever any provision of this Agreement refers to action to be taken
or consented to by Noteholders, such provision shall be deemed to refer to
Noteholders of record as of the Record Date immediately preceding the date on
which such action is to be taken or consent given by Noteholders. Solely for the
purposes of any action to be taken, or consented to by Noteholders, any Note
registered in the name of, or beneficially owned by, the Company, Triad or any
Affiliate of either of such entity, shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Indenture Trustee is entitled to rely upon any such action or consent, only
Notes which the Indenture Trustee knows to be so owned shall be so disregarded.
SECTION 1.5. No Recourse.
Without limiting the obligations of the Seller hereunder, no recourse
may be taken, directly or indirectly, under this Agreement or any certificate or
other writing delivered in connection herewith or therewith, against any
stockholder, officer or director, as such, of Triad, the Company or of any
predecessor or successor of Triad or the Company.
SECTION 1.6. Material Adverse Effect.
Whenever a determination is to be made under this Agreement as to
whether a given event, action, course of conduct or set of facts or
circumstances could or would have a material
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adverse effect on the Trust or the Noteholders (or any similar or analogous
determination), such determination shall be made without taking into account any
amounts on deposit in the Reserve Account or funds available from claims under
the Note Policy.
ARTICLE II
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1. Conveyance of the Initial Receivables and the Initial
Other Conveyed Property.
(a) Conveyance. Subject to the terms and conditions of this Agreement,
Triad hereby sells, contributes, transfers, assigns and otherwise conveys to the
Company, without recourse (but without limitation of its obligations in this
Agreement), and the Company hereby purchases and accepts, all right, title and
interest of Triad in and to the Initial Receivables and the Initial Other
Conveyed Property with respect thereto. It is the intention of Triad and the
Company that the transfer and assignment contemplated by this Agreement shall
constitute a sale and/or contribution of the Initial Receivables and the Initial
Other Conveyed Property from Triad to the Company and the beneficial interest in
and title to the Initial Receivables and the Initial Other Conveyed Property
shall not be part of Triad's estate in the event of the filing of a bankruptcy
petition by or against Triad under any bankruptcy or similar law. If,
notwithstanding the intent of Triad and the Company, the transfer and assignment
contemplated hereby is held not to be a sale, Triad hereby grants a first
priority security interest to the Company in the property conveyed pursuant to
this Section 2.1(a), and this Agreement shall be construed so as to further such
intent.
(b) Initial Receivables Purchase Price. Simultaneously with the
conveyance of the Initial Receivables and the Initial Other Conveyed Property
with respect thereto by Triad to the Company, on the Closing Date, the Company
shall pay to Triad the Purchase Price of the Initial Receivables sold by Triad
to the Company.
SECTION 2.2. Conveyance of the Subsequent Receivables and the
Subsequent Other Conveyed Property.
(a) Conveyance. On each Subsequent Transfer Date and simultaneously
with the execution and delivery of the related Subsequent Purchase Agreement,
Triad shall sell, contribute, transfer, assign and otherwise convey to the
Company, without recourse (but without limitation of its obligations in this
Agreement), and the Company shall purchase and accept, all right, title and
interest of Triad in and to the Subsequent Receivables and the Subsequent Other
Conveyed Property with respect thereto. I is the intention of Triad and the
Company that the transfer and assignment contemplated by each Subsequent
Transfer Agreement shall constitute a sale and/or contribution of the Subsequent
Receivables and the Subsequent Other Conveyed Property from Triad to the Company
and the beneficial interest in and title to the Subsequent Receivables and the
Subsequent Other Conveyed Property shall not be part of Triad's estate in the
event of the filing of a bankruptcy petition by or against Triad under any
bankruptcy or similar law.
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(b) Subsequent Receivables Purchase Price. Simultaneously with the
conveyance of the Subsequent Receivables and the Subsequent Other Conveyed
Property with respect thereto by Triad to the Company, on each Subsequent
Transfer Date the Company shall pay to Triad the Purchase Price of the
Subsequent Receivables sold by Triad to the Company.
SECTION 2.3. Conditions of the Company's Obligations. The obligations
of the Company to purchase the Initial Receivables and the Initial Other
Conveyed Property from Triad, and with respect to Subsequent Receivables, the
obligations of the Company to purchase the Subsequent Receivables and the
Subsequent Other Conveyed Property from Triad, will be subject to the
satisfaction on the Closing Date and on each Subsequent Transfer Date, as the
case may be, of the following conditions. Upon payment of the purchase price for
the Initial Receivables and the Initial Other Conveyed Property or for the
Subsequent Receivables and the Subsequent Other Conveyed Property, as the case
may be, to Triad and the prior written consent of the Insurer, such other
conditions shall be deemed satisfied or waived.
(a) Each of the obligations of Triad required to be performed by it on
or prior to the Closing Date and on each Subsequent Transfer Date, as the case
may be, pursuant to the terms of this Agreement shall have been duly performed
and complied with, and all of the representation and warranties of Triad under
this Agreement shall be true and correct in all material respects as of the
Closing Date and on each Subsequent Transfer Date, as the case may be, and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement and the Company and the Insurer shall
have received certificates to the effect of the foregoing signed by an
authorized officer of Triad.
(b) The Company shall have received letters in form and substance
reasonably acceptable to the Company and its counsel, and the Insurer, prepared
by KPMG Peat Marwick LLP, independent certified public accountants, dated as of
the date of the Prospectus Supplement, as of the Closing Date and on each
Subsequent Transfer Date, as the case may be, (i) regarding the numerical
information contained in the Prospectus Supplement and (ii) relating to certain
agreed upon procedures as specified by the Insurer.
(c) The Company shall have received duly executed and delivered copies
of the following additional closing documents, in form and substance reasonably
satisfactory to the Company and its counsel and the Insurer
(i) the Schedule of Receivables;
(ii) the Related Documents and the Underwriting Agreement, dated
as of December 7, 1998, between the Company and the Underwriter, and
all documents required thereunder, in each case duly executed and
delivered by each of the parties thereto other than the Company;
(iii) an officer's certificate of an officer of Triad, dated as of
the Closing Date and as of each Subsequent Transfer Date, as the case
may be, as to the incumbency of officers and the due authorization of
the transactions contemplated by the Related
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<PAGE> 10
Documents, with resolutions of their boards of directors and a copy of
their charter and by-laws attached thereto;
(iv) opinions of counsel for Triad as to the matters, and in
form and substance, reasonably acceptable to the Company and the Insurer
(it being agreed that such opinions shall expressly provide that the
Owner Trustee, the Indenture Trustee, the Underwriter, the Insurer and
the Rating Agencies shall be entitled to rely on such opinions),
including as to such matters as shall be required for the assignment of a
rating to the Notes of "AAA" by S&P and "Aaa" by Moody's;
(v) a letter from each of Moody's and S&P that it has assigned
a rating of "AAA" and "Aaa", respectively, to the Notes and satisfactory
written notification of such ratings has been received by the Insurer;
(vi) opinions of counsel for the Owner Trustee and the Indenture
Trustee, in form and substance reasonably acceptable to the Company and
the Insurer (it being agreed that such opinions shall expressly provide
that Triad, the Underwriter, the Insurer and the Rating Agencies shall be
entitled to rely on such opinions);
(vii) opinions of counsel for the Trust, in form and in substance
reasonably acceptable to the Company and the Insurer (it being agreed
that such opinions shall expressly provide that the Owner Trustee, the
Indenture Trustee, the Underwriter, the Insurer and the Rating Agencies
shall be entitled to rely on such opinions);
(viii) the Insurer (so long as no Insurer Default has occurred or
is continuing) shall, in its sole and absolute discretion, have approved
the transfer of the Subsequent Receivables to the Company;
(ix) after giving effect to any transfer of Subsequent Receivables
on a Subsequent Transfer Date, the Receivables transferred to the Company
pursuant hereto shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and
the Subsequent Receivables on the related Subsequent Cutoff Dates): (a)
the weighted average APR of such Receivables transferred to the Company
shall not be less than one percent less than the weighted average APR of
the Initial Receivables on the Initial Cutoff Date, unless, with the
prior consent of the Rating Agencies, TFSPC II and the Insurer, the
Spread Account Subsequent Deposit is increased with respect to such
Subsequent Receivables by the amount required by the Insurer; (b) the
weighted average remaining term of the Receivables transferred to the
Trust shall not be greater than 72 months nor less than 12 months; (c)
not more than 85% of the aggregate Principal Balance of such Receivables
will represent financing of used Financed Vehicles; (d) the APR is not
less than 9% nor more than 25%; (e) not more than 21% of the aggregate
Principal Balance of such Receivables will represent Receivables
designated in Credit Tier 3, not more than 50% of the aggregate Principal
Balance of the Receivables will represent Receivables designated in
Credit Tier 4, not more than 17% of the Aggregate Principal Balance of
the Receivables
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will represent Receivables designated in Credit Tier 5 and not more than
1% of the aggregate Principal Balance of the Receivables will represent
Receivables designated in Credit Tier 6; (f) no such Receivable will
represent financing of a Financed Vehicle which is older than a 1990
model year; (g) not more than 15% of the aggregate Principal Balance of
such Receivables will be conveyed to Triad pursuant to Correspondent
Assignments, and not more than 11% of the aggregate Principal Balance of
such Receivables will be conveyed to Triad by any one Correspondent,
additionally, the Trust, the Indenture Trustee, the Owner Trustee and the
Insurer shall have received a written confirmation from a firm of
certified independent public accountants as to the satisfaction of the
criteria in clauses (a) through (f); and
(x) no selection procedures believed to be adverse to the
interests of the Noteholders or the Insurer shall have been utilized in
selecting the Receivables.
(d) With respect to the transfer of the Initial Receivables, no
Termination Event shall have occurred as of the Closing Date.
(e) All proceedings in connection with the transactions contemplated by
this Agreement and the other Related Documents and all documents incident hereto
and thereto shall be reasonably satisfactory in form and substance to the
Company and its counsel.
(f) Triad shall have furnished the Company and the Insurer with such
other certificates of its officers or others and such other documents or
opinions as the Company or its counsel or the Insurer may reasonably request.
(g) All other terms and conditions of this Agreement and the Sale and
Servicing Agreement shall have been complied with in all material respects or
waived.
SECTION 2.4. True Sales. (a) Each of Triad and the Company intend the
transfer of the Initial Receivables and the Initial Other Conveyed Property or
the Subsequent Receivables and the Subsequent Other Conveyed Property, as the
case may be, to constitute a true sale by Triad to the Company providing the
Company with the full benefits of ownership thereof, and neither party hereto
intends the transactions contemplated hereunder to be, or for any purpose to be
characterized as, a loan from the Company to Triad.
(b) If (but only to the extent) that the transfer of the Initial
Receivables and the Initial Other Conveyed Property or the Subsequent
Receivables and the Subsequent Other Conveyed Property, as the case may be,
hereunder is characterized by a court or other Governmental Authority as a loan
rather than a sale, Triad shall be deemed hereunder to have granted to the
Company a security interest in all of Triad's right, title and interest in and
to the Initial Receivables and th Initial Other Conveyed Property or the
Subsequent Receivables and the Subsequent Other Conveyed Property, as the case
may be. Such security interest shall secure all of Triad's obligations (monetary
or otherwise) under this Agreement and the other Related Documents to which it
is a party, whether now or hereafter existing or arising, due or to become due,
direct or indirect, absolute or contingent. The Company shall have, with respect
to the property described in this Section 2.4, and in additio to all the other
rights and remedies available to the Company under this Agreement and applicable
law, all the rights and remedies of a secured
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party under any applicable UCC, and this Agreement shall constitute a security
agreement under applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Triad as Seller.
Triad makes the following representations and warranties as of the date
hereof and as of each Subsequent Transfer Date, as the case may be, on which the
Company relies in purchasing the Receivables and the Other Conveyed Property
with respect thereto and in transferring the Receivables and the Other Conveyed
Property with respect thereto to the Trust under the Sale and Servicing
Agreement and on which the Insurer will rely in issuing the Policy. Unless
otherwise specified, such representations and warranties speak as of the Closing
Date and as of the execution and delivery of any Subsequent Purchase Agreement,
as the case may be, but shall survive the sale, contribution, transfer and
assignment of the Receivables and the Other Conveyed Property hereunder, and the
sale, transfer and assignment thereof by the Company to the Trust under the Sale
and Servicing Agreement. Triad and the Company agree that the Company will
assign to the Trust all of the Company's rights and interests under the
Agreement and the Trust will pledge all of such interests of the Company to the
Indenture Trustee, and that the Indenture Trustee will thereafter be entitled to
enforce this Agreement directly against Triad in the Indenture Trustee's own
name on behalf of the Noteholders and the Insurer.
(a) Schedule of Representations. The representations and warranties set
forth on the Schedule of Representations with respect to the Initial Receivables
as of the Closing Date, and with respect to the Subsequent Receivables as of the
related Subsequent Transfer Date are true and correct in all material respects.
(b) Organization and Good Standing. Triad has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of California, with due power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and has, the power,
authority and legal right to acquire, sell and own the Receivables and the Other
Conveyed Property to be transferred to the Company.
(c) Due Qualification. Triad is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualification.
(d) Power and Authority. Triad has the power and authority to execute and
deliver this Agreement, the Sale and Servicing Agreement and its Related
Documents and to carry out its terms and their terms, respectively; Triad has
the power and authority to sell and assign the Receivables and Other Conveyed
Property to be sold and assigned to and deposited with the Company hereunder and
has duly authorized such sale and assignment to the Company by all necessary
corporate action; and the execution, delivery and performance of this Agreement,
the
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Sale and Servicing Agreement and its Related Documents have been duly authorized
by Triad by all necessary corporate action.
(e) Binding Obligation. This Agreement, the Sale and Servicing Agreement
and Triad's Related Documents, when duly executed and delivered by the other
parties thereto, shall constitute a legal, valid and binding obligation of Triad
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The execution, delivery and performance by Triad of its
Related Documents, the consummation of the transactions contemplated by this
Agreement, the Sale and Servicing Agreement and the Related Documents and the
fulfillment of the terms hereof and thereof do not (i) conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the articles of incorporation
or bylaws of Triad, or any indenture, agreement, mortgage, deed of trust,
commitment letter or other instrument to which Triad is a party or by which it
or its properties are bound, (ii) result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, commitment letter or other instrument or
(iii) violate any law, order, rule or regulation applicable to Triad of any
Governmental Authority having jurisdiction over Triad or any of its properties.
(g) No Proceedings. Other than as set forth on Schedule C hereto, there
are no proceedings or investigations pending or, to the best of Triad's
knowledge, threatened against Triad before any Governmental Authority having
jurisdiction over Triad or its properties (i) asserting the invalidity of this
Agreement or any of the Related Documents, (ii) seeking to prevent the issuance
of the Notes or the consummation of any of the transactions contemplated by this
Agreement or any of the Related Documents, (iii) seeking any determination or
ruling that could reasonably be expected to have a material adverse effect on
the performance by Triad of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents, or (iv)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Notes or seeking to impose any excise, franchise,
transfer or similar tax upon the Notes or the sale and assignment of the
Receivables and the Other Conveyed Property.
(h) No Consents. No consent, approval, license, authorization or order
of, or declaration, registration or filing with, any Governmental Authority or
other Person, is required to be made by Triad in connection with the execution,
delivery or performance of its Related Documents or the consummation of the
transactions contemplated thereby, except such as have been duly made, effected
or obtained.
(i) Chief Executive Office. The chief executive office of Triad is
located at 7711 Center Avenue, Suite 100, Huntington Beach, California 92647.
(j) No Untrue Statement. None of the statements of Triad in the
Prospectus Supplement (excluding any reference to or information contained in
the Prospectus or any
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information deemed incorporated by reference in the Prospectus Supplement from
the Prospectus) contains any untrue statement or alleged untrue statement of any
material fact or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.2. Representations and Warranties of the Company as Purchaser.
The Company makes the following representations and warranties as of the
date hereof and as of the Subsequent Transfer Date, as the case may be, on which
Triad relies in selling, assigning, transferring and conveying the Receivables
and the Other Conveyed Property to the Company hereunder and on which the
Insurer will rely in issuing the Policy. Unless otherwise specified, such
representations and warranties speak as of the Closing Date and as of each
Subsequent Transfer Date, as the cas may be, but shall survive the sale,
contribution, transfer and assignment of the Receivables and the Other Conveyed
Property hereunder, and the sale, transfer and assignment thereof by the Company
to the Trust under the Sale and Servicing Agreement.
(a) Organization and Good Standing. The Company has been duly organized
and is validly existing as a corporation under the laws of the State of
Delaware, with due power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is currently
conducted, and had at all relevant times, and has, the power, authority and
legal right to acquire, sell and own the Receivables and the Other Conveyed
Property and to transfer the Receivables and the Other Conveyed Property to the
Trust pursuant to the Sale and Servicing Agreement.
(b) Due Qualification. The Company is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualification.
(c) Power and Authority. The Company has the power, authority and legal
right to execute and deliver this Agreement and to carry out its terms and their
terms, respectively; the Company has the power and authority to acquire the
Receivables and the Other Conveyed Property hereunder and to sell, transfer or
otherwise convey such Receivables and Other Conveyed Property to the Trust and
has duly authorized such acquisition and conveyance by all necessary corporate
action; and the execution, delivery and performance of this Agreement has been
duly authorized by the Company by all necessary corporate action.
(d) Binding Obligation. This Agreement, when duly executed and delivered
by the other parties thereto, shall constitute a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(e) No Violation. The execution, delivery and performance by the Company
of this Agreement, the consummation of the transactions contemplated by this
Agreement, the Sale and
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Servicing Agreement and the Company's Related Documents, and the fulfillment of
the terms of this Agreement, the Sale and Servicing Agreement and the Company's
Related Documents, do not and will not (i) conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or bylaws of the
Company, or any indenture, agreement, mortgage, deed of trust, commitment letter
or other instrument to which the Company is a party or by which it or its
properties are bound, (ii) result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust, commitment letter or other instrument or (iii) violate
any law, order, rule or regulation applicable to the Company of any Governmental
Authority having jurisdiction over the Company or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Company's knowledge, threatened against the Company before any
Governmental Authority having jurisdiction over the Company or its properties
(i) asserting the invalidity of this Agreement, the Sale and Servicing Agreement
or any of the Related Documents, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement, the Sale and Servicing
Agreement or any of the Company's Related Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material
adverse effect on the performance by the Company of its obligations under, or
the validity or enforceability of, this Agreement, the Sale and Servicing
Agreement or any of the Company's Related Documents, or (iv) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Notes or seeking to impose any excise, franchise, transfer or
similar tax upon the Notes or the transfer and acquisition of the Receivables
and the Other Conveyed Property hereunder, or the transfer by the Company of the
Receivables and the Other Conveyed Property to the Trust pursuant to the Sale
and Servicing Agreement.
(g) No Consents. No consent, approval, license, authorization or order
of, or declaration, registration or filing with, any Governmental Authority or
other Person is required to be made by the Company in connection with the
execution, delivery or performance of its Related Documents or the consummation
of the transactions contemplated thereby, except such as have been duly made,
effected or obtained.
(h) Chief Executive Office. The chief executive office of the Company is
located at 11 Madison Avenue, New York, New York 10010.
(i) Investment Company Act Compliance. The Company is not required to be
registered as an "investment company" under the Investment Company Act of 1940,
as amended.
In the event of any breach of a representation and warranty made by the Company
hereunder, Triad covenants and agrees that Triad will not take any action to
pursue any remedy that either may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all Notes
or other similar securities issued by the Trust, or another trust or similar
vehicle formed by the Company, or any obligations, notes or other securities
issued by the Company have been paid in full. Triad and the Company agree that
damages will not be an adequate remedy for such breach and that this covenant
may be specifically enforced by the Company, the Trust or by the Indenture
Trustee on behalf of the Noteholders and the Insurer.
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SECTION 3.3. Indemnification.
(a) Triad shall defend, indemnify and hold harmless the Company, the
Issuer, the Indenture Trustee, the Owner Trustee and the Insurer, from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from any breach of any of Triad's representations
and warranties contained herein.
(b) Triad shall defend, indemnify and hold harmless the Company, the
Issuer, the Indenture Trustee, the Owner Trustee and the Insurer from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from the use, ownership or operation by Triad or any
affiliate thereof of a Financed Vehicle.
(c) Triad shall defend, indemnify and hold harmless the Company, the
Issuer, the Indenture Trustee, the Owner Trustee and the Insurer from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from any action taken, or failed to be taken, by it
in respect of any portion of the Receivables other than in accordance with this
Agreement or the Sale and Servicing Agreement.
(d) Triad agrees to pay, and shall defend, indemnify and hold harmless
the Company, the Issuer, the Indenture Trustee, the Owner Trustee and the
Insurer from and against any taxes that may at any time be asserted against the
Company, the Issuer, the Indenture Trustee, the Owner Trustee with respect to
the transactions contemplated in this Agreement, including, without limitation,
any sales, gross receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale, transfer and assignment of the
Receivables and the Other Conveyed Property to the Company and by the Company to
the Issuer or the issuance and original sale of the Notes or the Certificates,
or asserted with respect to ownership of the Receivables and Other Conveyed
Property which shall be indemnified by Triad pursuant to clause (e) below, or
federal, state or other income taxes, arising out of distributions on the Notes
or the Certificates or transfer taxes arising in connection with the transfer of
the Notes or the Certificates) and costs and expenses in defending against the
same, arising by reason of the acts to be performed by Triad under this
Agreement or imposed against such Persons.
(e) Triad agrees to pay, and to indemnify and hold harmless the Company,
the Issuer, the Indenture Trustee, the Owner Trustee and the Insurer from, any
taxes which may at any time be asserted against such Persons with respect to,
and as of the date of, the conveyance or ownership of the Receivables or the
Other Conveyed Property hereunder and the conveyance or ownership of the
Receivables under the Sale and Servicing Agreement or the issuance and original
sale of the Notes or the Certificates, including, without limitation, any sales,
gross receipts, personal property, tangible or intangible personal property,
privilege or license taxes (but not including any federal or other income taxes,
including franchise taxes, arising out of the transactions contemplated hereby
or transfer taxes arising in connection with the transfer of the Notes or the
Certificates) and costs and expenses in defending against the same, arising by
reason of the acts to be performed by Triad under this Agreement or imposed
against such Persons.
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(f) Triad shall defend, indemnify and hold harmless the Company, the
Issuer, the Indenture Trustee, the Owner Trustee and the Insurer from and
against any and all costs, expenses, losses, claims, damages, and liabilities to
the extent that such cost, expense, loss, claim, damage, or liability arose out
of, or was imposed upon any of such Persons through the negligence, misfeasance,
or bad faith of Triad in the performance of its duties under this agreement or
by reason of reckless disregard of Triad's obligations and duties under this
Agreement.
(g) Triad shall indemnify and hold harmless the Company, the Issuer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of the violation by Triad of federal or state securities laws in
connection with the registration or the sale of the Notes or the Certificates.
Indemnification under this Section 3.3 shall include reasonable fees and
expenses of counsel and expenses of litigation and shall survive termination of
the Notes and the Certificates. The indemnity obligations hereunder shall be in
addition to any obligation that Triad may otherwise have.
Notwithstanding the indemnity provisions contained in Sections 3.3(a)
through (h), Triad shall not be required to indemnify any Indemnified Party
against any taxes, costs, expenses, losses, damages, claims or liabilities to
the extent the same shall arise out of or be based upon (i) the wilful
misfeasance, bad faith or gross negligence of such party, or (ii) losses
suffered by reason of uncollectible or uncollected Receivables.
(h) (i) Triad agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement,
each Person who controls the Company within the meaning of Section 15 of the
Securities Act, the Underwriter and the Underwriter's respective officers and
directors and each Person, if any, who controls the Underwriter within the
meaning of the Securities Act and the Exchange Act (each, a "Company Indemnified
Party"), against any and all losses, claims, damages or liabilities to which any
Company Indemnified Party may become subject under the Securities Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, and shall reimburse such Company Indemnified Party for any
legal or other expenses incurred by the Company Indemnified Party in connection
with investigating or defending any such loss, claim, damage, liability or
action, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the preliminary prospectus
supplement (except as subsequently updated in the Prospectus Supplement), the
Prospectus Supplement or any amendment or supplement to the Prospectus
Supplement or any amendment or supplement to the Prospectus Supplement approved
in writing by Triad, or the omission or the alleged omission to state therein a
materia fact required to be stated therein or necessary to make the statements
in the preliminary prospectus supplement (except as subsequently updated in the
Prospectus Supplement), Prospectus Supplement or any amendment or supplement to
the Prospectus Supplement approved in writing by Triad, in light of the
circumstances under which they were made, not misleading, other than any untrue
statement or alleged untrue statement or omission or alleged omission based on
any information (A) in the third and last paragraph on the first page of the
Prospectus
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Supplement; (B) under the heading "Company" in "Summary of Terms;" (C) in the
second sentence under the heading "Use of Proceeds" in the Prospectus Supplement
only to the extent relating to the Company's use of proceeds; (D) under the
heading "Underwriting" in the Prospectus Supplement (the "Company Information"),
or the Prospectus or the Registration Statement; and (E) under the heading "The
Insurer"; whether or not deemed a part of or included in, by cross-reference or
otherwise, the Prospectus Supplement. This indemnity agreement shall be in
addition to any liability which Triad may otherwise have.
(ii) Triad agrees to indemnify and hold the Company harmless
against any and all losses, claims, damages or liabilities that the
Company may sustain related to the failure of Triad to perform in all
material respects their duties under this Agreement. Triad shall
immediately notify the Company if a claim is made by a third party with
respect to this Agreement, and Triad shall assume the defense of any such
claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Company in respect of such claim.
(i) The Company agrees to indemnify and hold harmless Triad, each of its
directors and officers and each Person who controls Triad or any such Person,
within the meaning of the Securities Act and the Exchange Act, against any and
all losses, claims, damages or liabilities to which Triad or any such Person may
become subject under the Securities Act, the Exchange Act or otherwise, and
shall reimburse Triad and any such director, officer or controlling Person for
any legal or other expenses incurred by such party or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damages, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus, the Registration Statement and the Company
Information in the Prospectus Supplement, and any amendment or supplement to the
Prospectus, or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. This
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(j) Promptly after receipt by an indemnified party under this Section 3.3
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 3.3, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party shall not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. If any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party). After notice from the indemnifying
party to such indemnified party of its election to assume the
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defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 3.3 for any legal or otherwise expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability of any claims that are the subject
matter of such action.
(k) If the indemnification provided for in this Section 3.3(h) and (i) is
unavailable or insufficient to hold harmless any Company Indemnified Party under
subsection (h) above or Triad, each of their directors and officers and each
Person who controls Triad or any such Person, within the meaning of the
Securities Act and the Exchange Act, under subsection (i) above, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (h) or (i) above, as applicable, (a) in such
proportion as is appropriate to reflect the relative benefits received by
Company on the one hand and Triad on the other from the offering of the offered
Notes or (b) if the allocation provided by clause (a) above is not permitted by
applicable law in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but also the relative fault of
Company on the one hand and Triad on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by Company on the one hand and Triad on the other shall be deemed to be
in the same proportion as the total net proceeds from the sale of the Trust
Property (before deducting expenses) received by Triad bear to the total
underwriting discounts and commissions received by the Underwriter. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
Indemnified Parties or Triad and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (k) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject to this subsection (k). Notwithstanding
the provisions of this subsection (k), except with respect to liabilities of the
Company resulting directly from material misstatements or material omissions of
information contained in the Registration Statement or the Prospectus, the
Company shall not be required to pay any amount in excess of the amount by which
the total price at which the Notes underwritten by the Underwriter and
distributed to the public were offered to the public exceeds the amount of any
damages which the Company has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
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ARTICLE IV
COVENANTS OF TRIAD
SECTION 4.1. Protection of Title of the Company and the Trust.
(a) Triad shall execute, file, record and register such financing
statements and cause to be executed, filed, recorded and registered such
continuation and other statements or documents, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
interests of the Company under this Agreement and any Subsequent Receivables
Purchase Agreement, and of the Trust and the Indenture Trustee under the
Indenture, the Sale and Servicing Agreemen and any Subsequent Transfer
Agreement, in the Receivables and the Other Conveyed Property, and in the
proceeds thereof. Triad shall deliver (or cause to be delivered) to the Company,
the Owner Trustee. the Indenture Trustee and the Insurer file-stamped copies of,
or filing receipts for, any document recorded, registered or filed as provided
above, as soon as available following such recordation, registration or filing.
If Triad fails to perform its obligations under this subsection, the Company,
the Owner Trustee, the Insurer or the Indenture Trustee may do so, at the
expense of Triad.
(b) Triad shall not change its name, identity or corporate structure in
any manner that would make any financing statement or continuation statement
filed by Triad (or by the Company, the Trust or the Indenture Trustee on behalf
of Triad) in accordance with Section 4.1(a) seriously misleading within the
meaning of the applicable provisions of the UCC or any title statute, unless
Triad shall have given the Company, the Owner Trustee, the Insurer and the
Indenture Trustee at least sixty (60) days prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Triad shall give the Company, the Owner Trustee, the Insurer (so long
as an Insurer Default shall not have occurred and be continuing) and the
Indenture Trustee at least sixty (60) days prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. Triad shall at all times maintain each office from which it
services Receivables and its principal executive office within the United States
of America.
(d) Triad, so long as Triad is the Servicer, shall maintain accounts and
records as to each Receivable accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) Triad shall maintain its computer systems so that, from and after the
time of sale under this Agreement or any Subsequent Receivables Purchase
Agreement of the Receivables to the Company and the sale of the Receivables by
the Company to the Trust, Triad's master computer records (including any backup
archives) that refer to any Receivable indicate clearly that such Receivable is
owned by the Trust. Indication of the Trust's ownership of a Receivable shall
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be deleted from or modified on Triad's computer systems when, and only when, the
Receivable has been paid in full or purchased.
(f) If at any time Triad proposes to sell, grant a security interest in,
or otherwise transfer any interest in automotive receivables (other than the
Receivables) to any prospective purchaser, lender or other transferee, Triad
shall give to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from backup archives) that,
if they shall refer in any manner whatsoever to any Receivable, indicate clearly
that such Receivable is owned by the Trust (unless such Receivable has been paid
in full or purchased).
(g) Promptly after taking the foregoing actions described in Sections
4.1(b) or (c), Triad shall deliver to the Indenture Trustee, the Owner Trustee
and the Insurer an Opinion of Counsel either (i) stating that, in the opinion of
such counsel, all financing statements and continuation statements have been
executed and filed that are necessary to preserve and protect the interest of
the Indenture Trustee in the Trust Property, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such action is
necessary to preserve and protect such interest.
SECTION 4.2. Other Liens or Interests.
Triad shall not (i) create, incur or suffer to exist, or agree to create,
incur or suffer to exist, or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the creation, incurrence or existence
of any Lien on, or restriction on transferability of, the Receivables, except
for the Lien in favor of the Company, the Lien in favor of the Trust, the Lien
in favor of the Indenture Trustee for the benefit of the Noteholders and the
Insurer and the restrictions on transferability imposed by the Related Documents
or (ii) sign or file under the UCC of any jurisdiction any financing statement
that names Triad or the Company as a debtor, or sign any security agreement
authorizing any secured party thereunder to file any such financing statement,
with respect to the Receivables, except in each case any such instrument solely
securing the rights and preserving the Lien of the Company, the Lien of the
Trust and the Lien of the Indenture Trustee, for the benefit of the Noteholders
and the Insurer or as otherwise permitted under this Agreement or the Related
Documents. Triad shall defend the right, title and interest of Purchaser and the
Indenture Trustee on behalf of the Noteholders and the Insurer in and to the
Receivables and Other Conveyed Property against all claims of third parties
obtaining through or under the Seller.
SECTION 4.3. Costs and Expenses. In connection with the transactions
contemplated under this Agreement and the other Related Documents, Triad shall
promptly pay (or shall reimburse Company or any other Person to the extent that
Company or such other Person shall pay): (a) the cost of the qualification of
the Notes for offer and sale under the securities or Blue Sky laws (including
the reasonable fees and expenses of counsel for the Underwriter relating to the
preparation, reproduction and delivery of any Blue Sky Memorandum prepared in
connection with such qualification); (b) the fees of the Rating Agencies; (c)
any of the initial fees of Owner Trustee and Indenture Trustee and the
reasonable fees and disbursements of their counsel (which, in the case of
Indenture Trustee, are set forth a fee letter dated as of December 15, 1998);
(d) expenses incurred in connection with printing (or otherwise reproducing) and
delivering this
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Agreement, the other Related Documents the Prospectus, the Prospectus
Supplement, any amendment or supplement thereto, any preliminary prospectus and
prospectus supplement, the Notes and the Certificates; (e) fees and expenses
relating to the filing of documents with the commission (including all related
filings under Rule 424(b) of the Securities Act, all related filings on Form 8-K
and periodic reports under the Exchange Act) in connection with the transactions
contemplated hereby; (f) the shelf registration amortization fee (which fee
shall equal 1/33rd of 1% times the aggregate principal amount of the offered
Notes) paid in connection with the issuance of offered Notes; (g) all
accountant's fees incurred in connection with the accountant's review of the
Prospectus Supplement and delivery of the letters described in Section 2.3, and
(h) the reasonable fees and disbursements of counsel to the Company.
ARTICLE V
REPURCHASES OR REPLACEMENTS
SECTION 5.1. Repurchase or Replacement of Receivables Upon Breach of
Warranty.
Upon the occurrence of a Triad Repurchase Event, Triad shall, unless such
breach shall have been cured in all material respects, repurchase or replace the
related Receivable in accordance with the Sale and Servicing Agreement from the
Company as of the Accounting Date in the first complete Collection Period
following its discovery or its receipt of notice of any such Triad Repurchase
Event and, on or before the Determination Date following such Accounting Date,
Triad shall deposit or cause to be deposited the Purchase Amount into the
Collection Account pursuant to Section 4.5 of the Sale and Servicing Agreement.
In no event shall Triad satisfy the obligations specified in the foregoing
sentence with Replacement Receivables, if after giving effect to such
replacement, either (i) as of the date of such replacement, more than 20
Receivables in the aggregate since the Closing Date are Replacement Receivables,
or (ii) the sum of the Principal Balances transferred since the Closing Date of
the Replacement Receivables is greater than 0.30 percent of the Original Pool
Balance. The obligation of Triad to repurchase or replace any Receivable as to
which a breach has occurred and is continuing shall, if such obligation is
fulfilled, constitute the sole remedy against Triad for such breach available to
the Company, the Issuer, the Insurer, the Backup Servicer, the Indenture Trustee
on behalf of the Noteholders or the Noteholders; provided, however, Triad shall
indemnify the Indenture Trustee and the Backup Servicer, and each of their
respective officers, directors, employees and agents, as well as the Trust, the
Insurer and the Noteholders against all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. The provisions of
this Section 5.1 are intended to grant the Issuer and the Indenture Trustee a
direct right against Triad to demand performance hereunder. Upon receipt of the
Purchase Amount or a Replacement Receivable and written instructions from the
Servicer, the Indenture Trustee shall release to Triad or any of Triad's
designees, the related Receivable File and shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse, as are
prepared by Triad and delivered to the Custodian and necessary to vest in Triad,
or such designee, title to the Receivable. The Custodian shall be under no duty
or obligation (a) to inspect, review or examine any documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose
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or that they are other than what they purport to be on their face or (b) to
determine whether there is a breach of any of the Seller's representations and
warranties. Notwithstanding any other provision of this Agreement or the Sale
and Servicing Agreement to the contrary, the obligation of Triad under this
Section 5.1 shall not terminate upon the termination of Triad as Servicer under
the Sale and Servicing Agreement and shall be performed in accordance with the
terms hereof notwithstanding the failure of the Servicer or the Company to
perform any of their respective obligations with respect to such Receivables
under the Sale and Servicing Agreement.
SECTION 5.2. Reassignment of Purchased Receivables.
Upon deposit in the Collection Account of the Purchase Amount of any
Receivables repurchased by Triad or deposit with the Indenture Trustee of a
Replacement Receivable under Section 5.1, the Company, the Owner Trustee and the
Indenture Trustee shall take any and all actions reasonably requested by Triad,
at the expense of Triad, to assign, without recourse, representation or
warranty, to Triad all of the Company's, the Indenture Trustee's and the Trust's
right, title and interest in and to such Receivables, such assignment being an
assignment outright and not for security; and Triad shall thereupon own such
Receivables and all such Other Conveyed Property, free of any further obligation
to the Company, the Trust, the Indenture Trustee or the Noteholders with respect
thereto. The Company shall take any and all actions reasonably requested by
Triad, at the expense of Triad, to release its security interest in each such
Receivable and in the Other Conveyed Property with respect thereto. If,
following the reassignment of a Purchased Receivable, or a replaced Receivable
in any enforcement suit or legal proceeding, it is held that Triad may not
enforce any such Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce the Receivable, the Company shall, at
the expense of Triad, take such steps as Triad deems reasonably necessary to
enforce the Receivable, including bringing suit in the Company's name.
SECTION 5.3. Waivers.
No failure or delay on the part of the Company or the Trust, as purchaser
and assignee of the Company, in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or future
exercise thereof or the exercise of any other power, right or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Liability of Triad.
Triad shall be liable in accordance herewith only to the extent of the
obligations of this Agreement specifically undertaken by Triad and its
representations and warranties.
SECTION 6.2. Merger or Consolidation of Triad.
Triad shall not merge or consolidate with any other Person or permit any
other Person to become the successor to all or substantially all of Triad's
business or assets unless, after such
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merger, consolidation or succession, the successor or surviving entity shall be
capable of fulfilling Triad's duties hereunder. Triad shall not merge or
consolidate with any other Person or permit any other Person to become its
successor without the prior written consent of the Insurer, which consent shall
not be unreasonably withheld. Any such successor corporation shall execute an
agreement of assumption of every obligation of Triad under its Related Documents
and, whether or not such assumption agreement is executed, shall be the
successor to Triad under this Agreement without the execution or filing of any
document (or any further act on the part of any of the parties to this
Agreement). Triad shall provide prompt notice of any merger, consolidation or
succession pursuant to this Section 6.2 to the Owner Trustee, the Indenture
Trustee, each Rating Agency and, so long as an Insurer Default shall not have
occurred and be continuing, the Insurer. Notwithstanding the foregoing, Triad
shall not merge or consolidate with any other Person or permit any other Person
to become a successor to Triad's business, unless: (i) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 3.1 shall have been breached in any material respect (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction), and no event, that, after notice or lapse of
time, or both, would become an Insurance Agreement Event of Default shall have
occurred and be continuing; (ii) Triad shall have delivered to the Owner
Trustee, the Indenture Trustee, each Rating Agency and, so long as an Insurer
Default shall not have occurred and be continuing, the Insurer, an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
6.2 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with; and (iii) Triad shall have
delivered to the Owner Trustee, the Indenture Trustee, the Insurer and each
Rating Agency an Opinion of Counsel, stating, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interests of the Company, the Trust and the Indenture Trustee, in the
Receivables or (B) no such action shall be necessary to preserve and protect
such interest.
SECTION 6.3. Limitation on Liability of Triad and Others.
Triad and any director or officer or employee or agent of Triad may rely
in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement. Triad shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
obligations under this Agreement and that in its opinion may involve it in any
expense or liability.
SECTION 6.4. Conveyance of the Receivables and the Other Conveyed
Property to the Trust.
Triad acknowledges that the Company intends, pursuant to the Sale and
Servicing Agreement and any Subsequent Transfer Agreement, to convey the
Receivables and the Other Conveyed Property, together with its respective rights
under this Agreement and any Subsequent Receivables Purchase Agreement, to the
Trust on the date hereof and any Subsequent Transfer Date, as the case may be.
Triad acknowledges and consents to such conveyance and waives any further notice
thereof and covenants and agrees that the representations and warranties of
Triad
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contained in this Agreement, and the rights of the Company hereunder, are
intended to benefit the Indenture Trustee, the Trust, the Insurer and the
Noteholders. In furtherance of the foregoing, Triad covenants and agrees to
perform its duties and obligations hereunder in accordance with the terms hereof
for the benefit of the Indenture Trustee, the Trust, the Insurer and the
Noteholders and that, notwithstanding anything to the contrary in this
Agreement, Triad shall be directly liable to the Indenture Trustee ,the Insurer
and the Trust (notwithstanding any failure by the Servicer, the Backup Servicer
or the Company to perform its duties and obligations hereunder or under the Sale
and Servicing Agreement), and that the Owner Trustee and the Indenture Trustee,
may enforce the duties and obligations of Triad under this Agreement against
Triad for the benefit of the Trust, the Insurer or the Noteholders,
respectively.
SECTION 6.5. Amendment.
(a) This Agreement may be amended by Triad and the Company with the prior
written consent of the Insurer (so long as an Insurer Default shall not have
occurred and be continuing) but without the consent of the Indenture Trustee,
the Owner Trustee any of the Certificateholder or the Noteholders, (i) to cure
any ambiguity, (ii) to correct or supplement any provisions in this Agreement or
(iii) for the purpose of adding any provision to or changing in any manner or
eliminating any provision of this Agreement or of modifying in any manner the
rights of the Noteholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee, the Indenture
Trustee and the Rating Agency, adversely affect in any material respect the
interests of the Noteholders.
(b) This Agreement may also be amended from time to time by Triad and the
Company with the prior written consent of the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) and with the consent of a
Note Majority (which consent of any Holder of a Note given pursuant to this
Section 6.5(b) or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such Note and
of any Note issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Note), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement, or of modifying in any manner the rights of
the Noteholders; provided, however, that the Rating Agency Condition shall have
been satisfied with respect to any such amendment prior to the execution
thereof; and provided, further, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables, payments that shall be required to be
made on any Note or the Class A Interest Rate or (ii) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of the Holders of all Notes then outstanding.
(c) Prior to the execution of any such amendment or consent under Section
6.5(a) or (b), Triad shall furnish five (5) days prior written notification of
the substance of such amendment or consent to the Rating Agency.
(d) Promptly after the execution of any such amendment or consent under
Section 6.5(b), the Indenture Trustee shall furnish written notification of the
substance of such amendment or consent to each Noteholder.
22
<PAGE> 26
(e) It shall not be necessary for the consent of Noteholders pursuant to
Section 6.5(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe.
SECTION 6.6. Notices.
All demands, notices and communications under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Company, at the following address: Asset Backed Securities
Corporation, 11 Madison Avenue, New York, New York 10010, Telecopy No.: (212)
325-8261, (b) in the case of the Seller, at the following address: Triad
Financial Corporation, 7711 Center Avenue, Suite 100, Huntington Beach,
California 92647, Telecopy No.: (714) 894-8617, (c) in the case of the Indenture
Trustee, and for so long as the Indenture Trustee is the Backup Servicer, the
Backup Servicer, at the following address: The Chase Manhattan Bank, 450 West
33rd Street, New York, New York 10001-2697, Telecopy No.: (212) 946-8191, (d) in
the case of the Trust or the Owner Trustee, at the following address: Wilmington
Trust Company, 1100 North Market Street, Wilmington, Delaware 19890, Telecopy
No.: (302) 651-1576, with a copy to the Servicer and (e) in the case of the
Insurer, to Financial Security Assurance Inc., 350 Park Avenue, New York, New
York 10022; Attention: Senior Vice President, Transaction Oversight (in each
case in which failure on the part of the Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the General
Counsel and the Head-Financial Guaranty Group and shall be marked to indicate
"URGENT MATERIAL ENCLOSED"); (f) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007; and (g) in the case of S&P, to Standard & Poor's Ratings Group, 25
Broadway - 15th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department; or at such other address as shall be designated by any
such party in a written notice to the other parties. Any notice required or
permitted to be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Note Register,
and any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Noteholder
receives such notice.
SECTION 6.7. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement, the Sale
and Servicing Agreement and the Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement, the
Sale and Servicing Agreement and the Related Documents. This Agreement may not
be modified, amended, waived or supplemented except as provided herein.
23
<PAGE> 27
SECTION 6.8. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
SECTION 6.9. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6.10. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
SECTION 6.11. Nonpetition Covenant.
Until one year and one day following the payment in full of all amounts
due in respect of the Notes, neither the Company nor Triad shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Company or the Trust
under any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Company or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Company or the
Trust.
SECTION 6.12. Assignment.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Section 6.2, this Agreement may not be assigned by Triad
or the Company.
SECTION 6.13. Third-Party Beneficiaries. The Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement so long as no Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise herein, any right of the
Insurer to direct, appoint, consent to, approve or, or take any action under
this Agreement, shall be a right exercised by the Insurer in its sole and
absolute discretion. The Insurer may disclaim any of its rights and powers under
this Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Indenture Trustee. Nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal
24
<PAGE> 28
or equitable right, remedy or claim in the Trust Property or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 6.14. 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 hereunder. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of
the Trust, the Indenture Trustee and the Noteholders and their respective
permitted successors and assigns, if any. Any request, notice, direction,
consent, waiver or other instrument or action by any Noteholder shall bind its
successors and assigns.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties have caused this Receivables
Purchase Agreement to be duly executed by their respective officers, effective
as of the day and year first above written.
TRIAD FINANCIAL CORPORATION, as Seller
By:
-----------------------------------------------
Name:
Title:
ASSET BACKED SECURITIES CORPORATION,
as Purchaser
By:
-----------------------------------------------
Name:
Title:
26
<PAGE> 30
SCHEDULE A
SCHEDULE OF RECEIVABLES
On file with the Indenture Trustee.
A-1
<PAGE> 31
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Triad hereby makes the following representations and warranties as to the
Receivables. Unless otherwise specified, such representations and warranties are
made as of the Closing Date with respect to Initial Receivables and as of the
related Subsequent Transfer Date with respect to Subsequent Receivables. Such
representations and warranties shall survive the sale, transfer, and assignment
of the Receivables by the Purchaser.
1. Characteristics of Receivables. Each Receivable (A) was
originated by a Dealer for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business and such Dealer had all necessary licenses and
permits to originate Receivables in the state where such Dealer was located, was
fully and properly executed by the parties thereto, was purchased, directly or
indirectly, by Triad using and materially conforming to Triad's credit policies,
from such Dealer and a Correspondent under an existing Dealer Agreement or
Correspondent Agreement or pursuant to a Dealer Assignment between the Dealer
and Triad or a Correspondent Assignment between the Correspondent and Triad and
was validly assigned by such Dealer or Correspondent to Triad pursuant to such
Assignment, (B) contains customary and enforceable provisions such as to render
the rights and remedies of the holder thereof adequate for realization against
the collateral security, (C) is a Receivable which provides fo level monthly
payments (provided that the period in the first Collection Period and the
payment in the final Collection Period of the Receivable may be minimally
different from the normal period and level payment) which, if made when due,
shall fully amortize the Amount Financed over the original term and (D) has not
been amended or collections with respect to which waived, other than as
evidenced in the Receivable File relating thereto.
2. Fraud or Misrepresentation. Each Receivable was originated by
a Dealer and was sold by the Dealer to (i) Triad or (ii) a Correspondent, which
sold such Receivable to Triad, and Triad sold such Receivable to the Company in
any such case, without any fraud or misrepresentation on the part of such
Dealer.
3. Compliance with Law. All requirements of applicable federal,
state and local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the Moss-Magnuson
Warranty Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers'
and Sailors' Civil Relief Act of 1940, each applicable state Motor Vehicle
Retail Installment Sales Act, and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and other consumer credit laws and equal
credit opportunity and disclosure laws) in respect of the Receivables and the
Financed Vehicles, have been complied with in all material respects, and each
Receivable and the sale of the Financed Vehicle evidenced by each Receivable
complied at the time it was originated or made and now complies in all material
respects with all applicable legal requirements.
B-1
<PAGE> 32
4. Origination. Each Receivable was originated in the United
States.
5. Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon, enforceable
by the holder thereof in accordance with its terms, except (A) as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law and (B) as such
Receivable may be modified by the application after the Cutoff Date of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended; and all parties to
each Receivable had full legal capacity to execute and deliver such Receivable
and all other documents related thereto and to grant the security interest
purported to be granted thereby.
6. No Government Obligor. No Obligor is the United States of
America, any State or municipality, or any agency, department, subdivision or
instrumentality thereof.
7. Obligor Bankruptcy. At the related Cutoff Date, no Obligor had
been identified on the records of Triad as being the subject of a current
bankruptcy proceeding.
8. Schedule of Receivables. The information set forth in the
Schedule of Receivables has been produced from the electronic ledger and was
true and correct in all material respects as of the close of business on the
related Cutoff Date.
9. Making Records. By the Closing Date or Subsequent Transfer
Date, as applicable, the Seller will have caused the portions of the electronic
ledger relating to the Receivables to be clearly and unambiguously marked to
show that the Receivables have been sold to the Company by the Seller and resold
by the Company to the Trust in accordance with the terms of the Sale and
Servicing Agreement.
10. Computer Tape. The Computer Tape made available by the Seller
to the Trust on the Closing Date or Subsequent Transfer Date, as applicable, was
complete and accurate as of the related Cutoff Date and includes a description
of the same Receivables that are described in the Schedule of Receivables.
11. Adverse Selection. No selection procedures believed to be
adverse to the Noteholders or the Insurer were utilized in selecting the
Receivables from those receivables owned by the Seller which met the selection
criteria contained in the Sale and Servicing Agreement.
12. Chattel Paper. The Receivables constitute chattel paper within
the meaning of the UCC.
13. One Original. There is only one original executed copy of each
Receivable.
14. Receivable Files Complete. There exists a Receivable File
pertaining to each Receivable and such Receivable File contains (a) a fully
executed original of the Receivable,
B-2
<PAGE> 33
and (b) the original Lien Certificate or application therefor. The complete
Receivable File for each Receivable is in the possession of the Custodian.
15. Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the Lien of the related Receivable in
whole or in part. No terms of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified as
a result of application of the Soldiers' and Sailor Civil Relief Act of 1940, as
amended.
16. Lawful Assignment. No Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make unlawful,
void or voidable the sale, transfer and assignment of such Receivable under the
Sale and Servicing Agreement (or pursuant to transfers of the Notes, if
applicable).
17. Good Title. Immediately prior to the conveyance of the
Receivables to the Trust pursuant to the Sale and Servicing Agreement or
Subsequent Transfer Agreement, as applicable, the Seller was the sole owner
thereof and had good marketable title thereto, free of any Lien and, upon
execution and delivery of the Sale and Servicing Agreement by the Seller, the
Trust shall have good and marketable title to and will be the sole owner of such
Receivables, free of any Lien. No Dealer or Correspondent has a participation
in, or other right to receive, proceeds of any Receivable. The Seller has not
taken any action to convey any right to any Person that would result in such
Person having a right to payments received under the related Insurance Policies
or the related Dealer Agreements or Dealer Assignments or Correspondent
Agreements or Correspondent Assignment, if applicable, or to payments due under
such Receivables.
18. Security Interest in Financed Vehicle. Each Receivable
created or shall create a valid, binding and enforceable first priority security
interest in favor of the Seller in the Financed Vehicle. The Lien Certificate
and original certificate of title for each Financed Vehicle identify Triad, or
if a Lien Certificate is being applied for with respect to such Financed Vehicle
the Lien Certificate will be received within 180 days of the Closing Date or
Subsequent Transfer Date, as applicable, and will identify Triad the Seller
named as the original secured party under each Receivable as the holder of a
first priority security interest in such Financed Vehicle. With respect to each
Receivable for which the Lien Certificate has not yet been returned from the
Registrar of Titles, Triad has received written evidence from the related Dealer
that such Lien Certificate showing the Seller as the first lienholder has been
applied for and the Seller's security interest has been validly assigned by the
Seller to the Trust pursuant to the Sale and Servicing Agreement. Immediately
after the sale, transfer and assignment thereof by the Seller to the Trust, each
Receivable will be secured by an enforceable and perfected first priority
security interest in the Financed Vehicle in favor of the Indenture Trustee as
secured party, which security interest is prior to all other Liens upon and
security interests in such Financed Vehicle which now exist or may hereafter
arise or be created (except, as to priority, for any lien for taxes, labor or
materials affecting a Financed Vehicle). As of the related Cutoff Date, there
were no Liens or claims for taxes, work, labor or materials affecting a Financed
Vehicle which are or may be Liens prior or equal to the Liens of the related
Receivable.
B-3
<PAGE> 34
19. All Filings Made. All filings (including, without limitation,
UCC filings) required to be made by any Person and actions required to be taken
or performed by any Person in any jurisdiction to give the Trust a first
priority perfected lien on, or ownership interest in, the Receivables and the
proceeds thereof and the Other Conveyed Property have been made, taken or
performed.
20. No Impairment. The Seller has not done anything to convey any
right to any Person that would result in such Person having a right to payments
due under the Receivable or otherwise to impair the rights of the Trust, the
Insurer, the Indenture Trustee, the Owner Trustee and the Noteholders in any
Receivable or the proceeds thereof.
21. Receivable Not Assumable. No Receivable is assumable by
another Person in a manner which would release the Obligor thereof from such
Obligor's obligations to Triad with respect to such Receivable.
22. No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense and no such right has been asserted
or, to the best of Seller's knowledge, threatened with respect to any
Receivable.
23. No Default. There has been no default, breach, violation or
event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 days and other defaults that will not
have a material adverse affect on the ability of the Obligor to make, nor the
enforceability of Obligor's obligation to make, Contract Scheduled Payments and
will not have a material adverse effect on the validity or priority of the Lien
on the Financed Vehicle), an no condition exists or event has occurred and is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms of
any Receivable, and there has been no waiver of any of the foregoing. As of the
related Cutoff Date, no Financed Vehicle had been repossessed by or at the
direction of Triad.
24. Insurance. At the time of a purchase of a Receivable by Triad
from a Dealer or a third party, each Financed Vehicle is required to be covered
by a comprehensive and collision insurance policy (i) naming Triad as loss
payee, (ii) insuring against loss and damage due to fire, theft, collision and
other risks generally covered by comprehensive and collision coverage and (iii)
subject to maximum deductibles of $500 for collision coverage and $500 for
comprehensive coverage. Each Receivable requires the Obligor to maintain
physical loss and damage insurance and each Receivable permits the holder
thereof to obtain physical loss and damage insurance at the expense of the
Obligor if the Obligor fails to do so. No Financed Vehicle is insured under a
policy of force-placed insurance on the related Cutoff Date.
25. Past Due. At the related Cutoff Date, no Receivable was a
Receivable for which more than 10% of a Contract Scheduled Payment is 31 or more
days past due.
26. Remaining Principal Balance. At the related Cutoff Date, the
Principal Balance of each Receivable set forth in Schedule of Receivables is
true and accurate in all material respects.
B-4
<PAGE> 35
27. Certain Characteristics of Initial Receivables. (A) Each
Initial Receivable had a remaining maturity, as of the Initial Cutoff Date, of
not more than 72 months; (B) each Receivable had an original maturity of not
more than 72 months; (C) each Initial Receivable had a remaining Principal
Balance as of the Initial Cutoff Date of at least $250 and not more than
$35,000; (D) each Initial Receivable has an Annual Percentage Rate of at least
9.00% and not more than 25.00%; (E) no Initial Receivable was one for which more
than 10% of a Scheduled Payment was 31 or more days past due as of the Initial
Cutoff Date; (F) no funds have been advanced by Triad, any Dealer, or
Correspondent or anyone acting on behalf of any of them in order to cause any
Initial Receivable to qualify under clause (E) above; and (G) not more than 15%
of the aggregate Principal Balance of such Receivables will be conveyed to Triad
pursuant to Correspondent Assignments, and not more than 11% of the aggregate
Principal Balance of such Receivables will be conveyed to Triad by any one
Correspondent.
28. Full Amortization. Each Receivable is a fully amortizing
Simple Interest Receivable, Rule of 78's Receivable or Actuarial Receivable
which provides for level monthly payments which, if made when due, shall fully
amortize the Amount Financed over the original term.
B-5
<PAGE> 36
SCHEDULE C
LEGAL PROCEEDINGS
Threatened litigation:
In or about September 1997, New York Life Insurance Company ("New York
Life") notified Triad that certain loans originated by Triad for the NAFCO Auto
Trusts may not satisfy NAFCO underwriting criteria and that Triad may be
obligated to repurchase certain loans. In response, Triad provided certain
information to New York Life concerning the underwriting of loans. In May 1998,
New York Life demanded that Triad repurchase approximately $2.6 million of loans
based upon a claim that Triad breached certain representations and warranties
under the loan sale agreement between Triad and a New York Life affiliate. At
New York Life's request, Triad entered into a series of Standstill and Tolling
Agreements which tolls until December 16, 1998 any applicable statute of
limitations with respect to New York Life's claim. Triad intends to vigorously
defend any action which may be brought with respect to this matter. No
prediction can be made with respect to the outcome of any litigation that may
result fro New York Life's claim.
]
C-1
<PAGE> 1
EXHIBIT 10.2.3
EXECUTION COPY
SALE AND SERVICING AGREEMENT
RELATING TO
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
among
TRIAD FINANCIAL CORPORATION
in its individual capacity
and as Servicer
ASSET BACKED SECURITIES CORPORATION
as Company
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
as Purchaser
and
THE CHASE MANHATTAN BANK
as Indenture Trustee and Backup Servicer
----------------------------------
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS............................................................................................ 1
Section 1.1. Definitions......................................................................................1
Section 1.2. Usage of Terms..................................................................................25
Section 1.3. Calculations....................................................................................25
Section 1.4 Section References..............................................................................25
Section 1.5. Action by or Consent of Noteholders.............................................................25
Section 1.6. No Recourse.....................................................................................26
Section 1.7. Nonpetition Covenant............................................................................26
Section 1.8. Limitation on Trust Fund Activities.............................................................26
Section 1.9. Material Adverse Effect.........................................................................26
ARTICLE II CONVEYANCE OF RECEIVABLES; ACCEPTANCE BY INDENTURE TRUSTEE............................................26
Section 2.1. Conveyance of Initial Receivables...............................................................26
Section 2.2. Conveyance of Subsequent Receivables............................................................28
Section 2.2. Custody of Receivable Files.....................................................................31
Section 2.4. Conditions Precedent to Issuance by Trust.......................................................33
Section 2.5. Representations and Warranties of Company.......................................................33
Section 2.6. Repurchase or Replacement of Receivables Upon Breach of Warranty................................35
Section 2.7. Indenture Trustee's Assignment of Receivables...................................................35
Section 2.8. Collection of Lien Certificates.................................................................36
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES..........................................................36
Section 3.1. Duties of the Servicer..........................................................................36
Section 3.2. Collection of Receivable Payments, Modifications of Receivables; Sub-servicing Account;
Lockbox Account.................................................................................38
Section 3.3. Realization Upon Receivables....................................................................40
Section 3.4. Insurance.......................................................................................42
Section 3.5. Maintenance of Security Interests in Vehicles...................................................42
Section 3.6. Covenants, Representations and Warranties of Servicer...........................................43
</TABLE>
i
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<TABLE>
<S> <C>
Section 3.7. Purchase or Replacement of Receivables Upon Breach of Covenant..................................46
Section 3.8. Servicer Fee, Payment of Certain Expenses by Servicer; Backup Servicer Fee......................47
Section 3.9. Servicer's Certificate..........................................................................47
Section 3.10. Annual Statement as to Compliance, Notice of Servicer Termination Event........................48
Section 3.11. Annual Independent Accountants'Report..........................................................49
Section 3.12. Access to Certain Documentation and Information Regarding Receivables..........................50
Section 3.13. Monthly Tape, Certain Duties of Backup Servicer.................................................50
Section 3.14. Reports to the Commission......................................................................51
Section 3.15. Indenture Trustee Notification to Company......................................................52
Section 3.16. Insurance......................................................................................52
Section 3.17. Compliance with Laws...........................................................................52
Section 3.18. Delegation of Duties...........................................................................52
Section 3.19. Retention and Termination of Servicer..........................................................52
ARTICLE IV PAYMENTS; STATEMENTS TO NOTEHOLDERS..................................................................53
Section 4.1. Trust Accounts..................................................................................53
Section 4.2 Servicer Reimbursements.........................................................................56
Section 4.3 Capitalized Interest Account....................................................................57
Section 4.4. Application of Collections......................................................................57
Section 4.5. Additional Deposits.............................................................................58
Section 4.6. Payments........................................................................................58
Section 4.7. Note Distribution Account.......................................................................60
Section 4.8. Pre-Funding Account.............................................................................62
Section 4.9. Net Deposits....................................................................................62
Section 4.10. Statements to Noteholders; Tax Returns.........................................................62
ARTICLE V THE RESERVE ACCOUNT...................................................................................65
Section 5.1. Withdrawals from Reserve Account................................................................65
ARTICLE VI THE NOTE POLICY......................................................................................65
Section 6.1. Claims Under Note Policy........................................................................65
Section 6.2. Preference Claims...............................................................................67
Section 6.3. Surrender of Policy.............................................................................68
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE VI THE COMPANY..........................................................................................68
Section 7.1. Liability of Company; Indemnities...............................................................68
Section 7.2. Merger or Consolidation of the Company..........................................................68
Section 7.3. Limitation on Liability of Company and Others...................................................69
Section 7.4. Special Purpose Entity..........................................................................69
Section 7.5. Restrictions on Liens...........................................................................70
Section 7.6. Creation of Indebtedness, Guarantees............................................................70
Section 7.7. Compliance with Laws............................................................................71
Section 7.8. Further Instruments and Acts....................................................................71
Section 7.9. Investment Company Act..........................................................................71
ARTICLE VIII THE SERVICER...................................................................................... 71
Section 8.1. Liability of Servicer; Indemnities..............................................................71
Section 8.2. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or
Backup Servicer.................................................................................73
Section 8.3. Limitation on Liability of Servicer, Backup Servicer and Others.................................74
Section 8.4. Servicer and Backup Servicer Not to Resign......................................................76
Section 8.5. Administrative Duties...........................................................................77
Section 8.6. Representations and Warranties of Backup Servicer...............................................78
Section 8.7. Duties of Backup Servicer.......................................................................79
ARTICLE IX SERVICER TERMINATION EVENTS..........................................................................80
Section 9.1. Servicer Termination Event......................................................................80
Section 9.2. Consequences of a Servicer Termination Event....................................................82
Section 9.3. Appointment of Successor........................................................................83
Section 9.4. Notification to Noteholders.....................................................................84
Section 9.5. Action Upon Certain Failures of the Servicer....................................................84
Section 9.6. Waiver of Past Defaults.........................................................................84
ARTICLE X TERMINATION...........................................................................................85
Section 10.1. Optional Purchase of All Receivables...........................................................85
ARTICLE XI MISCELLANEOUS PROVISIONS.............................................................................86
Section 11.1. Amendment......................................................................................86
</TABLE>
iii
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<TABLE>
<S> <C>
Section 11.2. Protection of Title to Trust...................................................................87
Section 11.3. Limitation on Rights of Noteholders............................................................89
Section 11.4. GOVERNING LAW..................................................................................90
Section 11.5. SUBMISSION TO JURISDICTION; WAIVERS............................................................90
Section 11.6. WAIVER OF JURY TRIAL...........................................................................91
Section 11.7. Severability of Provisions.....................................................................91
Section 11.8. Assignment.....................................................................................91
Section 11.9. Notes Nonassessable and Fully Paid.............................................................91
Section 11.11. Counterparts..................................................................................92
Section 11.12. Notices.......................................................................................92
Section 11.13. Successors and Assigns........................................................................93
Assignment to Trustee............................................................................................93
Nonpetition Covenants............................................................................................93
SCHEDULE A SCHEDULE OF RECEIVABLES ON FILE WITH THE SERVICER AND THE INDENTURE TRUSTEE..........................1
SCHEDULE B REPRESENTATIONS AND WARRANTIES OF COMPANY WITH RESPECT TO RECEIVABLES................................1
SCHEDULE C FORM OF INFORMATION REQUEST..........................................................................1
SCHEDULE D THREATENED LITIGATION................................................................................1
EXHIBIT A FORM OF SERVICER'S CERTIFICATE........................................................................1
EXHIBIT B REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS..........................................................1
</TABLE>
iv
<PAGE> 6
SALE AND SERVICING AGREEMENT, dated as of November 1, 1998 (this
"Agreement"), among TRIAD FINANCIAL CORPORATION, a California corporation, in
its individual capacity ("Triad") and as Servicer (the "Servicer"), ASSET BACKED
SECURITIES CORPORATION, a Delaware corporation, as Company (the "Company"),
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4, a Delaware business trust, as
purchaser (the "Trust" or the "Purchaser"), and THE CHASE MANHATTAN BANK, a New
York banking corporation, as Indenture Trustee (in such capacity, the "Indenture
Trustee") and as Backup Servicer (in such capacity, the "Backup Servicer").
WHEREAS, pursuant to the Receivables Purchase Agreement (as defined
below), the Company has purchased from Triad certain receivables arising in
connection with motor vehicle retail installment contracts acquired by Triad
through motor vehicle dealers;
WHEREAS, the Company wishes to sell and the Trust wishes to purchase
certain of such receivables;
WHEREAS, pursuant to the Subsequent Purchase Agreement (as defined
below), the Company will purchase from Triad certain additional receivables
arising in connection with motor vehicle retail installment contracts acquired
by Triad through motor vehicle dealers;
WHEREAS, the Company wishes to sell and the Trust wishes to purchase
such additional receivables;
WHEREAS, the Servicer has agreed to service all such receivables, which
constitute the principal assets of the trust estate; and
WHEREAS, The Chase Manhattan Bank is willing to serve in the capacities
of Indenture Trustee and Backup Servicer hereunder.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, Triad, the Servicer, the Company, the Trust, the Indenture Trustee and
the Backup Servicer hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used but not defined herein
shall have the meanings set forth in the Trust Agreement or the Indenture (each
as defined below). Whenever capitalized and used in this Agreement, the
following words shall have the following meanings:
Accountants' Report: The report of a firm of nationally recognized
independent accountants described in Section 3.11.
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Accounting Date: With respect to a Payment Date or a Determination
Date, the last day of the related Collection Period.
Actuarial Method: The method of allocating a fixed level payment
between principal and interest, pursuant to which each scheduled monthly payment
is deemed to consist of an amount of interest equal to 1/12 of the stated APR of
the Receivable multiplied by the outstanding Principal Balance of the Receivable
and an amount of principal equal to the remainder of such scheduled monthly
payment.
Actuarial Receivable: Any Receivable under which the portion of a
payment allocable to interest and the portion allocable to principal is
determined in accordance with the Actuarial Method.
Addition Notice: With respect to any transfer of Subsequent Receivables
to the Trust pursuant to Section 2.2 of this Agreement, notice of the Company's
election to transfer Subsequent Receivables to the Trust, such notice to
designate the related, Subsequent Cutoff Date, Subsequent Transfer Date and the
approximate principal amount of Subsequent Receivables to be transferred on such
Subsequent Transfer Date.
Additional Funds Available: With respect to any Payment Date the sum of
(i) the Deficiency Claim Amount, if any, received by the Indenture Trustee with
respect to such Payment Date plus (ii) the Insurer Optional Deposit, if any,
received by the Indenture Trustee with respect to such Payment Date.
Affiliate: 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, the term
"control" (including the terms "controlling," "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
Aggregate Principal Balance: With respect to the Closing Date, the
Initial Cutoff Date Principal Balance, and with respect to any Determination
Date, the sum of the Principal Balances (computed as of the related Accounting
Date) for all Receivables (other than Liquidated Receivables and Purchased
Receivables).
Agreement: This Agreement and all exhibits and schedules hereto.
Amount Financed: With respect to a Receivable, the aggregate amount
extended under such Receivable toward the purchase price of the Financed Vehicle
and related costs, including amounts of credit extended in respect of
accessories, insurance premiums, service and warranty policies or contracts and
other items customarily financed as part of motor vehicle retail installment
contracts.
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Annual Percentage Rate or APR: With respect to a Receivable, the annual
rate of finance charges stated in the Receivable.
Available Funds: With respect to any Determination Date, the sum of (i)
the Collected Funds received by the Servicer during the related Collection
Period, (ii) all Purchase Amounts deposited in the Collection Account for the
related Collection Period, (iii) all income received from investments of funds
in the Collection Account during the related Collection Period, (iv) the Monthly
Capitalized Interest Amount with respect to such Payment Date, (v) the Insurer
Optional Deposit, if any, and (vi) any remaining Pre-Funded Amount applied to
the mandatory redemption of Notes, as applicable.
Backup Servicer: The Chase Manhattan Bank, its successor in interest
pursuant to Section 8.2 or such Person as shall have been appointed as Backup
Servicer pursuant to Section 8.4.
Backup Servicer Fee: With respect to any Payment Date, the fee payable
to the Backup Servicer for services rendered during the related Collection
Period which shall be equal to one-twelfth of .0175% multiplied by the Note
Balance as of the open of business on the first day of the related Collateral
Period, provided, however, in no event shall the Backup Servicer Fee be less
than $13,125 in aggregate in any calendar year.
Business Day: Any day other than a Saturday, Sunday or other day on
which commercial banking institutions or trust companies in (i) New York, New
York, (ii) the state in which the Corporate Trust Office is located or (iii) the
state in which the executive offices of the Servicer, any successor Servicer or
successor Indenture Trustee are located, are authorized or obligated by law,
executive order or governmental decree to be closed.
Capitalized Interest Account: The account designated as such,
established and maintained pursuant to Section 4.3.
Capitalized Interest Account Initial Deposit: $74,778.86 deposited on
the Closing Date.
Certificate: As defined in the Trust Agreement.
Certificated Security: As defined in Section 8-102(a)(4) of Revised
Article 8.
Certificateholder: As defined in the Trust Agreement.
Class: A class of Notes.
Class A Interest Rate: 5.98% per annum, calculated on a basis of a
360-day year consisting of twelve 30-day months.
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Class A Note: Any Note executed on behalf of the Trust and issued
pursuant to the Indenture in substantially the form set forth in Exhibit A to
the Indenture.
Class A Note Factor: As of any Payment Date, a seven-digit figure equal
to the Note Balance as of the close of business on such Payment Date divided by
the initial Note Balance. The Class A Note Factor will be 1.0000000 as of the
Closing Date; thereafter, the Class A Note Factor will decline to reflect
reductions in the Note Balance.
Clearing Corporation: As defined in Section 8-102(3) of Old Article 8.
Closing: As defined in Section 2.1(e).
Closing Date: December 15, 1998.
Collateral Agent: The Chase Manhattan Bank, in its capacity as
Collateral Agent under the Reserve Account Agreement and any successors thereto
under such Agreement.
Collected Funds: With respect to any Determination Date, the amount of
funds in the Collection Account representing collections on the Receivables
received by the Servicer during the related Collection Period, including all
Liquidation Proceeds collected during the related Collection Period (but
excluding any Purchase Amounts) and all amounts paid by the Dealers under Dealer
Agreements or Dealer Assignments with respect to the Receivables during the
related Collection Period.
Collection Account: The account designated as the Collection Account
in, and which is established and maintained pursuant to, Section 4.1.
Collection Period: With respect to any Payment Date or Determination
Date, the calendar month preceding the month in which such Payment Date or
Determination Date occurs.
Commission: The Securities and Exchange Act Commission.
Company: Asset Backed Securities Corporation, a Delaware corporation.
Computer Tape: The computer tape or diskette generated on behalf of the
Servicer that provides information relating to the Receivables.
Contract Scheduled Payment: With respect to any Collection Period for
any Receivable, the amount indicated in such Receivable as required to be paid
by the Obligor thereon in such Collection Period (without giving effect to
deferments of payments granted to Obligors by the Servicer pursuant to the Sale
and Servicing Agreement or any rescheduling of payments in an insolvency or
similar proceeding).
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Control: With respect to any Federal Book Entry Security, the Indenture
Trustee shall have obtained control if:
(i) the Indenture Trustee is a participant in the book entry
system maintained by the Federal Reserve Bank that is acting as fiscal
agent for the issuer of such Federal Book Entry Security, and such
Federal Reserve Bank has indicated by book entry that such Federal Book
Entry Security has been credited to the Indenture Trustee's securities
account in such book entry system; or
(ii) (a) the Indenture Trustee (1) is registered on the
records of a Securities Intermediary as the person having a Securities
Entitlement in respect of such Federal Book Entry Security against such
Securities Intermediary; or (2) has obtained the agreement, in writing,
of the Securities Intermediary for such Securities Entitlement that
such Securities Intermediary will comply with Entitlement Orders of the
Indenture Trustee without further consent of any other Person; and (b)
the Securities Intermediary is a participant in the book entry system
maintained by the Federal Reserve Bank that is acting as fiscal agent
for the issuer of such Federal Book Entry Security; and (c) such
Federal Reserve Bank has indicated by book entry that such Federal Book
Entry Security has been credited to the Securities Intermediary's
securities account in such book entry system.
Controlling Party: The Insurer, so long as no Insurer Default shall
have occurred and be continuing and the Indenture Trustee for the benefit of the
Noteholders, in the event the Insurer Default shall have occurred and be
continuing; provided, however, that the Owner Trustee for the benefit of the
Certificateholder shall be the Controlling Party after all unpaid principal and
interest on the Notes shall have been paid in full and all amounts due to the
Insurer have been paid and the Note Policy has expired in accordance with its
terms.
Corporate Trust Office: The principal office of the Indenture Trustee
at which its corporate trust business shall be administered, which office at the
Closing Date is located at 450 West 33rd Street, New York, New York 10001 or
such other address as the Indenture Trustee may designate from time to time by
notice to the Noteholders, the Insurer, the Servicer and the Company.
Correspondent: With respect to a Receivable, the person (i) purchasing
such Receivable from a Dealer, if such Receivable is not purchased directly by
Triad and (ii) assigning such Receivable to Triad.
Correspondent Agreement: An agreement between a Correspondent and Triad
relating to the sale of retail installment contracts to Triad and all documents
and instruments relating thereto.
Correspondent Assignment: With respect to a Receivable, the executed
assignment conveying such Receivable to Triad.
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Cram Down Loss: With respect to a Receivable, if a court of appropriate
jurisdiction in an insolvency proceeding shall have issued an order reducing the
amount owed on a Receivable or otherwise modifying or restructuring the Contract
Scheduled Payments to be made on a Receivable, an amount equal to (i) the excess
of the Principal Balance of such Receivable immediately prior to such order over
the Principal Balance of such Receivable as so reduced and/or (ii) if such court
shall have issued an order reducing the effective rate of interest on such
Receivable, the net present value (using as the discount rate the higher of the
APR on such Receivable or the rate of interest, if any, specified by the court
in such order) of the Contract Scheduled Payments as so modified or
restructured. A Cram Down Loss shall be deemed to have occurred on the date of
issuance of such order.
Credit Tier: Any one of the six Credit Tiers designated in the Triad
Financial Corporation policies and procedures manual.
Custodian: The Chase Manhattan Bank and any other Person named from
time to time as custodian under this Agreement, which Person must be acceptable
to the Controlling Party (the Custodian as of the Closing Date being acceptable
to the Insurer as of the Closing Date).
Cutoff Date: With respect to the Initial Receivables, the Initial
Cutoff Date, and with respect to the Subsequent Receivables, the Subsequent
Cutoff Date.
Dealer: With respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to Triad or a
Correspondent.
Dealer Agreement: An agreement between (i) Triad and a Dealer or (ii) a
Correspondent and a Dealer relating to the sale of retail installment contracts
to Triad or such Correspondent, as the case may be, and all documents and
instruments relating thereto.
Dealer Assignment: With respect to a Receivable, the executed
assignment conveying such Receivable to Triad or a Correspondent, as the case
may be.
Defaulted Receivable: Any Receivable with respect to which any of the
following shall have occurred: (a) for which the related Financed Vehicle has
been repossessed by the Servicer or (b) for which all or more than 10% of any
payment is 120 days or more past due or (c) a Receivable with respect to which
the Servicer has determined in good faith that all amounts expected to be
recovered have been received.
Deficiency Claim Amount: As defined in Section 5.1(a).
Deficiency Claim Date: As defined in Section 5.1(a).
Deficiency Notice: As defined in Section 5.1(a).
Delivery: When used with respect to Trust Account Property, "Delivery"
means:
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(i) with respect to Physical Property other than a
"certificated security" as defined under Old Article 8, transfer
thereof to the Indenture Trustee or its nominee or custodian by
physical delivery to the Indenture Trustee or its nominee or custodian
endorsed to, or registered in the name of, the Indenture Trustee or its
nominee or custodian or endorsed in blank;
(ii) with respect to a "certificated security" as defined
under Old Article 8 that will, upon compliance with the following
procedures, be held by a Person located in an Old Article 8
Jurisdiction, transfer thereof:
(A) by delivery of such certificated security
endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank to a
Financial Intermediary, and the making by such Financial
Intermediary of entries on its books and records identifying
such certificated security as belonging to the Indenture
Trustee or its nominee or custodian and the sending by such
Financial Intermediary of a confirmation of the transfer to
the Indenture Trustee or its nominee or custodian of such
certificated security; or
(B)(1) by delivery thereof to a Clearing Corporation
and the registering by such Clearing Corporation of
appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the
appropriate securities account of a Financial Intermediary by
the amount of such certificated security, (2) the
identification by the Clearing Corporation of the certificated
securities for the sole and exclusive account of the Financial
Intermediary, (3) the maintenance of such certificated
securities by such Clearing Corporation or a "custodian bank"
(as defined in Section 8-102(4) of Old Article 8) or the
nominee of either subject to the Clearing Corporation's
exclusive control, (4) the sending of a confirmation by the
Financial Intermediary of the transfer to the Indenture
Trustee or its nominee or custodian of such securities and the
registering by such Financial Intermediary of entries on its
books and records identifying such certificated security as
belonging to the Indenture Trustee or its nominee or
custodian, and, in any event, any such Physical Property in
registered form shall be in the name of the Indenture Trustee
or its nominee or custodian, and (5) such additional or
alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or its nominee or
custodian, consistent with applicable law or regulations or
the interpretation thereof,
(iii) with respect to a Certificated Security that will, upon
compliance with the following procedures, be held by a person located
in a Revised Article 8 Jurisdiction, transfer of such Certificated
Security to the Indenture Trustee or its nominee or custodian by
physical delivery to the Indenture Trustee or its nominee or custodian,
endorsed to, or
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registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank;
(iv) with respect to any such Trust Account Property that
constitutes an "uncertificated security" under Old Article 8 (and that
is not a Federal Book Entry Security) and where the issuer thereof is
organized in an Old Article 8 Jurisdiction, registration of the
transfer to, and ownership of such Trust Account Property by the
Indenture Trustee or any Financial Intermediary acting on behalf of the
Indenture Trustee by the issuer of such Trust Account Property, and (B)
in the case of registration in the name of any Financial Intermediary,
(1) the making by any such Financial Intermediary of entries in its
books and records identifying such uncertificated security as belonging
to the Indenture Trustee, and (2) delivery by any such Financial
Intermediary to the Indenture Trustee of a written confirmation of the
transfer of the uncertificated securities to the Indenture Trustee; and
(v) with respect to any such Trust Account Property that
constitutes an Uncertificated Security (including any investments in
money market mutual funds, but excluding any Federal Book Entry
Security) and where the issuer thereof is organized in a Revised
Article 8 Jurisdiction, (A) registration of the Indenture Trustee as
the registered owner by the issuer, or (B) satisfaction of the
requirements for the Indenture Trustee's obtaining "control" pursuant
to Section 8-106(c)(2) of Revised Article 8.
Determination Date: With respect to any Collection Period, the fifth
Business Day preceding the related Payment Date in the calendar month following
such Collection Period.
Draw Date: With respect to any Payment Date, the third (3rd) Business
Day (as defined in the Note Policy) immediately preceding such Payment Date.
Electronic Ledger: The electronic master record of the retail
installment contracts of the Servicer.
Eligible Account: (i) A segregated trust account that is maintained
with the corporate trust department of the Indenture Trustee or (ii) a
segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, any of
the States or the District of Columbia, having a certificate of deposit,
short-term deposit or commercial paper rating of at least "A-l" by S&P or "P-1"
by Moody's).
Eligible Investments: Any one or more of the following types of
investments:
(a) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of
principal and interest by, the United States or any agency or
instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States;
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(b) demand or time deposits in, certificates of deposit of,
demand notes of, or bankers' acceptances issued by any depository
institution or trust company organized under the laws of the United
States or any State (or any domestic branch of a foreign bank) and
subject to supervision and examination by federal and/or state banking
or depository institution authorities (including, if applicable, the
Indenture Trustee or any agent of the Indenture Trustee acting in their
respective commercial capacities); provided, however, that at the time
of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other
than such obligations the rating of which is based on the credit of a
Person other than such depository institution or trust company) thereof
shall be rated at least "A-1" by S&P or "P-1" by Moody's;
(c) repurchase obligations pursuant to a written agreement (i)
with respect to any obligation described in clause (a) above, where the
Indenture Trustee has taken actual or constructive delivery of such
obligation in accordance with Section 4.1, and (ii) entered into with a
depository institution or trust company organized under the laws of the
United States or any State, the deposits of which are insured by the
Federal Deposit Insurance Corporation and the commercial paper or other
short-term unsecured debt obligations of which are rated at least
"A-1+" by S&P or "P-1" by Moody's and whose long term unsecured debt
obligations are rated "A+" by S&P or "P-1" by Moody's (including, if
applicable, the Indenture Trustee, or any agent of the Indenture
Trustee acting in its commercial capacity);
(d) commercial paper that, at the time of the investment or
the contractual commitment to invest therein, (i) is payable in United
States dollars and (ii) is at least "A-1" by S&P or "P-1" by Moody's;
(e) money market mutual funds registered under the Investment
Company Act of 1940, as amended, that are rated in the highest credit
rating category by Moody's or S&P; or
(f) any other demand or time deposit, obligation, security or
investment as may be acceptable to the Controlling Party and the Rating
Agencies, as may from time to time be confirmed in writing to the
Indenture Trustee by the Controlling Party and the Rating Agencies.
provided, however, that no such instrument shall be an Eligible Investment if
(w) such instrument evidences a right to receive either (A) only interest
payments with respect to the obligations underlying such instrument or (B) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations; (x) its terms do not have a
predetermined fixed dollar amount of principal due at maturity that cannot vary
or change; (y) to the extent rated, an "r" highlighter is affixed to
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its rating; or (z) to the extent the related interest rate is variable, interest
thereon is not tied to a single interest rate index plus a single fixed spread
(if any), or does not move proportionately with that index.
Any Eligible Investments may be purchased by or through the Indenture
Trustee or any of its Affiliates.
Eligible Servicer: Triad, the Backup Servicer (so long as the Backup
Servicer is not in default of any of its obligations under this Agreement or any
other agreement relating hereto) or another Person that, at the time of its
appointment as Servicer, (i) is servicing a portfolio of motor vehicle retail
installment contracts and/or motor vehicle installment loans of not less than
$100 million, (ii) is legally qualified and has the capacity and all necessary
licenses, permits and approvals to service the Receivables, (iii) has
demonstrated the ability to service with reasonable skill and care a portfolio
of motor vehicle retail installment contracts and/or motor vehicle installment
loans similar to the Receivables, (iv) is approved by the Rating Agencies, (v)
is approved by the Insurer (if no Insurer Default has occurred and is
continuing) or the Note Majority (if an Insurer Default has occurred and is
continuing), (vi) is qualified and entitled to use, pursuant to a license or
other written agreement, and agrees to maintain the confidentiality of, the
software that the Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has available software that
is adequate to perform its duties and responsibilities under this Agreement and
(vii) has a tangible net worth as determined in accordance with generally
accepted accounting principles consistently applied of at least $15 million.
Entitlement Order: As defined in Section 8-102(a)(8) of Revised
Article 8.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: Any one of the following events: (i) default in the
payment of any interest on any Note when the same becomes due and payable, and
such default shall continue for a period of two days; (ii) default in the
payment of the principal of any Note when the same becomes due and payable;
(iii) default in the observance or performance of any covenant or agreement of
the Issuer made in the Indenture (other than a covenant or agreement a default
in the observance or performance of which is elsewhere in Section 5.1 of the
Indenture specifically dealt with), or any representation or warranty of the
Issuer made in the Indenture or in any certificate or other writing delivered
pursuant thereto or in connection therewith proving to have been incorrect in
any material respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition in
respect of which such misrepresentation or warranty was incorrect shall not have
been eliminated or otherwise cured, for a period of 30 days after there shall
have been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Holders of at least
25% of the Note Balance, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating that such
notice is a "Notice of Default"
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under the Indenture; (iv) the filing of a petition for relief by a court having
jurisdiction in the premises in respect of the Issuer, the Seller or any
substantial part of their property in an involuntary case under any applicable
Federal or State bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer, the Seller or for any
substantial part of their property, or ordering the winding-up or liquidation of
the affairs of the Issuer or the Seller, and such petition shall remain unstayed
and in effect for a period of 60 consecutive days; (v) the commencement by the
Issuer or the Seller of a voluntary case under any applicable Federal or State
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by the Issuer or the Seller to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer or the Seller
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or the Seller
or for any substantial part of their property, or the making by the Issuer or
the Seller of any general assignment for the benefit of creditors, or the
failure by the Issuer or the Seller generally to pay its debts as such debts
become due, or the taking of action by the Issuer or the Seller in furtherance
of any of the foregoing; or (vi) the failure to pay the Note Balance on the
Final Scheduled Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as it may be amended
from time to time.
Executive Officer: With respect to any corporation, the President,
Chief Financial Officer, Controller or any Vice President.
Federal Book Entry Security: An obligation (i) issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or the Federal National
Mortgage Association, or any other direct obligation of, or obligation fully
guaranteed as to timely payment or principal and interest by, the United States,
that is a book-entry security held through the Federal Reserve System pursuant
to Federal book entry regulations, and (ii) the perfection of a security
interest in which is governed pursuant to federal regulations by Revised
Article 8.
Final Scheduled Payment Date: September 17, 2005 or, if such day is not
a Business Day, the next Business Day).
Financed Vehicle: A new or used automobile or light-duty truck,
together with all accessories thereto, securing or purporting to secure an
Obligor's indebtedness under a Receivable.
Financial Asset: As defined in Section 8-102(a)(9) of Revised
Article 8.
Financial Intermediary: As defined in Section 8-313(4) of Old
Article 8.
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Funding Period: The period beginning on and including the Closing Date
and ending on the first to occur of (a) the first date on which the amount on
deposit in the Pre-Funding Account (after giving effect to any transfers
therefrom in connection with the transfer of Subsequent Receivables to the
Purchaser on such date) is less than $100,000, (b) the date on which an
Insurance Agreement Event of Default or a Servicer Termination Event occurs and
(c) the Payment Date in January 1999.
Governmental Authority: Any court or federal or state regulatory body,
administrative agency or other tribunal or other governmental instrumentality.
Indenture: The Indenture, dated as of November 1, 1998, between the
Trust and the Indenture Trustee, as the same may be amended or supplemented from
time to time, in accordance with the terms thereof.
Indenture Collateral: As defined in the Indenture.
Indenture Trustee: The Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor Indenture Trustee under
the Indenture.
Indenture Trustee Fee: With respect to any Payment Date, the fee
payable to the Indenture Trustee for services rendered during the related
Collection Period, which shall be equal to one twelfth of .0025% multiplied by
the Note Balance as of the open of business on the first day of the related
Collection Period, provided, however, in no event shall the Indenture Trustee
Fee be less than $1875.00 in aggregate in any calendar year.
Indenture Trustee Officer: Any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust officer
or other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Agreement.
Independent Accountants: As defined in Section 3.11.
Information Request: A request for information delivered pursuant to
Sections 3.11(d) or 4.10(c), substantially in the form of Schedule C hereto.
Initial Cutoff Date: The close of business on October 31, 1998.
Initial Cutoff Date Principal Balance: $86,123,510.83.
Initial Receivables: The Receivables listed on the Schedule of
Receivables attached hereto as Schedule A and transferred by the Company to the
Trust on the Closing Date.
Insolvency Event: With respect to a specified Person, (a) the entry of
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial
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part of its property in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs; (b) the
commencement of an involuntary case under the federal bankruptcy laws, as now or
hereinafter in effect, or another present or future federal or state bankruptcy,
insolvency or similar law and such case is not dismissed within 60 days; or (c)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
Insolvency Proceeds: As defined in Section 10.1(b).
Instruments: As defined in Section 9-105(l)(i) of Revised Article 8.
Insurance Agreement: The Insurance and Indemnity Agreement, dated as of
November 1, 1998, among the Insurer, the Trust, TFSPC II, and Triad.
Insurance Agreement Event of Default: An "Event of Default" as defined
in the Insurance Agreement.
Insurance Policy: With respect to a Receivable, any insurance policy
providing loss or physical damage, credit life, credit disability, accident and
health, theft, mechanical breakdown or similar coverage with respect to the
Financed Vehicle or otherwise benefiting the holder of the Receivable.
Insurer: Financial Security Assurance Inc., a monoline insurance
company incorporated under the laws of the State of New York, or any successor
thereto, as issuer of the Note Policy.
Insurer Default: The occurrence and continuance of any of the
following events:
(i) the Insurer shall have failed to make a payment required
under the Note Policy in accordance with its terms;
(ii) The Insurer shall have (a) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (b) made a general assignment for the benefit of its
creditors, or (c) had an order for relief entered against it under the
United States Bankruptcy Code
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or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority shall
have entered a final and nonappealable order, judgment or decree (a)
appointing a custodian, trustee, agent or receiver for the Insurer or
for all or any material portion of its property or (b) authorizing the
taking of possession by a custodian, trustee, agent or receiver of the
Insurer (or the taking of possession of all or any material portion of
the property of the Insurer).
Insurer Optional Deposit: With respect to any Payment Date, an amount
delivered by the Insurer, at its sole option, other than amounts in respect of a
Note Policy Claim Amount, for deposit into the Collection Account for any of the
following purposes: (i) to provide funds in respect of the payment of fees or
expenses of any provider of services to the Trust with respect to such Payment
Date; or (ii) to include such amounts as part of the Additional Funds Available
for such Payment Date to the extent that without such amount a draw would be
required to be made on the Note Policy.
Interest Carryover Shortfall: As of the close of business on any
Payment Date, an amount equal to the excess of (a) the Interest Payment Amount
for such Payment Date and any outstanding Interest Carryover Shortfall from the
immediately preceding Payment Date, plus interest on such outstanding Interest
Carryover Shortfall, to the extent permitted by law, at the Class A Interest
Rate from such preceding Payment Date through the current Payment Date
(calculated on the basis of a 360-day year consisting of twelve 30-day months),
over (b) the amount of interest that the holders of the Class A Notes actually
received on such current Payment Date.
Interest Payment Amount: With respect to any Payment Date, an amount
equal to 30 days of interest, calculated on the basis of a 360-day year
consisting of twelve 30-day months, (or in the case of the first Payment Date,
the number of days from and including December 15, 1998, to but excluding
December 17, 1998), at the Class A Interest Rate on the Note Balance as of the
close of business on the related Accounting Date or in the case of the first
Payment Date, the Note Balance on the Closing Date.
Investment Property: As defined in Section 9-115(l)(f) of Revised Article 8.
Lien: Any security interest, lien, charge, pledge, preference, equity
or encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
Lien Certificate: With respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party that indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction in which the original
certificate of title is
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required to be given to the Obligor, the term "Lien Certificate" shall mean only
a certificate or notification issued to a secured party.
Liquidated Receivable: Any Receivable with respect to which any of the
following shall have occurred with respect to any Collection Period: (i) the
sale of the Financed Vehicle; (ii) all or more than 10% of any Contract
Scheduled Payment is 120 days or more past due, except Receivables with respect
to which the related Financed Vehicles have been repossessed within such 120
days, (iii) the Servicer has determined in good faith that all amounts it
expects to be recovered have been received, or (iv) 90 days have elapsed since
the Servicer repossessed the Financed Vehicle.
Liquidation Proceeds: With respect to a Liquidated Receivable, (i)
proceeds from the disposition of Financed Vehicles securing the Liquidated
Receivables, (ii) any insurance proceeds or rebates, or (iii) other monies,
received from the Obligor or otherwise, less amounts required to be refunded to
the Obligor.
Lockbox Account: An account maintained with a Lockbox Bank, into which
payments from Obligors under Triad's portfolio of serviced contracts are
deposited; provided, however that upon the occurrence of a Servicer Termination
Event, the Controlling Party may, in its sole discretion, cause there to be
established as the Lockbox Account a segregated account in the name of the
Indenture Trustee.
Lockbox Agreement: The agreement with the Lockbox Bank between the
Servicer and such Lockbox Bank pursuant to which the Lockbox Account is
maintained; provided, however, that the Controlling Party shall approve, in its
sole discretion, any new Lockbox Agreement in the event the Servicer and the
Lockbox Bank enter into such an Agreement.
Lockbox Bank: Initially, Mellon Bank N.A. and its successors in
interest, and thereafter a depository institution approved by the Insurer (so
long as no Insurer Default has occurred and is continuing) which provides a
lockbox as part of its normal and customary services named by the Servicer at
which the Lockbox Account is established and maintained as of such date;
provided, however, that upon the occurrence of a Servicer Termination Event, the
Controlling Party may, in its sole discretion, cause the Lockbox Account to be
established at another bank.
Mandatory Redemption Date: The earlier of (i) the Payment Date in
January, 1999 and (ii) if the last day of the Funding Period occurs on or prior
to the Determination Date in December 1998, then the December 1998 Payment Date.
Master Account Agreement: The Master Account Agreement, dated as of May
31, 1996, among Triad, ContiTrade Services L.L.C. and Mellon Bank, N.A., as the
same may be amended or supplemented from time to time.
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Monthly Capitalized Interest Amount: An amount equal to the difference
between (i) the product of (x) (I) 2, in the case of the December Payment Date,
or (II) 30, in the case of the January Payment Date; or (III) 18, in the case of
the February Payment Date, (y) the sum of (I) the Class A Interest Rate and (II)
the per annum rate used to calculate the Premium payable on such Payment Date
and (z) the difference between (A) the average daily aggregate principal amount
of the Notes during the period since the prior Payment Date and (B) the
Aggregate Principal Balance as of the last day of the preceding Collection
Period (or in the case of the December 1998 Payment Date, as of the Closing
Date) and (ii) the Pre-Funding Earnings for the related Collection Period.
Monthly Records: All records and data maintained by the Servicer with
respect to the Receivables and the Obligors, including the following with
respect to each Receivable: the account number; the identity of the originating
Dealer; Obligor name; Obligor address; Obligor home phone number; Obligor
business phone number (if any); original Amount Financed or Principal Balance;
original total of payments; original term; Annual Percentage Rate; current
balance; pay off balance; current remaining term; contract origination date;
first payment date; final scheduled payment date; next payment due date;
collateral description; days currently delinquent; new/used classification;
amount of the Contract Scheduled Payment; and past due late charges, if any.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
Note: Any one of the Class A Notes executed on behalf of the Trust and
issued pursuant to the Indenture in substantially the form set forth in Exhibit
A to the Indenture.
Note Balance: Initially, $100,000,000 and thereafter, an amount equal
to the initial Note Balance reduced by all amounts distributed to the Class A
Noteholders that are allocable to principal. If the date of determination is a
Payment Date, then such Note Balance shall be reduced by all such amounts
distributed on such date.
Note Distribution Account: The account designated as such, established
and maintained pursuant to Section 4.7.
Note Majority: Holders of Class A Notes representing more than 50% of
the Note Balance.
Note Policy: The financial guaranty insurance policy issued by the
Insurer to the Indenture Trustee, for the benefit of the Noteholders.
Note Policy Claim Amount: For any Payment Date, the excess, if any, of
(i) the sum of the Interest Payment Amount and the Principal Payment Amount for
such Payment Date over (ii) the sum of the amounts actually deposited into the
Note Distribution Account on such related Payment Date.
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Note Preference Claim: As defined in Section 6.2(b).
Note Register: As defined in the Indenture.
Note Shortfall Amount: For any Payment Date, the excess, if any, of (i)
the sum of the Interest Payment Amount and the Payment Principal Amount for the
related Payment Date, over (ii) the amount actually deposited into the Note
Distribution Account on such related Payment Date from the Available Funds and
any amounts deposited in the Collection Account from the Reserve Account
pursuant to Section 5.1.
Noteholder or Holder: Holders of Notes registered in the Note Register,
except that so long as any Notes are outstanding, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, the
interest evidenced by any Note registered in the name of or beneficially owned
by the Servicer, or any Affiliate of the Servicer other than the Underwriter,
shall not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request or demand shall have been
obtained.
Obligor: With respect to a Receivable, the purchaser or the
co-purchasers of the related Financed Vehicle and any other Person or Persons
who are primarily or secondarily obligated to make payments under such
Receivable.
OC Stabilization Date: The first Payment Date on which the
Overcollateralization Amount equals the Target Overcollateralization Amount.
Officer's Certificate: A certificate signed by an Executive Officer.
Old Article 8: Article 8 of the UCC as in effect in the applicable Old
Article 8 Jurisdiction as of the date hereof.
Old Article 8 Jurisdiction: A jurisdiction which has not adopted
Revised Article 8.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
in form and substance and from counsel acceptable to the Controlling Party and
the Indenture Trustee or the Owner Trustee and not at the expense of the
Controlling Party, Indenture Trustee or Owner Trustee.
Original Pool Balance: The sum of (i) the Aggregate Principal Balance
as of the Initial Cutoff Date plus (ii) the aggregate principal balances of the
Subsequent Receivables added to the Trust as of their respective Subsequent
Cutoff Dates.
Owner Trustee: As defined in the Trust Agreement.
Overcollateralization Amount: With respect to any Payment Date, an
amount equal to the excess, if any, of (i) the sum of (a) the remaining
Aggregate Principal Balance as of the related
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Accounting Date and (b) all amounts, if any, in the Pre-Funding Account, over
(ii) the remaining Note Balance, after giving effect to the amounts payable on
such Payment Date pursuant to Section 4.6(b)(i) through (iv) on such Payment
Date.
Overfunded Capitalized Interest Amount:
(i) with respect to the December 1998 Payment Date, the excess
of (a) the amount on deposit in the Capitalized Interest Account on
such Payment Date (after giving effect to the transfer of the Monthly
Capitalized Interest Amount to the Collection Account on such date)
over (b) the product of (i) 1/360, (ii) 2.5%, (iii) 48 and (iv) the
amount on deposit in the Pre-Funding Account (excluding Pre-Funding
Earnings) at the close of business on December 15, 1998.
(ii) with respect to the January, 1999 Payment Date, the
excess of (a) the amount on deposit in the Capitalized Interest Account
on such Payment Date (after giving effect to the transfer of the
Monthly Capitalized Interest Amount to the Collection Account on such
date) over (b) the product of (i) 1/360, (ii) 2.5% (iii) 18 and (iv)
the amount on deposit in the Pre-Funding Account (excluding Pre-Funding
Earnings) at the close of business on December 31, 1998.
(iii) with respect to the February, 1999 Payment Date, the
amount on deposit in the Capitalized Interest Account on such Payment
Date (after giving effect to the transfer of the Monthly Capitalized
Interest Amount to the Collection Account on such date).
Payment Amount: With respect to a Payment Date, the sum of (i) the
Available Funds as of the related Determination Date, plus (ii) the Deficiency
Claim Amount, if any, with respect to such Payment Date.
Payment Date: The 17th day of each calendar month, or if such 17th day
is not a Business Day, the next Business Day, commencing December 17, 1998 and
including the Final Scheduled Payment Date.
Permitted Lien: (i) the Lien in favor of the Trust, (ii) the Lien in
favor of the Indenture Trustee for the benefit of the Insurer and the
Noteholders, (iii) the restrictions on transferability imposed by the Related
Documents and (iv) with respect to a Financed Vehicle, but not the Trust's
interest in the Receivable secured by such Financed Vehicle, inchoate Liens for
taxes not yet payable and mechanics' or suppliers' liens for services or
materials supplied the payment of which is not yet overdue in each case arising
subsequent to the Initial Cutoff Date with respect to the Initial Receivables or
arising subsequent to the related Subsequent Cutoff Date with respect to the
Subsequent Receivables, as applicable.
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Person: Any legal person, including any individual, corporation,
partnership, limited liability company, joint venture, estate, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity.
Physical Property: Personal property constituting Instruments or
constituting "certificated securities" under Old Article 8, including bankers'
acceptances, commercial paper, negotiable certificates of deposit and other
obligations that are susceptible of physical delivery.
Pre-Computed Receivable: Any Actuarial Receivable or Rule of 78's
Receivable.
Pre-Funded Amount: With respect to any Payment Date, the amount on
deposit in the Pre-Funding Account, (exclusive of Pre-Funding Earnings) which
initially shall be the amount set forth in Section 4.8.
Pre-Funding Account: The account established pursuant to Section
4.1(a)(iii).
Pre-Funding Earnings: Any investment earnings on amounts on deposit in
the Pre-Funding Account.
Premium: As defined in the Insurance Agreement.
Principal Balance: With respect to any Receivable, (a) as of the
applicable Cutoff Date, the Amount Financed minus (i) in the case of a
Precomputed Receivable, that portion of all payments (including all Contract
Scheduled Payments and any prepayments in full or partial prepayment) actually
received on or prior to such date and allocable to principal in accordance with
the Actuarial Method and (ii) in the case of a Simple Interest Receivable, that
portion of all payments (including all Contract Scheduled Payments and any
prepayments in full or partial prepayment) received on or prior to such date and
allocable to principal in accordance with the Simple Interest Method, and (b) as
of any date after the applicable Cutoff Date, the Principal Balance as of the
Cutoff Date minus (i) in the case of a Precomputed Receivable, that portion of
all payments (including all Contract Scheduled Payments and any prepayments in
full or partial prepayments) actually received on or prior to such date (but
after the applicable Cutoff Date) and allocable to principal in accordance with
the Actuarial Method, (ii) in the case of a Simple Interest Receivable, that
portion of all payments (including all Contract Scheduled Payments and any
prepayments in full or partial prepayments) received on or prior to such date
(but after the applicable Cutoff Date) and allocable to principal in accordance
with the Simple Interest Method and (iii) any Cram Down Loss in respect of such
Receivable. The principal balance of a Liquidated Receivable for purposes other
than the definition of Principal Payment Amount shall be equal to $0.
Principal Carryover Shortfall: As of the close of business on any
Payment Date, an amount equal to (i) the Principal Payment Amount and any
outstanding Principal Carryover
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Shortfall from the immediately preceding Payment Date, over (ii) the amount of
principal that the Noteholders actually received on such current Payment Date.
Principal Payment Amount: (i) With respect to any Payment Date other
than the Final Scheduled Payment Date, the amount equal to the excess, if any,
of (x) the sum of the following amounts, without duplication: (a) the principal
portion of all Contract Scheduled Payments received during the related
Collection Period on Precomputed Receivables (calculated in accordance with the
Actuarial Method) and all payments of principal received on Simple Interest
Receivables (calculated in accordance with the Simple Interest Method) during
such Collection Period; (b) the principal portion of all prepayments received
during the related Collection Period; (c) the portion of the Purchase Amount
allocable to principal of each Receivable that became a Purchased Receivable as
of the related Accounting Date and, at the option of the Insurer, the Principal
Balance of each Receivable that was required to be but was not so purchased or
repurchased; (d) the Principal Balance of each Receivable that first became a
Liquidated Receivable during the related Collection Period; and (e) the
aggregate amount of Cram Down Losses with respect to the Receivables that have
occurred during the related Collection Period, over (y) the Step-Down Amount, if
any, for such Payment Date and (ii) with respect to the Final Payment Date, the
then outstanding Note Balance.
Purchase Amount: With respect to a Receivable, the Principal Balance
plus interest thereon at the respective APR from the last day through which
interest has been paid to the immediately preceding Accounting Date if purchased
prior to the Determination Date immediately following the end of such Collection
Period, and otherwise through the last day of the month of repurchase.
Purchased Receivable: A Receivable that was purchased as of the close
of business on the Accounting Date by the Seller or the Servicer as a result of
the violation of certain representations or warranties of the Seller under this
Agreement or a breach by the Servicer of certain of the Servicer's obligations.
Rating Agencies: Moody's and S&P. If no such organization or successor
maintains a rating on the Notes, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Company and acceptable to the Insurer (so long as an Insurer Default
shall not have occurred and be continuing), notice of which designation shall be
given to the Indenture Trustee, the Owner Trustee and the Servicer.
Rating Agency Condition: With respect to any action, each Rating Agency
shall have been given prior notice thereof and each Rating Agency shall have
notified Triad, the Insurer, the Company, the Servicer and the Indenture Trustee
in writing that such action will not result in a reduction or withdrawal of the
then current rating of the Class A Notes.
Receivable: A retail installment contract (including any related
promissory note and the related security agreement), and all rights and
obligations under such contract, for a Financed
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Vehicle that is included in the Schedule of Receivables (except for Receivables
that shall have become Purchased Receivables or Receivables that are replaced in
accordance with the terms hereof).
Receivable File: The documents listed in Section 2.3(a) pertaining to a
particular Receivable.
Receivables Purchase Agreement: The Receivables Purchase Agreement,
dated as of November 1, 1998, between the Company and Triad.
Record Date: With respect to each Payment Date, the Business Day
immediately preceding such Payment Date, unless otherwise specified in the
Agreement.
Recoveries: With respect to a Liquidated Receivable, the positive
excess, if any of (i) the monies collected from whatever source subsequent to
the date on which such Receivable became a Liquidated Receivable over (ii) the
reasonable costs of liquidation, including reasonable out-of-pocket expenses of
the Servicer in connection with such liquidation plus any amounts required by
law to be remitted to the Obligor.
Registrar of Titles: With respect to any state, the Governmental
Authority responsible for the registration of, and the issuance of certificates
of title relating to, motor vehicles and liens thereon.
Related Documents: This Agreement, the Indenture, the Trust Agreement,
the Notes, the Receivables Purchase Agreement, the Underwriting Agreement, the
Reserve Account Agreement, the Insurance Agreement, the Indemnification
Agreement, the Premium Letter and the other agreements executed in connection
with the Closing. The Related Documents executed by any party are referred to
herein as "such party's Related Documents," "its Related Documents" or by a
similar expression.
Replacement Receivable: With respect to any Collection Period, any
Receivable (a) having a Principal Balance and APR at least equal to the
Receivable it is replacing, (b) meeting the requirements of Section 2.2(b)(vi),
and (c) is of the same Credit Tier as the Receivable it is replacing.
Reserve Account: The account designated as the "Series 1998-4 Spread
Account," established and maintained pursuant to the Reserve Account Agreement.
Reserve Account Agreement: The Master Spread Account Agreement, dated
as of November 1, 1998, among the Insurer, the Indenture Trustee, and TFSPC II
as the same may be modified, supplemented or otherwise amended in accordance
with the terms thereof.
Responsible Officer: When used with respect to the Indenture Trustee or
Owner Trustee, any officer of the Indenture Trustee or Owner Trustee assigned by
the Indenture Trustee or
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Owner Trustee to administer its corporate trust affairs
relating to the Trust. When used with respect to any other Person that is not an
individual, the President, any Vice-President or Assistant Vice-President or the
Controller of such Person, or any other officer or employee having similar
functions.
Revised Article 8: UCC, Revised Article 8, Investment Securities (with
conforming and miscellaneous amendments to Articles 1, 3, 4, 5, 9 and 10), 1994
Official Text, as adopted by the American Law Institute and the National
Conference of Commissioners on Uniform State Laws. Unless the context requires
otherwise, "Revised Article 8" means such version in the form in which it is
adopted in the applicable jurisdiction.
Revised Article 8 Jurisdiction: A jurisdiction which has adopted
Revised Article 8.
Rule of 78's Receivable: Any Receivable under which the portion of a
payment allocable to interest earned during that month is determined by
multiplying the total amount of add-on interest payable over the term of the
Receivable by a fraction, the denominator of which is equal to the sum of a
series of numbers beginning with one and ending with the number of scheduled
monthly payments due under the related Receivable, and the numerator of which is
the number of payments remaining under such Receivable before giving effect to
the payment to which the fraction is being applied. The difference between the
amount of the scheduled monthly payment made by the Obligor and the amount of
earned add-on interest calculated for the month is applied to principal
reduction.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.,
or any successor thereto.
Schedule of Receivables: The schedule of all retail installment
contracts sold and transferred to the Trust on the Closing Date attached hereto
as Schedule A, as it may be amended from time to time, including to remove
Purchased Receivables pursuant to Section 2.6 or replaced Receivables pursuant
to Section 3.7, and to add Replacement Receivables and Subsequent Receivables.
Schedule of Representations: The Schedule of Representations and
Warranties of the Company attached as Schedule B.
Securities Account: As defined in Section 8-501(a) of Revised
Article 8.
Securities Act: The Securities Act of 1933, as amended.
Securities Entitlement: As defined in Section 8-102(a)(17) of Revised
Article 8.
Securities Intermediary: As defined in Section 8-102(a)(14) of Revised
Article 8.
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Seller: Triad Financial Corporation, a California corporation, in its
capacity as Seller under the Receivables Purchase Agreement.
Servicer: Triad Financial Corporation, a California corporation, its
successor in interest pursuant to Section 8.2 or, after any termination of the
Servicer upon a Servicer Termination Event, the Backup Servicer or any other
successor Servicer.
Servicer Expenses: For any Collection Period, expenses associated with
the repossession of Financed Vehicles.
Servicer Fee: With respect to any Payment Date, the fee payable to the
Servicer for services rendered during the related Collection Period, which shall
be equal to the sum of (i) one-twelfth of 2.25% multiplied by the Aggregate
Principal Balance as of the open of business on the first day of the related
Collection Period and (ii) any late fees received with respect to the
Receivables during such related Collection Period.
Servicer Termination Event: An event described in Section 9.1.
Servicer Transition Expenses: As defined in Section 9.3(c).
Servicer's Certificate: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached as Exhibit A.
Simple Interest Method: The method of allocating a fixed level payment
on an obligation between principal and interest, pursuant to which the portion
of such payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (based on the
actual number of days in the calendar month and 365 days in the calendar year)
elapsed since the preceding payment of interest was made and the remainder of
such payment is allocable to principal.
Simple Interest Receivable: Any Receivable under which principal and
interest is allocated according to the Simple Interest Method.
State: Any state of the United States of America, or the District of
Columbia.
Step-Down Amount: With respect to any Payment Date, the excess, if any
of (a) the Overcollateralization Amount calculated for this purpose only without
deduction for any Step-Down Amount (i.e., assuming that the entire amount
described in clause (x) of the definition of Principal Payment Amount is
distributed as principal on the Notes) over (b) the Target Overcollateralization
Amount on such Payment Date.
Subsequent Cutoff Date: The date specified in the related Subsequent
Transfer Agreement, provided, however that such date shall be on or before the
Subsequent Transfer Date.
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Subsequent Purchase Agreement: An agreement by and between the Company
and Triad pursuant to which the Company will acquire Subsequent Receivables.
Subsequent Receivables: The Receivables transferred to the Purchaser
pursuant to Section 2.2, which shall be listed on Schedule A to the related
Subsequent Transfer Agreement.
Subsequent Transfer Agreement: The agreement among the Trust, the
Company and the Servicer, substantially in the form of Exhibit A.
Subsequent Transfer Date: With respect to Subsequent Receivables, any
date, occurring not more frequently than once a month, during the Funding Period
on which Subsequent Receivables are to be transferred to the Trust pursuant to
this Agreement, and a Subsequent Transfer Agreement is executed and delivered to
the Trust.
Target Overcollateralization Amount: With respect to any Payment Date,
an amount equal to the product of (i) 9.50% (or such lesser percentage as the
Insurer may decide in its sole discretion), and (ii) the sum of (a) the
remaining Aggregate Principal Balance and (b) amounts, if any, in the
Pre-Funding Account, each determined as of the related Accounting Date.
TFSPC II: Triad Financial Special Purpose Corporation II, a Delaware
corporation.
Triad: Triad Financial Corporation, a California corporation.
Trust: Triad Auto Receivables Owner Trust 1998-4, a Delaware business
trust.
Trust Account: As defined in Section 4.1(c).
Trust Account Property: The Trust Accounts, all amounts and investments
held from time to time in any Trust Account (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities or
otherwise) and all proceeds of the foregoing.
Trust Agreement: The Amended and Restated Trust Agreement, dated as of
November 1, 1998, among TFSPC II, as certificateholder, Asset Backed Securities
Corporation, as depositor, Triad Financial Corporation and Wilmington Trust
Company as Owner Trustee.
Trust Property: The property and proceeds conveyed pursuant to Section
2.1 and Section 2.2, together with certain monies paid after the applicable
Cutoff Date with respect to the Receivables, the Trust Accounts (including all
Eligible Investments therein and all proceeds therefrom), the rights of the
Trust under this Agreement and the rights of the Company under the Receivables
Purchase Agreement or each Subsequent Purchase Agreement, as the case may be.
Although TFSPC II has pledged the Reserve Account to the Collateral Agent
pursuant to the Reserve Account Agreement, the Reserve Account shall not under
any circumstances be deemed to be part of or otherwise includable in the Trust
or in the Trust Property.
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Uncertificated Security: As defined in Section 8-102(a)(18) of Revised
Article 8.
Underwriter: Credit Suisse First Boston.
Underwriting Criteria: The criteria used by Triad for purchasing
contracts.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
SECTION 1.2. Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural includes the
singular, words importing one gender include the other gender, references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form, references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement, references to Persons include their permitted successors and assigns,
and the terms "include" or "including" mean "include without limitation" or
"including without limitation."
SECTION 1.3. Calculations. All calculations of the amount of interest
accrued on the Notes and all calculations of the amount of fees to be paid
pursuant hereto, including without limitation, the fees to be paid to the
Servicer shall be made on the basis of a 360-day year consisting of twelve
30-day months. All references to the Principal Balance of a Receivable as of an
Accounting Date shall refer to the close of business on such day.
SECTION 1.4. Section References. All references to Articles, Sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
SECTION 1.5. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken or consented to by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken or consent given by Noteholders. Solely for purposes of any action to be
taken or consented to by Noteholders, any Note registered in the name of, or
beneficially owned by, Triad, the Company or any Affiliate thereof other than
the Underwriter shall be deemed not to be outstanding; provided, however, that,
solely for the purpose of determining whether the Indenture Trustee is entitled
to rely upon any such action or consent, only Notes that the Indenture Trustee
knows to be so owned shall be so disregarded. The Indenture Trustee or Note
Registrar may require such additional proof of any matter referred to in this
Section 1.5 as it shall deem necessary.
SECTION 1.6. No Recourse. Without limiting the obligations of Triad
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Triad,
the Company, the Servicer, the Underwriter, the Backup Servicer, the Owner
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Trustee (in its individual or trust capacities) or the Indenture Trustee or of
any predecessor or successor of Triad, the Company, the Servicer, the
Underwriter, the Backup Servicer, the Owner Trustee (in its individual or trust
capacities) or the Indenture Trustee.
SECTION 1.7. Nonpetition Covenant. Until one year and one day following
the payment in full of all amounts due in respect of the Notes, none of the
Company, the Servicer, the Indenture Trustee, Triad nor the Backup Servicer
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Company
or the Trust under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Company or the Trust or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Company or the Trust.
SECTION 1.8. Limitation on Trust Fund Activities. Notwithstanding any
other provision in this Agreement to the contrary, the Indenture Trustee and the
Insurer shall have no power to vary the investment of the Noteholders within the
meaning of Treasury Department Regulation ss. 301.7701-4(c) or to engage in
business on behalf of the Trust unless the Indenture Trustee shall have received
an Opinion of Counsel that such activity shall not cause the Trust to be an
association or a publicly traded partnership taxable as a corporation for
federal income tax purposes.
SECTION 1.9. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Noteholders or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Note Policy.
ARTICLE II
CONVEYANCE OF RECEIVABLES; ACCEPTANCE BY INDENTURE TRUSTEE
SECTION 2.1 Conveyance of Initial Receivables.
(a) Subject to the terms and conditions of this Agreement, the Company
hereby sells, transfers, assigns and otherwise conveys to the Trust, without
recourse (but without limitation of its obligations under this Agreement): (1)
all of the right, title and interest of the Company in and to the Initial
Receivables and all monies due or received thereunder or in respect thereof on
or after the Initial Cutoff Date including amounts due on or before the Initial
Cutoff Date but received by Triad, the Company or the Trust after the Initial
Cutoff Date (including all Liquidation Proceeds and recoveries received with
respect to such Receivables); and (2) all of the right, title and interest of
Triad and the Company in and to (i) the security interests of Triad and the
Company in the related Financed Vehicles and any other interest of Triad and the
Company in the related Financed Vehicles, including the certificates of title
with respect to such Financed
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Vehicles, (ii) the Insurance Policies and any proceeds from any Insurance
Policies relating to the Initial Receivables, the Obligors or the related
Financed Vehicles, including rebates or refunds of premiums relating to the
Initial Receivables, (iii) the rights of Triad and the Company against Dealers
with respect to the Initial Receivables under the Dealer Agreements and the
Dealer Assignments, (iv) the rights of Triad and the Company against
Correspondents with respect to the Initial Receivables under the Correspondent
Agreements and the Correspondent Assignments, (v) all items contained in the
related Receivable Files and any and all other documents that Triad keeps on
file in accordance with its customary procedures relating to the Initial
Receivables, the Obligors or the related Financed Vehicles, (vi) property
(including the right to receive future Liquidation Proceeds) that secures any of
the Initial Receivables and that has been acquired by or on behalf of the
Company or the Trust pursuant to the liquidation of any such Initial Receivable,
(vii) the rights of the Company under the Receivables Purchase Agreement, (viii)
all funds on deposit from time to time in the Collection Account, the Note
Distribution Account, Pre-Funding Account and the Capitalized Interest Account,
including all income thereon and proceeds thereof, (ix) all of the right, title
and interest of the Company in and to refunds for the costs of extended service
contracts with respect to the Financed Vehicles and (x) all proceeds and
investments of any of the foregoing, all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever in
respect of any of the foregoing. It is the intention of the Company and the
Trust that the transfer and assignment contemplated by this Agreement shall
constitute a sale of the Receivables and the other Trust Property from the
Company to the Trust and the beneficial interest in and title to the Receivables
and the other Trust Property shall not be part of the Company's estate in the
event of the filing of a bankruptcy petition by or against the Company under any
bankruptcy law.
(b) If, notwithstanding the intent of the Company and the Trust, the
transfer and assignment contemplated hereby is held not to be a sale, the
Company hereby grants a first priority security interest to the Trust in the
property referred to in this Section 2.1, for the benefit of the Noteholders and
the Insurer and this Agreement shall constitute a security agreement. The
execution and delivery of this Agreement shall constitute an acknowledgment by
the Company and the Indenture Trustee on behalf of the Noteholders that, solely
for income and franchise tax purposes, until the Certificates are held by more
than one Person or the Trust is recharacterized as a separate entity, the Trust
will be disregarded as an entity separate from its owner and the Notes will be
treated as debt. The powers granted and obligations undertaken in this Agreement
shall be construed so as to further such intent.
(c) In connection with the grant of the security interest in paragraph
(b) above, the Company shall cause the Servicer to file the following financing
statements:
(i) Form UCC-1 filed with the Secretary of State of
California, naming Triad as the debtor, the Company as the secured
party, and Receivables and the Trust Property as collateral;
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(ii) Form UCC-2 filed with the Secretary of State of
California, naming Triad as the debtor, the Company as the secured
party, the Indenture Trustee as assignee and the Receivables and the
Trust Property as collateral;
(iii) Form UCC-1 filed with the Secretary of State of New York
and Delaware, naming the Company as the debtor, the Trust as secured
party the Indenture Trustee as assignee and the Receivables and the
Trust Property as collateral;
(iv) Form UCC-1 filed with the Secretary of State of Delaware,
naming the Trust as the debtor, the Indenture Trustee as the secured
party and the Indenture Collateral as collateral.
(d) The Company hereby directs the Trust to, and the Trust does hereby,
accept the Trust Property conveyed by the Company to the Trust pursuant to this
Section 2.1.
(e) The conveyance of the Receivables and the other Trust Property with
respect thereto shall take place at a closing (the "Closing") at the offices of
Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, New York 10112, on the
Closing Date.
SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to paragraph (b) below and the terms and conditions of this
Agreement, the Company hereby sells, transfers, assigns and otherwise conveys to
the Trust, without recourse (but without limitation of its obligations under
this Agreement): (1) all of the right, title and interest of the Company in and
to the Subsequent Receivables and all monies due or received thereunder or in
respect thereof after the Subsequent Cutoff Date including amounts due on or
before the Subsequent Cutoff Date but received by Triad, the Company or the
Trust after the Subsequent Cutoff Date (including all Liquidation Proceeds and
recoveries received with respect to such Subsequent Receivables); and (2) all of
the right, title and interest of Triad and the Company in and to (i) the
security interests of Triad and the Company in the related Financed Vehicles and
any other interest of Triad and the Company in the related Financed Vehicles,
including the certificates of title with respect to such Financed Vehicles, (ii)
the Insurance Policies and any proceeds from any Insurance Policies relating to
the Subsequent Receivables, the Obligors or the related Financed Vehicles,
including rebates or refunds of premiums relating to the Subsequent Receivables,
(iii) the rights of Triad and the Company against Dealers with respect to the
Subsequent Receivables under the Dealer Agreements and the Dealer Assignments,
(iv) the rights of Triad and the Company against Correspondents with respect to
the Subsequent Receivables under the Correspondent Agreements and the
Correspondent Assignments, (v) all items contained in the related Receivable
Files and any and all other documents that Triad keeps on file in accordance
with its customary procedures relating to the Subsequent Receivables, the
Obligors or the related Financed Vehicles, (vi) property (including the right to
receive future Liquidation Proceeds) that secures any of the Subsequent
Receivables and that has been acquired by or on behalf of the Company or the
Trust pursuant to the liquidation of any such Receivable,
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(vii) the rights of the Company under the Subsequent Receivables Purchase
Agreement, (viii) all funds on deposit from time to time in the Collection
Account, the Note Distribution Account, the Pre-Funding Account and the
Capitalized Interest Account, including all income thereon and proceeds thereof,
(ix) all of the right, title and interest of the Company in and to refunds for
the costs of extended service contracts with respect to the Financed Vehicles
and (x) all proceeds and investments of any of the foregoing, all present and
future claims, demands, causes and choses in action in respect of any or all of
the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any of the foregoing.
(b) The Company shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Company shall have provided the Indenture Trustee, the
Owner Trustee, the Insurer and the Rating Agencies with (i) an Addition
Notice not later than seven (7) Business Days prior to such Subsequent
Transfer Date, (ii) an electronic transmission of the information on
the related Subsequent Receivables set forth in such Addition Notice
and (iii) any other information reasonably requested by any of the
foregoing with respect to the Subsequent Receivables;
(ii) the Company shall have delivered to the Owner Trustee,
the Insurer and the Indenture Trustee a duly executed Subsequent
Transfer Agreement which shall include supplements to Schedule A,
listing the Subsequent Receivables;
(iii) the Company shall, to the extent required by Section
3.2, have deposited in the Collection Account all collections in
respect of the Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the Company
shall not be insolvent and shall not become insolvent as a result of
the transfer of Subsequent Receivables on such Subsequent Transfer
Date, (B) the Company shall not intend to incur or believe that it
shall incur debts that would be beyond its ability to pay as such debts
mature, (C) such transfer shall not have been made with actual intent
to hinder, delay or defraud any Person and (D) the assets of the
Company shall not constitute unreasonably small capital to carry out
its business as conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables transferred
to the Trust pursuant hereto shall meet the following criteria (based
on the characteristics of the Initial Receivables on the Initial Cutoff
Date and the Subsequent Receivables on the related Subsequent Cutoff
Dates) as such information is provided to the Indenture Trustee by the
Servicer: (a) the weighted average APR of such Receivables transferred
to the Trust shall not be less than
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one percent less than the weighted average APR of the Initial
Receivables on the Initial Cutoff Date, unless, with the prior consent
of the Rating Agencies and the Insurer, the Company increases the
Reserve Account Initial Deposit with respect to such Subsequent
Receivables by the amount required by the Insurer; (b) the weighted
average remaining term of the Receivables transferred to the Trust
shall not be greater than 72 months nor less than 12 months; (c) not
more than 85% of the aggregate Principal Balance of such Receivables
will represent financing of used Financed Vehicles; (d) the APR is not
less than 9% nor more than 25%; (e) not more than 21% of the aggregate
Principal Balance of such Receivables will represent Receivables
designated in Credit Tier 3, not more than 50% of the aggregate
Principal Balance of the Receivables will represent Receivables
designated in Credit Tier 4, not more than 17% of the aggregate
Principal Balance of the Receivables will represent Receivables
designated in Credit Tier 5 and not more than 1% of the aggregate
Principal Balance of the Receivables will represent Receivables
designated in Credit Tier 6; (f) no such Receivable will represent
financing of a Financed Vehicle which is older than a 1990 model year;
(g) not more than 15% of the aggregate Principal Balance of such
Receivables have been conveyed to Triad pursuant to Correspondent
Assignments, and not more than 11% of the aggregate Principal Balance
of such Receivables have been conveyed to Triad by any one
Correspondent; additionally, the Trust, the Indenture Trustee, the
Owner Trustee and the Insurer shall have received a written
confirmation from a firm of certified independent public accountants as
to the satisfaction of the criteria in clauses (a) through (f);
(vii) each of the representations and warranties made by the
Company pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date shall be
true and correct as of the related Subsequent Transfer Date, and the
Company shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(viii) the deposit into the Reserve Account of the amounts
required by Section 3.01(c) of the Reserve Account Agreement;
(ix) the Company shall deliver or have previously delivered
the related Receivables Files to the Custodian, and the Custodian shall
acknowledge the receipt of such files by delivery of a certificate in
form of Exhibit C hereto.
(x) the Company shall have taken any action required to
maintain the first priority perfected ownership interest of the Trust
in the Trust Property and the first perfected security interest of the
Indenture Trustee in the Indenture Collateral pledged under the
Indenture;
(xi) no selection procedures adverse to the interests of the
Noteholders or the Insurer shall have been utilized in selecting the
Subsequent Receivables;
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(xii) the addition of any such Subsequent Receivables shall
not result in a material adverse tax consequence to the Trust or the
Noteholders;
(xiii) the Company shall cause to be delivered (A) to the
Rating Agencies, the Insurer and the Owner Trustee Opinions of Counsel
with respect to the transfer of such Subsequent Receivables
substantially in the form of the Opinions of Counsel delivered to the
Rating Agencies and the Insurer on the Closing Date and (B) to the
Indenture Trustee the Opinion of Counsel required by Section 11.2(j)
regarding true sale, non-consolidation, perfection and other matters
satisfactory in form and in substance to the Insurer;
(xiv) each Rating Agency shall have confirmed in writing to
the Indenture Trustee and the Insurer that the rating on the Notes
shall not be withdrawn or reduced as a result of the transfer of such
Subsequent Receivables to the Trust;
(xv) the Insurer (so long as an Insurer Default shall not have
occurred and be continuing), in its absolute and sole discretion, shall
have approved in writing to the Indenture Trustee the transfer of such
Subsequent Receivables to the Trust;
(xvi) the Company shall have received a reasonably equivalent
value in exchange for the sale of the Subsequent Receivables;
(xvii) the Company shall have delivered to the Insurer and the
Indenture Trustee an Officers' Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (b).
SECTION 2.3. Custody of Receivable Files.
(a) The Company shall cause to be delivered the following documents
and/or instruments (with respect to each Receivable) to the Custodian on or
prior to the Closing Date with respect to the Initial Receivables, and the
applicable Subsequent Transfer Date with respect to the Subsequent Receivables:
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, as applicable, including
any extension agreements, provided that the Custodian shall not have to
certify the receipt of any such agreements modifying or extending the
Receivable); and
(ii) The original Lien Certificate (when received) indicating
that the Financed Vehicle is owned by the Obligor and subject to the
interest of Triad as first lienholder or secured party (including any
Lien Certificate received by Triad), or, if such original Lien
Certificate has not yet been received, a copy of the application
therefor or a representation from the Dealer certifying as to the
application thereof, if any, showing Triad as secured party. Prior to
the Closing Date, the Custodian shall (A) conduct a physical inventory
of the Receivables Files relating to the Receivables in order to
confirm that the Custodian is
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in possession of a Receivable File for each Receivable listed in the
relevant Schedule of Receivables delivered to the Custodian and (b)
perform a review of the Receivables Files relating to such Receivables
that would enable the Custodian to determine that each Receivable File
includes (i) a fully executed original retail installment sales
contract or promissory note and (ii) the original or copy of a Lien
Certificate or application therefor or such other documents received
from the relevant authority showing Triad as the secured party. As
evidence of the performance of such inventory and review, on or prior
to the Closing Date, the Custodian shall deliver to the Insurer, the
Owner Trustee, the Company and the Servicer, and Acknowledgment in the
form of Exhibit C hereto.
(b) Upon payment in full of any Receivable (including upon payment by
Triad or the Servicer of the Purchase Amount) or replacement of a Receivable,
the Servicer shall notify the Custodian pursuant to a certificate of an
authorized representative of the Servicer in the form of Exhibit B and shall
request delivery of the Receivable and Receivable File to the Servicer. From
time to time as appropriate for servicing and enforcing any Receivable, the
Custodian shall, upon written request of an authorized representative of the
Servicer in the form of Exhibit B and delivery to the Custodian of a receipt
signed by such officer, cause the original Receivable and the related Receivable
File to be released to the Servicer, as agent and bailee of the Custodian. The
Servicer's receipt of a Receivable and/or Receivable File pursuant to the prior
sentence shall obligate the Servicer to return the original Receivable and the
related Receivable File to the Custodian when its need by the Servicer has
ceased unless the Receivable is paid in full, liquidated, purchased, repurchased
or replaced.
(c) The Custodian shall maintain the Receivable Files it has received
at its principal office or at such other office as shall from time to time be
identified to the Servicer, the Insurer and the Owner Trustee, and the Custodian
will hold such Receivable Files in such office on behalf of the Noteholders and
the Insurer, clearly identified as being separate from any other instruments and
files on its records, including other instruments and files held by the
Indenture Trustee. Each Receivable shall be identified on the books and records
of the Custodian in a manner that (i) is consistent with practices of a
commercial bank acting in the capacity of custodian with respect to similar
receivables and (ii) is otherwise necessary, as reasonably determined by the
Custodian, to comply with the terms of this Agreement.
SECTION 2.4. Conditions Precedent to Issuance by Trust. As conditions
to the Indenture Trustee's authentication and delivery of the Notes on the
Closing Date, the Indenture Trustee and the Insurer shall have received the
following on or before the Closing Date:
(a) The Schedule of Initial Receivables certified by an Executive
Officer of the Seller;
(b) The acknowledgment (including an exceptions listing, if any) of the
Indenture Trustee stating that it holds the Receivable Files relating to the
Initial Receivables and has reviewed such Receivable Files and such Receivable
Files contain the items set forth in Section 2.3(a)(i) and (ii);
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(c) Copies of resolutions of the Board of Directors of the Company
approving the execution, delivery and performance of the Company's Related
Documents and the transactions contemplated hereby and thereby, certified by a
Secretary or an Assistant Secretary of the Company;
(d) Copies of resolutions of the Board of Directors of Triad approving
the execution, delivery and performance of its Related Documents and the
transactions contemplated hereby and thereby, certified by a Secretary or an
Assistant Secretary of Triad;
(e) Opinions from Dechert Price & Rhoads and Helen R. Kraus, General
Counsel of Triad, and local counsel for California with respect to the Trust's
first priority perfected security interest or ownership interest in the
Receivables and the Financed Vehicles and copies of any financing statements
which have been or will be attached to such opinions;
(f) An executed copy of each Related Document; and
(g) The executed Note Policy, issued to the Indenture Trustee for the
benefit of the Noteholders.
SECTION 2.5. Representations and Warranties of Company. By its
execution of this Agreement, the Company makes the following representations and
warranties on which the Trust relies in accepting the Receivables and the other
Trust Property and in issuing the Notes and on which the Indenture Trustee
relies in authenticating the Notes and upon which the Insurer shall be deemed to
rely in issuing the Note Policy. Unless otherwise specified, such
representations and warranties speak as of the Closing Date in the case of the
Initial Receivables and as of the related Subsequent Transfer Date in the case
of Subsequent Receivables, but shall survive the sale, transfer and assignment
of the Receivables to the Trust.
(a) Schedule of Representations. The representations and warranties set
forth on the Schedule of Representations set forth in Schedule B attached hereto
are true and correct in all material respects.
(b) Organization and Good Standing. The Company has been duly organized
and is validly existing as a corporation under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is currently
conducted.
(c) Due Qualification. The Company is duly qualified to do business and
has obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business shall require
such qualification.
(d) Power and Authority. The Company has the power and authority to
execute and deliver its Related Documents and to carry out their terms; the
Company has power and authority to sell and assign the Receivables and the other
Trust Property to be sold and assigned to and
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deposited with the Trust by it and has duly authorized such sale and assignment
to and deposit with the Trust by all necessary corporate action; and the
execution, delivery and performance of the Company's Related Documents have been
duly authorized by the Company by all necessary corporate action.
(e) Binding Obligations. The Company's Related Documents, when duly
executed and delivered by the other parties thereto, shall constitute valid and
binding obligations of the Company enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(f) No Violation. The execution, delivery and performance by the
Company of its Related Documents, the consummation of the transactions
contemplated thereby and the fulfillment of the terms thereof do not (i)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Company, or any indenture, agreement,
mortgage, deed of trust, commitment letter or other instrument to which the
Company is a party or by which it or its properties are bound, (ii) result in
the creation or imposition of any Lien (other than Permitted Liens) upon any of
its properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust, commitment letter or other instrument or (iii) to the Company's
knowledge, violate any law, order, rule or regulation applicable to the Company
of any Governmental Authority having jurisdiction over the Company or its
properties.
(g) No Proceedings. There are no proceedings or investigations pending
or, to the Company's knowledge, threatened against the Company, before any
Governmental Authority having jurisdiction over the Company or its properties
(i) asserting the invalidity of any of the Related Documents, (ii) seeking to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated by any of the Related Documents, (iii) seeking any determination or
ruling that would have a material adverse effect on the performance by the
Company of its obligations under, or the validity or enforceability of, any of
the Related Documents.
(h) No Consents. No consent approval, license, authorization or order
of, or declaration, registration or filing with, any Governmental Authority or
other Person is required to be made by the Company in connection with the
execution, delivery or performance of its Related Documents or the consummation
of the transactions contemplated thereby, except such as have been duly made,
effected or obtained.
(i) Chief Executive Office. The chief executive office of the Company
is located at 11 Madison Avenue, New York, New York 10010.
SECTION 2.6. Repurchase or Replacement of Receivables Upon Breach of
Warranty. Upon discovery by any of the Company, the Servicer or the Indenture
Trustee of a breach of any
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of the representations and warranties of Triad contained in Section 3.1(a) of
the Receivables Purchase Agreement that has a material adverse effect on the
interests of the Noteholders or the Insurer in any Receivable, the party
discovering such breach shall give prompt written notice to the others;
provided, however, that the failure to give any such notice shall not affect the
obligation of Triad under Section 5.1 of the Receivables Purchase Agreement.
Triad hereby acknowledges its obligations to repurchase or replace such
Receivable in accordance with the terms set forth in the Receivables Purchase
Agreement and further acknowledges that the provisions of Section 5.1 of the
Receivables Purchase Agreement are intended to grant the Trust and the Indenture
Trustee a direct right against Triad to demand performance thereunder.
SECTION 2.7. Indenture Trustee's Assignment of Receivables. With
respect to all Purchased Receivables and replaced Receivables, the Trust and the
Indenture Trustee shall take any and all actions reasonably requested by the
Servicer, at the Servicer's expense, to assign, without recourse, representation
or warranty, to the Servicer, all the Trust's and the Indenture Trustee's right,
title and interest in and to such Purchased Receivables or replaced Receivables
and the other Trust Property with respect thereto, such assignment being an
assignment outright and not for security; and the Servicer, shall thereupon own
such Purchased Receivables or replaced Receivables and the other Trust Property
related thereto, free of any further obligation to the Trust, the Indenture
Trustee or the Noteholders with respect thereto. The Trust and the Indenture
Trustee shall take any and all actions reasonably requested by the Servicer, at
the expense of the requesting party, to release its security interest in each
Purchased Receivable or replaced Receivable and in the other Trust Property with
respect thereto. The Servicer shall remove each Purchased Receivable or replaced
Receivable from the Schedule of Receivables and mark the Electronic Ledger
accordingly. The Servicer shall deliver any supplements to the Schedule of
Receivables to the Company, the Insurer and the Indenture Trustee and the Owner
Trustee. Notwithstanding the foregoing, although the Trust and the Indenture
Trustee, as applicable, shall be required to execute documentation related to
the foregoing, neither the Trust nor the Indenture Trustee shall be required to
prepare any such documentation.
SECTION 2.8. Collection of Lien Certificates. The Servicer shall use
its best efforts to collect each Lien Certificate from the applicable Registrar
of Titles as promptly as practicable and, pending receipt of each Lien
Certificate from such Registrar of Titles, shall supply written evidence
reasonably acceptable to the Indenture Trustee that each such Lien Certificate
has been applied for. If a Lien Certificate with respect to a Receivable showing
Triad as first lienholder is not received by the Indenture Trustee within one
hundred eighty (180) days after the Closing Date with respect to an Initial
Receivable or one hundred eighty (180) days after the related Subsequent
Transfer Date with respect to a Subsequent Receivable, the Servicer shall be
obligated to purchase or replace such Receivable under Section 3.7.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1. Duties of the Servicer. The Servicer is hereby authorized
to act as agent for the Trust and in such capacity shall manage, service,
administer and make collections on the Receivables and perform the other actions
required by the Servicer under this Agreement. The Servicer agrees that its
servicing of the Receivables shall be carried out in accordance with customary
and usual procedures of institutions that service motor vehicle retail
installment contracts and, to the extent more exacting, with the degree of skill
and attention that the Servicer exercises from time to time with respect to
comparable motor vehicle receivables that it services for itself or others
provided, however, that the Servicer shall not materially change its servicing
standards and procedures without the prior written consent of the Insurer, which
consent shall not be unreasonably withheld; provided further, however, such
consent shall not be required if the Servicer has given the Insurer notice in
writing of such request and the Insurer has not responded to any request for
consent within five (5) Business Days of receipt of such request. In performing
such duties, it shall comply with its current servicing policies and procedures,
as such servicing policies and procedures may be amended from time to time, so
long as such amendments shall not materially and adversely affect the interests
of the Noteholders, the Insurer or the Trust. The Servicer's duties shall
include, without limitation, notifying each Obligor to make its Contract
Scheduled Payments and all other payments on the Receivables directly to the
Lockbox Bank, collection and posting of all payments, responding to inquiries of
Obligors on the Receivables, investigating delinquencies, sending statements or
payment coupons to Obligors, reporting tax information to Obligors, monitoring
the collateral, accounting for collections and furnishing monthly and annual
statements to the Indenture Trustee and the Insurer with respect to
distributions, monitoring the status of the Insurance Policies, maintaining the
collateral insurance, if any, and performing the other duties specified herein.
The Servicer shall: (a) maintain a lenders comprehensive single
interest or other collateral protection insurance policy with respect to all
Financed Vehicles, which policy by its terms insures against physical damage in
the event (i) any Obligor fails to maintain physical damage insurance with
respect to the related Financed Vehicle, and under which lenders comprehensive
single interest policy the Servicer will be the named insured and the Indenture
Trustee shall be named additional insured, (ii) or the Financed Vehicle is
repossessed; (b) implement such other collateral protection in a manner that is
customary and standard for servicers of receivables in the same general area as
the Servicer and for receivables comparable to the Receivables, which may
include self-insurance or (c) implement other insurance coverage acceptable to
the Controlling Party. The Servicer or its agents shall monitor the status of
the Insurance Policies in accordance with its customary servicing procedures. If
the Servicer shall determine that an Obligor has failed to obtain or maintain an
Insurance Policy covering the related Financed Vehicle (including during the
repossession of such Financed Vehicle against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision insurance), the Servicer shall be diligent in
carrying on its customary servicing procedures to enforce the rights of the
holder of the Receivable thereunder to ensure that the Obligor obtains such
Insurance Policy. The
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Servicer shall also administer and enforce all rights and responsibilities of
the holder of the Receivables provided for in the Dealer Agreements (and shall
maintain possession of the Dealer Agreements, as appropriate, to the extent it
is necessary to do so), the Dealer Assignments and the Insurance Policies, as
appropriate, to the extent such Dealer Agreements, Dealer Assignments and
Insurance Policies relate to the Receivables, the Financed Vehicles or the
Obligors.
To the extent consistent with the standards, policies and procedures
otherwise required hereby, the Servicer shall follow its customary standards,
policies and procedures and shall have full power and authority, acting alone,
to do any and all things in connection with management, servicing,
administration and collection that it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Servicer is hereby authorized and
empowered by the Trust to execute and deliver, on behalf of the Trust, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with respect to the
Receivables and the Financed Vehicles; provided, however, that notwithstanding
the foregoing, the Servicer shall not, except pursuant to an order from a court
of competent jurisdiction, release an Obligor from payment of any unpaid amount
under any Receivable or waive the right to collect the unpaid balance of any
Receivable from the Obligor, except that the Servicer may forego collection
efforts if the amount subject to collection is de minimis and if it would forego
collection of such amount in accordance with its customary procedures. The
Servicer is authorized to release Liens on Financed Vehicles granted by the
Receivables in order to collect insurance proceeds with respect thereto and to
liquidate such Financed Vehicles in accordance with its customary standards,
policies and procedures.
The Servicer is hereby authorized to commence, in its own name or in
the name of the Trust or the Indenture Trustee (provided that, if the Servicer
is acting in the name of the Indenture Trustee, it has obtained the Indenture
Trustee's written consent, which consent shall not be unreasonably withheld),
legal proceedings to enforce Receivables or to commence or participate in any
other legal proceedings (including bankruptcy proceedings) relating to or
involving Receivables, Obligors or Financed Vehicles. If the Servicer commences
or participates in such legal proceedings in its own name, the Trust shall
thereupon be deemed to have automatically assigned such Receivables to the
Servicer solely for purposes of commencing or participating in any such
proceedings as a party or claimant, and the Servicer is authorized and empowered
by the Trust to execute and deliver in the Servicer's name any notices, demands,
claims, complaints, responses, affidavits or other documents or instruments in
connection with any such proceedings. The Indenture Trustee and the Trust shall
furnish the Servicer with any powers of attorney and other documents that the
Servicer may reasonably request and that the Servicer deems necessary or
appropriate and take any other steps that the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
SECTION 3.2. Collection of Receivable Payments, Modifications of
Receivables; Lockbox Account.
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(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures as
it follows with respect to comparable motor vehicle receivables that it services
for itself or others and otherwise act with respect to the Receivables, the
Dealer Agreements, the Insurance Policies and the other Trust Property serviced
by it in such manner as will, in the reasonable judgment of the Servicer,
maximize the amount to be received by the Trust with respect thereto. The
Servicer is authorized in its discretion to waive any prepayment charge, late
payment charge or any other similar fees that may be collected in the ordinary
course of servicing any Receivable.
(b) Notwithstanding anything to the contrary provided in this
Agreement, the Servicer will not (i) forgive any periodic or other Contract
Scheduled Payment due on such Receivable, (ii) permit any modification with
respect to any Receivable that would increase or decrease the Annual Percentage
Rate on such Receivable, or defer the payment of any principal or interest or
any periodic or other scheduled payment due on such Receivable, unless the
Obligor is in default under a Receivable or is likely to default on such
Receivable in the foreseeable future, provided, however, that notwithstanding
the foregoing, the Servicer may permit any such modifications or deferrals
described in this clause (ii) if such modification or deferral is required by
court order, (iii) reduce or increase the Principal Balance on such Receivable
(except in connection with actual payments of periodic or other scheduled
payments or principal prepayments) unless any such modification is required by
court order, (iv) other than in connection with a Liquidated Receivable, release
any Lien in favor of the Servicer or the Trust securing a Receivable or (v)
extend the final maturity date of any Receivable; provided, however, that the
Servicer may grant an extension or deferral of the final maturity date of a
Receivable, if the Servicer, in its sole discretion, determines that (A) the
Receivable is in default or default on such Receivable is likely to occur in the
foreseeable future, and (B) that the value of the Receivable will be enhanced by
such extension; and, provided, further, that the Servicer shall not (1) grant
more than three extensions and/or deferrals in the aggregate with respect to a
Receivable, (2) grant more than one extension or deferral per calendar year with
respect to a Receivable, (3) grant an extension or deferral for more than one
calendar month with respect to a Receivable or (4) grant an extension or
deferral with respect to a Receivable, if immediately after giving effect
thereto, the sum of the Principal Balance of Receivables in respect of which
extensions and/or deferrals in the aggregate had been granted would exceed more
than one percent of the Aggregate Principal Balance.
(c) The Servicer shall, prior to the Closing Date with respect to
Initial Receivables and prior to the related Subsequent Transfer Date with
respect to Subsequent Receivables, notify each Obligor to make its payments with
respect to the Receivables directly to the Lockbox Bank. The Servicer shall use
its best efforts to cause Obligors to make all payments on the Receivables
whether by check or by direct debit of the Obligor's bank account, to be made to
the Lockbox Bank. The Servicer shall use its best efforts to cause the Lockbox
Bank to deposit all available Contract Scheduled Payments with respect to the
Receivables in the Lockbox Account no later than the first (1st) Business Day
after receipt, and to cause all available amounts on deposit in the
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Lockbox Account with respect to such payments to be transferred to the
Collection Account no later than the second Business Day after receipt of such
payments in the Lockbox Account. All amounts received by the Servicer, Triad or
the Company in respect of the Receivables in the form of checks with payment
coupons shall be deposited directly to the Lockbox Bank immediately upon
receipt, but in no event later than the second (2nd) Business Day after receipt
of such payment. Other payments received by each of the Servicer, Triad and the
Company will be deposited into a local servicing account for processing
immediately upon receipt, and then transferred to the Collection Account no
later than the second (2nd) Business Day after receipt of available amounts. The
Lockbox Account shall be a demand deposit account, or at the request of the
Controlling Party, an Eligible Account. Upon the occurrence of a Servicer
Termination Event, the Controlling Party may, in its sole discretion, elect to
change the identity of the Lockbox Bank and transfer the Lockbox Account to a
segregated account in the name of the Indenture Trustee.
(d) On the Closing Date, the Servicer shall deposit or cause to be
deposited into the Collection Account all amounts collected with respect to the
Initial Receivables from the Initial Cutoff Date to the fourth (4th) Business
Day preceding the Closing Date. As soon as possible thereafter and in accordance
with the provisions of this Agreement, all amounts collected with respect to the
Initial Receivables from such date to the Closing Date shall be deposited into
the Collection Account.
(e) On each Subsequent Transfer Date, the Servicer shall deposit or
cause to be deposited into the Collection Account all amounts collected with
respect to the Subsequent Receivables from the related Subsequent Cutoff Date to
the fourth (4th) Business Day preceding the Closing Date. As soon as possible
thereafter and in accordance with the provisions of this Agreement, amounts
collected with respect to the Subsequent Receivables from any such date to the
Closing Date shall be deposited into the Collection Account.
(f) In the event the Servicer shall for any reason no longer be acting
as such, the Backup Servicer or successor Servicer shall thereupon (i) assume
the rights and obligations of the Servicer relating to the Receivables and (ii)
(1) assume all of the rights and, from the date of assumption, all of the
obligations of the outgoing Servicer relating to the Receivables under any
Lockbox Agreement to which the Servicer is a party or (2) establish a different
Lockbox Account for the benefit of the Trust with the prior written consent of
the Insurer and notify each Obligor of the new Lockbox Bank to which its
payments should be sent. If the Backup Servicer or successor Servicer assumes an
existing Lockbox Agreement to which the Servicer is a party, the Backup Servicer
or any other successor Servicer shall not be liable for any acts, omissions or
obligations of the Servicer prior to such succession. In such event, the
successor Servicer shall be deemed to have assumed all of the outgoing
Servicer's interest therein relating to the Receivables and to have replaced the
outgoing Servicer as a party to each such Lockbox Agreement to the same extent
as if such Lockbox Agreement had been assigned to the successor Servicer, except
that the outgoing Servicer shall not thereby be relieved of any liability, or
obligations on the part of the outgoing Servicer to the Lockbox Bank under such
Lockbox Agreement. The outgoing Servicer
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shall, upon request of the Indenture Trustee, but at the expense of the outgoing
Servicer, deliver to the successor Servicer all documents and records relating
to the Lockbox Agreement and an accounting of amounts collected and held by the
Lockbox Bank and otherwise use its best efforts to effect the orderly and
efficient transfer of any Lockbox Agreement to the successor Servicer.
(g) Notwithstanding any third-party processing arrangement, or any of
the provisions of this Agreement relating to any third-party processing
arrangement, the Servicer shall remain obligated and liable to the Trust, the
Indenture Trustee, the Insurer and the Noteholders for servicing and
administering the Receivables and the other Trust Property serviced by it in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue thereof.
SECTION 3.3. Realization Upon Receivables.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall use its best efforts to repossess (or
otherwise comparably convert the ownership of) any Financed Vehicle securing a
Receivable with respect to which the Servicer has determined that payments
thereunder are not likely to be resumed, as soon as practicable after default on
such Receivable, but in no event later than the date on which all or a portion
of a Contract Scheduled Payment has become 120 days delinquent, and shall use
its best efforts to liquidate such Financed Vehicle within 90 days of
repossession, provided, however that the Servicer may elect not to repossess or
liquidate a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect to
such Receivable would be increased by forebearance. The Servicer is authorized
to follow such customary practices and procedures as it shall deem necessary or
advisable, consistent with the standard of care required by Section 3.1, which
practices and procedures may include reasonable efforts to realize upon any
recourse to Dealers, the sale of the related Financed Vehicle at public or
private sale, and shall include the submission of claims under an Insurance
Policy and other actions by the Servicer in order to realize upon a Receivable.
The foregoing is subject to the proviso that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair or repossession
shall increase the proceeds of liquidation of the related Receivable by an
amount greater than the amount of such expenses. All Recoveries and Liquidation
Proceeds received upon liquidation of a Financed Vehicle shall be remitted
directly by the Servicer to a servicing account of the Servicer and the Servicer
shall cause all available amounts related thereto to be transferred to the
Collection Account no later than the second Business Day after receipt thereof.
The Servicer shall pay on behalf of the Trust any personal property taxes
assessed on repossessed Financed Vehicles; the Servicer shall be entitled to
reimbursement of any such tax from Recoveries and Liquidation Proceeds with
respect to such Receivable. The Servicer shall not lease any repossessed
Financed Vehicle to any party. In selling or otherwise disposing of any
repossessed Financed Vehicle, the Servicer shall do so as expeditiously as
possible and in a manner such that such activities shall not rise to the level
of a trade or business of selling or otherwise transferring such repossessed
Financed Vehicles.
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(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed
to be an automatic assignment from the Trust and the Indenture Trustee, to the
Servicer of the rights under such agreements for purposes of collection only.
If, however, in any enforcement suit or legal proceeding it is held that the
Servicer may not enforce any such agreement on the grounds that it is not a real
party in interest or a Person entitled to enforce such agreement, the Trust or
the Indenture Trustee, at the Servicer's expense, shall take such steps as the
Servicer deems necessary to enforce such agreement, including bringing suit in
its name or the name of the Trust or the Indenture Trustee for the benefit of
the Noteholders. All amounts recovered shall be remitted directly and promptly
(but in no event later than one Business Day) by the Servicer into a servicing
account of the Servicer and the Servicer shall cause all available amounts
therein to be transferred to the Collection Account no later than the second
Business Day after receipt of available amounts in respect thereof.
(c) The Servicer agrees that prior to delivering any repossessed
Financed Vehicle for sale to any Dealer, it shall make such filings and effect
such notices as are necessary under ss.9-114(1) of the UCC to preserve its
ownership interest (or security interest, as the case may be) in such
repossessed Financed Vehicle.
SECTION 3.4. Insurance. The Servicer shall require, in accordance with
its customary servicing policies and procedures, that each Financed Vehicle, at
the time of origination of the Receivable, be insured by the related Obligor
under the Insurance Policies referred to in Paragraph 24 of the schedule of
representations set forth in Schedule B to the Receivable Purchase Agreement and
that such Insurance Policy names Triad as an additional insured. Each Receivable
shall permit the holder thereof to obtain physical loss and damage insurance at
the expense of the Obligor if the Obligor fails to maintain such insurance. The
Servicer may sue to enforce or collect upon the Insurance Policies in its own
name or as agent of the Trust. If the Servicer elects to commence a legal
proceeding to enforce an Insurance Policy, the act of commencement shall be
deemed to be an automatic assignment of the rights of the Trust and the
Indenture Trustee under such Insurance Policy to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce an Insurance Policy on the grounds that
it is not a real party in interest or a holder entitled to enforce the Insurance
Policy, the Trust or the Indenture Trustee, at the Servicer's expense, shall
take such steps as the Servicer deems necessary to enforce such Insurance
Policy, including bringing suit in its name or the name of the Trust and the
Indenture Trustee for the benefit of the Noteholders.
SECTION 3.5. Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps on behalf of the Trust as are
necessary to maintain perfection of the first priority security interest
createdby each Receivable in the related Financed Vehicle, including the
recording, registering, filing, re-recording, re-filing and re-registering of
all security agreements, financing statements and continuation statements or
instruments as are necessary to
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maintain the security interest under the respective Receivables. The Trust and
the Indenture Trustee each hereby authorize the Servicer, and the Servicer
agrees, to take any and all steps necessary to re-perfect or continue the
perfection of such security interest in the name of Triad or the Company on
behalf of the Trust as necessary because of the relocation of a Financed Vehicle
or for any other reason. If the assignment of a Receivable to the Trust and the
pledge of such Receivables to the Indenture Trustee are insufficient without a
notation on the related Financed Vehicle's certificate of title or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to perfect a security interest
in the related Financed Vehicle in favor of the Indenture Trustee, the Servicer
hereby agrees that Triad's designation as the secured party on the certificate
of title is in its capacity as agent of the Indenture Trustee, solely for
purposes of providing perfection of the security interest therein.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Insurer may (so long as an Insurer Default shall not have occurred and be
continuing) instruct the Indenture Trustee and the Servicer to take or cause to
be taken, or, if an Insurer Default shall have occurred, upon the occurrence of
a Servicer Termination Event, the Servicer shall take or cause to be taken such
action as may, in the opinion of counsel to the Insurer (so long as no Insurer
Default has occurred and is continuing) or the Servicer (so long as an Insurer
Default has occurred and is continuing), be necessary to perfect or re-perfect
the security interests in the Financed Vehicles securing the Receivables in the
name of the Trust by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the Insurer
(so long as no Insurer Default has occurred and is continuing) or the Servicer
(so long as an Insurer Default has occurred and is continuing), be necessary or
prudent.
(c) Triad hereby agrees to pay all expenses related to such perfection
or re-perfection and to take all action necessary therefor. In addition, prior
to the occurrence of an Insurance Agreement Event of Default, the Controlling
Party may instruct the Indenture Trustee and the Servicer to take or cause to be
taken such action as may, in the opinion of counsel to the Controlling Party, be
necessary to perfect or re-perfect the security interest in the Financed
Vehicles underlying the Receivables in the name of the Trust, including by
amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Controlling Party, be
necessary or prudent; provided, however, that if the Controlling Party requests
that the title documents be amended prior to the occurrence of an Insurance
Agreement Event of Default, the out-of-pocket expenses of the Servicer or the
Indenture Trustee in connection with such action shall be reimbursed to the
Servicer or the Indenture Trustee, as applicable, by the Controlling Party.
Triad hereby appoints the Indenture Trustee as its attorney-in-fact to take any
and all steps required to be performed by Triad pursuant to this Section 3.5(c)
(it being understood that and agreed that the Indenture Trustee shall have no
obligation to take such steps, except as pursuant to the Related Documents to
which it is a party), including execution of certificates of title or any other
documents in the name and stead of Triad, and the Indenture Trustee hereby
accepts such appointment.
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SECTION 3.6. Covenants, Representations and Warranties of Servicer. By
its execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants on which the Trust relies in accepting
the Receivables and issuing the Notes, the Insurer relies in issuing the Note
Policy, and on which the Indenture Trustee relies in authenticating the Notes.
Unless otherwise specified, such representations and warranties speak as of the
Closing Date with respect to Initial Receivables and as of the related
Subsequent Transfer Date with respect to Subsequent Receivables, but shall
survive the sale, transfer and assignment of the Receivables to the Trust and
the pledge by the Trust of its rights hereunder to the Indenture Trustee.
(a) The Servicer covenants as follows:
(i) Liens in Force. The Financed Vehicle securing each
Receivable shall not be released in whole or in part from the security
interest granted by the Receivable, except upon payment in full of the
Receivable or as otherwise contemplated herein;
(ii) No Impairment. The Servicer shall do nothing to impair
the rights of the Trust, the Indenture Trustee, the Insurer or the
Noteholders in the Receivables or the other Trust Property. The
Servicer shall take such action as is necessary (including the filing
of appropriate UCC financing statements and continuation statements) to
preserve the rights of the Trust, the Indenture Trustee, the Insurer
and the Noteholders in the Receivables and the other Trust Property;
(iii) No Amendments. The Servicer shall not extend or
otherwise amend the terms of any Receivable, except in accordance with
Section 3.2;
(iv) Restrictions on Liens. The Servicer shall not (A) create,
incur or suffer to exist, or agree to create, incur or suffer to exist,
or consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any
Lien on, or restriction on transferability of, the Receivables, except
for Permitted Liens or (B) sign or file under the UCC of any
jurisdiction any financing statement that names Triad or the Servicer
as a debtor, or sign any security agreement authorizing any secured
party thereunder to file such financing statement, with respect to the
Receivables, except in each case any such instrument solely securing
the rights and preserving the Lien of the Indenture Trustee for the
benefit of the Noteholders and the Insurer or as otherwise permitted
under this Agreement or the Related Documents; and
(v) Compliance with Laws. The Servicer shall comply with the
laws of each state in which a Receivable is located, including, without
limitation, all federal and state laws regarding the collection and
enforcement of consumer debt.
(vi) Servicing of Receivables. The Servicer shall service the
Receivables as required by the terms of this Agreement and in
substantial compliance with its standard
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and customary procedures for servicing all of its other comparable
motor vehicle receivables.
(b) The Servicer represents, warrants and covenants as of the Closing
Date with respect to the Initial Receivables (and as of the related Subsequent
Transfer Date with respect to Subsequent Receivables) as to itself (on which the
Insurer relies in issuing the Note Policy):
(i) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of organization, with power,
authority and legal right to own its properties and to conduct its
business as such properties are currently owned and such business is
currently conducted;
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires or shall require such qualifications, licenses or
approvals;
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and its Related
Documents and to carry out its terms and their terms, and the
execution, delivery and performance of the Servicer's Related Documents
have been duly authorized by the Servicer by all necessary corporate
action;
(iv) Binding Obligation. The Servicer's Related Documents,
when duly executed and delivered by the other parties thereto shall
constitute legal, valid and binding obligations of the Servicer
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(v) No Violation. The execution, delivery and performance by
the Servicer of its Related Documents, the consummation of the
transactions contemplated thereby and the fulfillment of the terms
thereof do not (A) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the articles of incorporation or bylaws of
the Servicer, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it or its
properties are bound, (B) result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, or
(C) violate any law, order, rule or regulation applicable to the
Servicer of any Governmental Authority having jurisdiction over the
Servicer or any of its properties;
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(vi) No Proceedings. Other than as set forth in Schedule D
hereto, there are no proceedings or investigations pending or, to the
best of the Servicer's knowledge, threatened against the Servicer,
before any Governmental Authority having jurisdiction over the Servicer
or its properties (A) asserting the invalidity of any of the Related
Documents, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by the Related
Documents, (C) seeking any determination or ruling that could
reasonably be expected to have a material adverse effect on the
performance by the Servicer of its obligations under, or the validity
or enforceability of, any of the Related Documents or (D) seeking to
adversely affect the federal income tax or other federal, state or
local tax attributes of the Notes or seeking to impose any excise,
franchise, transfer or similar tax upon the Notes or the sale and
assignment of the Receivables hereunder;
(vii) No Consents. No consent, license, approval,
authorization or order of, or registration, declaration or filing with,
any Governmental Authority or other Person is required to be made in
connection with the execution, delivery or performance of the
Servicer's Related Documents or the consummation of the transactions
contemplated thereby, except such as have been duly made, effected or
obtained;
(viii) Taxes. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due;
(ix) Chief Executive Office. The principal place of business
and chief executive office of the Servicer is, and for the four months
preceding the date of this Agreement has been, located at 7711 Center
Avenue, Suite 100, Huntington Beach, California;
(x) No Injunctions. There are no existing injunctions, writs,
restraining orders or other similar orders which might adversely affect
the performance by the Servicer or its obligations under, or the
validity and enforceability of, the Agreement; and
(xi) Compliance with Law. The Servicer is in compliance with
all requirements of federal and state laws, rules, regulations and
orders, except where the failure so to comply would not have a material
adverse effect on the Servicer, its business or its properties, or the
ability of the Servicer to perform its obligations under this
Agreement.
(c) The Servicer covenants and agrees:
(i) Backup Servicer Indemnification. The Servicer shall
defend, indemnify and hold the Backup Servicer and any officers,
directors, employees or agents of the Backup Servicer harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments and any other costs, fees and expenses
that the Backup Servicer may sustain in connection with claims asserted
at any time by third parties against the Backup Servicer that result
from (A) any willful or negligent act taken or omission by
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the Servicer (other than errors in judgment) or (B) a material breach
of any representations of the Servicer in this Section 3.6; and
(ii) Transfer of Data. The Servicer shall make arrangements
for the prompt and safe transfer of, and the Servicer shall provide to
the Backup Servicer, all necessary servicing files and records,
including (as deemed necessary by the Backup Servicer at such time):
(A) account documentation, (B) servicing system tapes, (C) account
payment history, (D) collections history and (E) the trial balances, as
of the close of business on the day immediately preceding conversion to
the Backup Servicer, reflecting all applicable loan information.
SECTION 3.7. Purchase or Replacement of Receivables Upon Breach of
Covenant. The Servicer, the Trust, the Owner Trustee or the Indenture Trustee
shall, and a Note Majority may, upon discovery of a breach of any of the
covenants set forth in Sections 3.5 or 3.6(a) that has a material adverse effect
on the interests of the Trust, the Insurer or the Noteholders in any Receivable
give prompt written notice to the others; provided, however, that the failure to
give any such notice shall not affect any obligation of the Servicer under this
Section 3.7. Unless the breach shall have been cured by the last day of the
first full calendar month following its discovery or receipt of notice of any
such breach, the Servicer shall have an obligation, and the Indenture Trustee
shall enforce such obligation, to purchase from the Trust or replace with
Replacement Receivables the Receivables affected by such breach provided,
however, that in no event shall the Servicer satisfy such obligation with
Replacement Receivables, if after giving effect to such replacement, either (i)
more than 20 Receivables would be Replacement Receivables transferred since the
Closing Date, or (ii) the sum of the Principal Balances of the Replacement
Receivables transferred since the Closing Date is greater than 0.30 percent of
the Original Pool Balance. In consideration of the purchase of such Receivable,
the Servicer shall remit the Purchase Amount in the manner specified in Section
4.4. The Indenture Trustee, provided a Responsible Officer of the Indenture
Trustee has actual knowledge, shall notify the Insurer and each Rating Agency
promptly, in writing, of any failure by the Servicer to so purchase or replace
any Receivable (including Liquidated Receivables). The Servicer shall indemnify
the Company, the Indenture Trustee, the Insurer, the Backup Servicer and their
respective officers, directors, employees and agents, the Trust and the
Noteholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach.
SECTION 3.8. Servicer Fee, Payment of Certain Expenses by Servicer;
Backup Servicer Fee. On each Payment Date, the Servicer shall be entitled to
receive out of the Collection Account the Servicer Fee and Servicer Expenses for
the related Collection Period pursuant to Section 4.6; provided, however, that
the Servicer shall certify such Servicer Expenses to the Indenture Trustee with
a copy of such certification to each Rating Agency on or prior to each
Determination Date. The Servicer shall be required to pay all expenses incurred
by it in connection with its activities under this Agreement, including taxes
imposed on the Servicer,
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expenses incurred in connection with distributions, reports made by the Servicer
to Noteholders or the Insurer and all other fees and expenses of the Trust
including taxes levied or assessed against the Trust, and claims against the
Trust in respect of indemnification not expressly stated under this Agreement to
be for the account of the Trust. The Servicer shall be liable for the fees and
expenses of the Independent Accountants, the Custodian and the Lockbox Bank. On
each Payment Date, the Backup Servicer shall be entitled to receive out of the
Collection Account the Backup Servicer Fee for the related Collection Period and
any Servicer Transition Expense pursuant to Section 4.6.
SECTION 3.9. Servicer's Certificate. No later than 12:00 noon, New York
City time, on each Determination Date, the Servicer shall deliver to the
Indenture Trustee, the Backup Servicer, the Insurer and each Rating Agency a
Servicer's Certificate executed by a Responsible Officer of the Servicer
containing, among other things, (i) all information necessary to enable the
Indenture Trustee to make any withdrawal and deposit required by Section 5.1,
and to make the distributions required by Sections 4.6, and 4.7 (ii) all
information necessary to enable the Indenture Trustee to send the statements
required by Section 4.10 to Noteholders and the Insurer, and (iii) all
information necessary to enable the Indenture Trustee to reconcile all deposits
to, and withdrawals from, the Collection Account for the related Collection
Period and Payment Date, including the accounting required by Section 4.9.
Receivables purchased, repurchased or replaced by the Servicer or the Seller on
or before the related Accounting Date and each Receivable that became a
Liquidated Receivable or that was paid in full during the related Collection
Period shall be identified by account number (as set forth in the Schedule of
Receivables). In addition to the information set forth in the preceding
sentence, the Servicer's Certificate shall also contain the following
information: (a) the Delinquency Ratio, the Cumulative Default Rate and the
Cumulative Net Loss Rate (as such terms are defined in the Reserve Account
Agreement) for such Determination Date; (b) whether to the knowledge of the
Servicer any Trigger Event (as such term is defined in the Insurance Agreement)
has occurred as of such Determination Date; (c) whether any Trigger Event that
may have occurred as of a prior Determination Date is deemed cured as of such
Determination Date; and (d) whether to the knowledge of the Servicer an
Insurance Agreement Event of Default has occurred. A copy of such certificate
may be obtained by any Noteholder by a request in writing to the Indenture
Trustee addressed to the Corporate Trust Office.
SECTION 3.10. Annual Statement as to Compliance, Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Indenture Trustee, the Backup
Servicer, the Insurer and each Rating Agency, on or before June 30 of each year,
beginning on June 30, 1999, an officer's certificate signed by any Responsible
Officer of the Servicer, dated as of the preceding December 31 (or other
applicable date), stating that (i) a review of the activities of the Servicer
during the preceding 12-month period (or such other period as shall have elapsed
from the Closing Date to the date of the first such certificate) and of its
performance under this Agreement has been made under such officer's supervision,
and (ii) to such officer's knowledge, based on
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such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof. A copy of such certificate may be obtained by any
Noteholder by a request in writing to the Indenture Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to the Indenture Trustee, the Backup
Servicer, the Insurer and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than two (2) Business Days thereafter,
written notice in an Officer's Certificate of any event that, with the giving of
notice or lapse of time, would become a Servicer Termination Event under Section
9.1.
SECTION 3.11. Annual Independent Accountants' Report.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer, to deliver to the Indenture
Trustee, the Backup Servicer, the Insurer and each Rating Agency, on or before
June 30 of each year, beginning on June 30, 1999, with respect to the fiscal
year ended the immediately preceding March 31 (or such other period as shall
have elapsed from the Closing Date to the date of such certificate), a statement
(the "Accountants' Report") addressed to the Board of Directors of the Servicer,
to the Indenture Trustee, to the Indenture Trustee for the benefit of the
Noteholders, to the Backup Servicer, to the Insurer and to each Rating Agency,
to the effect that such firm has audited the books and records of the Servicer
and issued its report thereon and that such audit: (i) was made in accordance
with generally accepted auditing standards, and accordingly included such tests
of the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances, (ii) included tests relating to auto
loans serviced for others in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers (the "Program"), to the extent the
procedures in the Program are applicable to the servicing obligations set forth
in this Agreement, (iii) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of automobile and light-duty
truck installment sales contracts (setting forth the statistics so reviewed);
and (iv) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light-duty truck loans serviced for
others that, in the firm's opinion, the Program requires such firm to report.
The Accountants' Report shall further state that (i) certain agreed upon
procedures were performed relating to three randomly selected Servicer's
Certificates, (ii) except as disclosed in such report, no errors or exceptions
were found in the Servicer's Certificates based on the performance of such
agreed upon procedures, and (iii) the delinquency and loss information relating
to the Receivables contained in the Servicer Certificates were found to be
accurate.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
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(c) On or before June 30 of each year, commencing June 30, 1999, the
Servicer shall deliver to the Indenture Trustee, the Owner Trustee, the Insurer,
the Backup Servicer and each Rating Agency, the audited annual financial
statements of the Servicer.
(d) Copies of the Accountants' Report and such audited annual financial
statements shall also be available to any Noteholder from the Indenture Trustee
upon reasonable request. Any Noteholder desiring such documents shall have
delivered to the Indenture Trustee an executed Information Request.
SECTION 3.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall upon reasonable prior notice provide to
representatives of the Indenture Trustee, the Backup Servicer and the Insurer
reasonable access (without charge) to the documentation regarding the
Receivables. The Servicer will permit any authorized representative or agent
designated by the Indenture Trustee, each Rating Agency, the Insurer or the
Backup Servicer to visit and inspect any of the properties of the Servicer, to
examine the corporate books and financial records of the Servicer, its records
relating to the Receivables, and make copies thereof or extracts therefrom and
to discuss the affairs, finances, and accounts of the Servicer with its
principal officers, as applicable, and its independent accountants. Any expense
incident to the exercise by the Indenture Trustee, each Rating Agency, the
Insurer or the Backup Servicer of any right under this Section shall be borne by
the Servicer to the extent such visits and examinations are not more frequent
than once in every twelve month-period, or a Servicer Termination Event has
occurred and is continuing. In each case, such access shall be afforded only
upon reasonable request and during normal business hours. Nothing in this
Section 3.12 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as a result of such obligation
shall not constitute a breach of this Section 3.12.
SECTION 3.13. Monthly Tape, Certain Duties of Backup Servicer.
(a) On each Determination Date, the Servicer shall deliver to the
Indenture Trustee, the Insurer and the Backup Servicer a computer tape or a
diskette (or any other electronic transmission acceptable to the Indenture
Trustee, the Insurer and the Backup Servicer) in a format acceptable to the
Indenture Trustee, the Insurer and the Backup Servicer containing the
information with respect to the Receivables as of the close of business on the
preceding Accounting Date which is necessary to calculate or confirm (i)
Aggregate Principal Balance, and (ii) the delinquency information, and which
includes the borrower demographic information.
(b) Prior to each such Payment Date (except in the case of the first
Payment Date, within ten (10) Business Days of the Closing Date), the Backup
Servicer shall use such tape or diskette (or other means of electronic
transmission acceptable to the Indenture Trustee and the Backup Servicer) and
review the related Servicer's Certificate in order to perform the following:
(i) confirm that the Servicer's Certificate is complete on its
face;
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(ii) load the computer diskette received from the Servicer and
confirm that such computer diskette is in readable form;
(iii) calculate and confirm the Payment Amount, the Principal
Payment Amount, the Interest Payment Amount, the Backup Servicer Fee,
the Servicer Fee, the Indenture Trustee Fee and the amount on deposit
in the Reserve Account for the next Payment Date, the Cumulative
Default Rate, the Cumulative Net Loss Rate, the Cumulative Default Test
Failure, the Cumulative Net Loss Test Failure, the Delinquency Ratio
(each as defined in the Reserve Account) and whether there has occurred
any Trigger Event or Curable Insurance Agreement Event of Default (each
as defined in the Insurance Agreement); and
(iv) verify the mathematical accuracy of any calculations on
the face of the Servicer's certificate.
(c) The Backup Servicer shall certify in writing to the Controlling
Party that it has verified the Servicer's Certificate in accordance with this
Section and in the event of any discrepancy, the Backup Servicer shall report
such discrepancy to the Servicer and the Controlling Party, in each case, on or
before the third (3) Business Day following the Determination Date in a form
similar to Exhibit D attached hereto. In the event of a discrepancy as described
in the preceding sentence, the Servicer and the Backup Servicer shall attempt to
reconcile such discrepancies prior to the related Payment Date, but in the
absence of a reconciliation, distributions on the related Payment Date shall be
made by the Indenture Trustee consistent with the information provided by the
Servicer in the Servicer's Certificate. In the event that the Servicer and the
Backup Servicer are unable to reconcile the discrepancies with respect to a
Servicer Certificate by the related Payment Date, the Servicer shall cause the
Independent Accountants, at the Servicer's expense, to audit the Servicer's
Certificate and prior to the 5th Business Day, but no later than the 8th
calendar day, of the following month, reconcile the differences. The effect, if
any, of such reconciliation shall be reflected in the Servicer's Certificate for
such next succeeding Determination Date. In addition, upon the occurrence of an
Insurance Agreement Event of Default, the Servicer shall, if so requested by the
Controlling Party deliver to the Indenture Trustee Monthly Records within 15
days after demand therefor and a Computer Tape containing as of the close of
business on the date of demand all of the data maintained by the Servicer in
computer format in connection with servicing the Receivables.
(d) In addition, upon the occurrence of a Servicer Termination Event,
the Servicer shall, if so requested by the Controlling Party deliver to the
Backup Servicer its Monthly Records within fifteen (15) days after demand
therefor and a Computer Tape containing as of the close of business on the date
of demand all of the data maintained by the Servicer in computer format in
connection with servicing the Receivables and in a form acceptable to the Backup
Servicer.
(e) Other than the duties specifically set forth in this Agreement, the
Backup Servicer shall have no obligations hereunder, including to supervise,
verify, monitor or administer the
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performance of the Servicer. The Backup Servicer shall have no liability for any
actions taken or omitted by the Servicer, except for the express duties of the
Backup Servicer set forth herein.
SECTION 3.14. Reports to the Commission. The Servicer shall, on behalf
of the Trust, cause to be filed with the Commission any and all periodic reports
required to be filed under the provisions of the Exchange Act, and the rules and
regulations of the Commission thereunder. The Company shall, at the Servicer's
expense, cooperate in any reasonable request made by the Servicer in connection
with such filings. The Servicer shall deliver to the Indenture Trustee, the
Insurer and the Company copies of all reports filed with the Commission.
SECTION 3.15. Indenture Trustee Notification to Company. The Indenture
Trustee shall, on April 30, 1999, deliver to Company a list of all filings made
with the Commission and delivered to Indenture Trustee pursuant to Section 3.14.
SECTION 3.16. Insurance. The Servicer shall maintain insurance
coverage, including a fidelity bond of a type and in an amount customary for
servicers engaged in the business of servicing automobile receivables. The
Servicer shall use its best efforts to obtain and thereafter maintain an errors
and omissions insurance policy in such form and with such limits as are
customary for originators and servicers of assets similar to the Receivables;
provided that such coverage may be obtained for a commercially reasonable
premium. The Servicer shall be entitled to self-insure with respect to such
insurance so long as the long-term unsecured debt obligations of the Servicer
are rated in the second highest long-term debt category by the Rating Agencies.
SECTION 3.17. Compliance with Laws. The Servicer shall comply with the
requirements of all applicable laws (including any federal or state laws
regulating the collection or enforcement of consumer debts and/or the
foreclosure upon, and repossession of, vehicles) in the discharge of its duties
and obligations hereunder.
SECTION 3.18. Delegation of Duties. So long as Triad is the Servicer,
the Servicer may delegate duties under this Agreement to sub-contractors who are
in the business of servicing motor vehicle receivables which are similar to the
Receivables and who are willing to accept such delegations and to perform such
duties in accordance with the customary procedures of Triad and this Agreement,
with the prior written consent of the Controlling Party, which consent shall not
be unreasonably withheld. The Servicer also may at any time, without the consent
of the Controlling Party, or any other Person, perform the specific duty of
repossession of Financed Vehicles through sub-contractors who are in the
business of repossessing motor vehicles. No such delegation or subcontracting
duties by the Servicer as described in this Section 3.16 shall relieve the
Servicer of its responsibility with respect to such duties. The Servicer shall
pay the fees and expenses of all such sub-contractors from its own funds.
SECTION 3.19. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term, commencing on the Closing Date and ending on March 31, 1999, which term
shall be extendible by the Insurer
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(provided that no Insurer Default has occurred and is continuing) for successive
quarterly terms ending on each successive June 30, September 30, December 31 and
March 31 (or, pursuant to revocable written standing instructions from time to
time to the Servicer and the Indenture Trustee for any specific number of terms
greater than one), until the Notes are paid in full. Each such notice (including
each notice pursuant to standing instructions, which shall be deemed delivered
at the end of successive quarterly terms for so long as such instructions are in
effect) (a "Servicing Extension Notice") shall be delivered by the Insurer to
the Indenture Trustee and the Servicer. The Servicer hereby agrees that, as of
the date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the initial term beginning on the Closing Date
and for the duration of the term covered by such Servicer Extension Notice, to
continue as the Servicer subject to and in accordance with the other provisions
of this Agreement. Until such time as an Insurer Default shall have occurred and
be continuing, the Indenture Trustee agrees that if as of the fifteenth day
prior to the last day of any term of the Servicer the Indenture Trustee shall
not have received any Servicer Extension Notice from the Insurer, the Indenture
Trustee will, within five days after, give written notice of such non-receipt to
the Insurer and Servicer and the Servicer's term shall not be extended unless a
Servicer Extension Notice is received on or before the last day of such term.
Notwithstanding the foregoing, in the event an Insurer Default has occurred and
is continuing, the Servicer Extension Notice shall be deemed to have been
delivered as of last day of the current term of the Servicer and extended until
the next quarterly period.
ARTICLE IV
PAYMENTS; STATEMENTS TO NOTEHOLDERS
SECTION 4.1. Trust Accounts.
(a) (i) On or prior to the Closing Date, the Indenture Trustee on
behalf of the Noteholders and the Insurer shall establish the Collection Account
in the name of the Indenture Trustee bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Noteholders and
the Insurer. The Collection Account shall be an Eligible Account and shall be a
segregated trust account initially established with the Indenture Trustee.
(ii) On or prior to the Closing Date, the Indenture Trustee on
behalf of the Noteholders and the Insurer shall establish the Note
Distribution Account in the name of the Indenture Trustee bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders and the Insurer. The Note
Distribution Account shall be an Eligible Account and shall be a
segregated trust account initially established with the Indenture
Trustee.
(iii) On or prior to the Closing Date, the Indenture Trustee
on behalf of the Noteholders and the Insurer shall establish the
Pre-Funding Account in the name of the Indenture Trustee bearing a
designation clearly indicating that the funds deposited therein
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are held for the benefit of the Noteholders and the Insurer. The
Pre-Funding Account shall be an Eligible Account and shall be a
segregated trust account initially established with the Indenture
Trustee.
(b) The Servicer shall cause the following amounts to be deposited into
the Collection Account no later than two (2) Business Days following receipt of
available amounts thereof by the Lockbox Bank or the Servicer, but in any event
no later than the time specified in Section 3.2: (i) all Contract Scheduled
Payments, (ii) all Recoveries, (iii) all Purchase Amounts, (iv) all amounts on
deposit in any Lockbox Account with respect to the Receivables, (v) the proceeds
of any Insurance Policy, collateral insurance, fidelity policy or other
insurance policy relating to the Receivables or the Servicer's activities with
respect thereto, and (vi) all other amounts of any nature whatsoever in respect
of the Receivables.
(c) All amounts held in the Collection Account, the Pre-Funding
Account, the Note Distribution Account and the Capitalized Interest Account
(collectively, the "Trust Accounts"), shall, to the extent permitted by
applicable laws, rules and regulations, be invested by the Indenture Trustee, as
directed by the Servicer in writing (or, if the Servicer fails to provide such
direction, amounts in the Collection Account shall be invested in investments
described in clause (e) of the definition of Eligible Investments), in Eligible
Investments that mature not later than one (1) Business Day prior to the Payment
Date for the Collection Period to which such amounts relate unless otherwise
permitted by the Rating Agencies and the Insurer, provided, however, that any
amounts deposited in the Note Distribution Account by the Insurer shall remain
uninvested. Any such written direction shall certify that any such investment is
authorized by this Section 4.1 Investments in Eligible Investments shall be made
in the name of the Indenture Trustee on behalf of the Noteholders and the
Insurer, and such investments shall not be sold or disposed of prior to their
maturity. Each and every investment of funds in a Trust Account shall be made in
Eligible Investments held by a financial institution that is a Securities
Intermediary:
(i) in an account pursuant to an agreement with such financial
institution, governed by the law of the State of New York or any other
jurisdiction which has adopted Revised Article 8, that requires such
financial institution to (A) comply with Entitlement Orders pertaining
to such account originated by the Indenture Trustee, in its capacity as
trustee under the Indenture, without further consent of the Company,
(B) not enter into any agreement which grants "control" (as defined in
Section 8-106 of Revised Article 8) of such account (or any interest or
property therein) to any Person other than the Indenture Trustee, (C)
subordinate any security interest, banker's lien, right of setoff or
other similar right which such financial institution may have in such
account to the interest of the Indenture Trustee and (D) expressly
treat each item of property as a Financial Asset and such account as a
Securities Account; and
(ii) with respect to which such institution has noted the
Indenture Trustee's interest therein by book entry or otherwise, and
with respect to which a confirmation of the Indenture Trustee's
interest has been sent to the Indenture Trustee by such institution,
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provided that such Eligible Investments are (A) specific "certificated
securities" (as defined under Old Article 8), and (B) either (1) in the
possession of such institution or (2) in the possession of a Clearing
Corporation, registered in the name of such Clearing Corporation, not
endorsed for collection or surrender or any other purpose not involving
transfer, not containing any evidence of a right or interest
inconsistent with the Indenture Trustee's security interest therein,
and held by such Clearing Corporation in an account of such
institution.
Subject to the other provisions hereof, the Indenture Trustee shall have sole
control over each such investment and the income thereon, and any certificate or
other instrument evidencing any such investment, if any, shall be delivered
directly to the Indenture Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the
Indenture Trustee in a manner that complies with this Section 4.1. All interest,
dividends, gains upon sale and other income from, or earnings on, investments of
funds in the Trust Accounts shall be deposited in the Collection Account and
distributed on the next Payment Date pursuant to Section 4.6. If the Indenture
Trustee is given instructions to invest funds in a Trust Account in investments
other than investments of the type described in clause (e) of the definition of
"Eligible Investments", the Person giving such instructions agrees to assist the
Indenture Trustee in complying with the requirements herein with respect to such
investments.
(d) With respect to the Trust Account Property, the Indenture Trustee
agrees that:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the name of the Indenture Trustee in
accounts which satisfy the definition of Eligible Account; each such
deposit account shall be subject to the exclusive custody and control
of the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical
Property (other than a "certificated security" as defined under Old
Article 8) shall be delivered to the Indenture Trustee in accordance
with paragraph (i) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Indenture Trustee;
(iii) any Trust Account Property that constitutes a
"certificated security" as defined under Old Article 8 that will, upon
compliance with the procedures set forth in paragraph (ii) of the
definition of "Delivery," be held by a Person located in an Old Article
8 Jurisdiction, shall be delivered to the Indenture Trustee in
accordance with paragraph (ii) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the Indenture
Trustee or a Financial Intermediary acting solely for the Indenture
Trustee;
(iv) any Trust Account Property that constitutes a
Certificated Security that will, upon compliance with the procedures
set forth in paragraph (iii) of the definition of
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"Delivery," be held by a Person located in a Revised Article 8
Jurisdiction shall be delivered to the Indenture Trustee in accordance
with paragraph (iii) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Indenture Trustee;
(v) any Trust Account Property that constitutes an
"uncertificated security" under Old Article 8 (and that is not a
Federal Book Entry Security) and where the issuer thereof is organized
in an Old Article 8 Jurisdiction, shall be delivered to the Indenture
Trustee in accordance with paragraph (iv) of the definition of
"Delivery" and shall be maintained, pending maturity or disposition,
through continued registration of the Indenture Trustee's (or its
nominee's) ownership of such security;
(vi) any such Trust Account Property that constitutes an
Uncertificated Security (including any investments in money market
mutual funds, but excluding any Federal Book Entry Security) and where
the issuer thereof is organized in a Revised Article 8 Jurisdiction,
shall be delivered to the Indenture Trustee in accordance with
paragraph (v) of the definition of "Delivery" and shall be maintained,
pending maturity or disposition, through continued registration of the
Indenture Trustee's (or its nominee's) ownership of such security; and
(vii) with respect to any Trust Account Property that
constitutes a Federal Book Entry Security, the Indenture Trustee shall
maintain and obtain Control over such property.
Effective upon Delivery of any Trust Account Property in the form of
Physical Property, book-entry securities or uncertificated securities,
the Indenture Trustee shall be deemed to have represented that it has
purchased such Trust Account Property for value, in good faith and
without notice of any adverse claim thereto.
(e) If at any time any of the Trust Accounts ceases to be an Eligible
Account, the Indenture Trustee, with the prior written consent of the Insurer
(so long as no Insurer Default has occurred and is continuing), shall within
five Business Days establish a new Trust Account as an Eligible Account and
shall transfer any cash and/or any investments to such new Trust Account. The
Indenture Trustee shall promptly notify the Rating Agencies and the Owner
Trustee of any change in the location of any of the aforementioned accounts.
SECTION 4.2. Servicer Reimbursements. The Servicer shall be entitled to
be reimbursed from amounts on deposit in, or to be deposited in, the Collection
Account with respect to a Collection Period for amounts previously deposited in
the Collection Account but later determined by the Servicer to have resulted
from mistaken deposits or postings or checks returned for insufficient funds.
The amount to be reimbursed hereunder shall be paid to the Servicer on the
related Payment Date pursuant to Section 4.6(b)(i) upon certification by the
Servicer of such amounts and the provision of such information to the Indenture
Trustee and the
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Insurer as may be necessary in the opinion of the Insurer to verify the accuracy
of such certification. In the event that the Insurer has not received evidence
satisfactory to it of the Servicer's entitlement to reimbursement pursuant to
this Section, the Insurer shall (unless an Insurer Default shall have occurred
and be continuing) give the Indenture Trustee notice to such effect, following
receipt of which the Indenture Trustee shall not make a distribution to the
Servicer in respect of such amount pursuant to Section 4.6, or if the Servicer
prior thereto has been reimbursed pursuant to Section 4.6, the Indenture Trustee
shall withhold such amounts from amounts otherwise distributable to the Servicer
on the next succeeding Payment Date. The Indenture Trustee shall not be liable
for any action it is required to take pursuant to this Section 4.2, provided
that such action is in accordance with the provisions of this Section.
SECTION 4.3. Capitalized Interest Account.
(a) On or prior to the Closing Date, the Indenture Trustee shall
establish the Capitalized Interest Account in the name of the Indenture Trustee
for the benefit of the Noteholders and the Insurer. The Capitalized Interest
Account shall be an Eligible Account and shall be a segregated trust account
initially established with the Indenture Trustee.
(b) On or prior to the Closing Date, the Company shall deposit an
amount equal to the Capitalized Interest Account Initial Deposit into the
Capitalized Interest Account.
(i) On the Payment Dates occurring in December 1998 and
January and February 1999 the Indenture Trustee shall withdraw at the
written direction of the Servicer from the Capitalized Interest Account
the Monthly Capitalized Interest Amount for such Payment Date and
deposit such amount in the Collection Account as further provided in
Section 4.6.
(ii) On the Payment Dates occurring in December 1998 and
January and February 1999 the Servicer shall instruct the Indenture
Trustee in writing to withdraw from the Capitalized Interest Account
and deposit in the Collection Account on such Payment Date an amount
equal to the Overfunded Capitalized Interest Amount for such Payment
Date. Any amounts remaining in the Capitalized Interest Account on the
Payment Date which immediately follows the end of the Funding Period
after taking into account the transfer pursuant to Section 4.6 shall be
withdrawn from the Capitalized Interest Account and deposited in the
Collection Account.
SECTION 4.4. Application of Collections. For purposes of this
Agreement, all collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Receivable, payments by or on behalf of the
Obligor shall be applied (i) in accordance with the Actuarial Method, with
respect to Pre-Computed Receivables, and (ii) in accordance with the Simple
Interest Method, with respect to Simple Interest Receivables.
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(b) With respect to each Receivable that has become a Purchased
Receivable, the Purchase Amount shall be applied to interest and principal on
the Receivable in accordance with Section 4.4(a) as if the Purchase Amount had
been paid by the Obligor on the related Accounting Date. Nothing contained
herein shall relieve any Obligor of any obligation relating to any Receivable.
(c) All amounts collected that are payable to the Servicer as Servicing
Expenses hereunder shall be deposited in the Collection Account and paid to the
Servicer in accordance with Section 4.6(b)(i).
(d) All payments by or on behalf of an Obligor received with respect to
any Purchased Receivable after the Accounting Date preceding the Accounting Date
on which the Purchase Amount was paid by the Seller or the Servicer shall be
paid to the Seller or the Servicer, respectively and shall not be included in
the Available Funds.
SECTION 4.5. Additional Deposits. On or before each Accounting Date,
the Servicer or the Seller shall deposit into the Collection Account the
aggregate Purchase Amounts with respect to Purchased Receivables. All such
deposits of Purchase Amounts shall be made in immediately available funds. On or
before each Payment Date, the Indenture Trustee shall remit to the Collection
Account any amounts to be transferred into the Collection Account by the
Indenture Trustee from the Reserve Account pursuant to Section 5.1. Concurrent
with the exercise of the optional clean-up purchase pursuant to Section 10.1,
the Servicer shall deposit into the Collection Account the aggregate Purchase
Amount for such Receivables. Any such deposit shall be made in immediately
available funds.
SECTION 4.6. Payments.
(a) No later than 11:00 a.m. New York time on each Payment Date, the
Indenture Trustee shall (based solely on the information contained in the
Servicer's Certificate delivered on the related Determination Date) cause to be
made the following transfers and distributions in the amounts set forth in the
Servicer's Certificate for such Payment Date:
(i) During the Funding Period, from the Capitalized Interest
Account to the Collection Account, in immediately available funds, the
Monthly Capitalized Interest Amount for such Payment Date; and
(ii) If such Payment Date is the Mandatory Redemption Date,
from the Pre-Funding Account to the Collection Account, in immediately
available funds, the Pre-Funded Amount after giving effect to the
purchase of Subsequent Receivables, if any, on the Mandatory Redemption
Date.
(b) From the Collection Account, on each Payment Date, the Indenture
Trustee shall (x) distribute all amounts deposited by the Insurer pursuant to
Section 4.11 as directed by the
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Insurer in writing and (y) (based solely on the information contained in the
Servicer's Certificate delivered with respect to the related Determination Date
unless the Insurer shall have notified the Indenture Trustee in writing by the
close of business on the Business Day immediately preceding such Payment Date of
any errors or deficiencies with respect thereto) distribute the following
amounts to the extent of the Payment Amount in the following order of priority:
(i) first, from the Available Funds and other funds deposited
in the Collection Account pursuant to Section 5.1(b), to the Servicer,
any accrued and unpaid Servicer Fee, with respect to the related
Collection Period, and any Servicer Expenses to the extent the Servicer
has not reimbursed itself in respect of such amounts, and the amounts
specified in Section 4.2 to the extent the Servicer has not reimbursed
itself in respect of such amounts pursuant to Section 4.9;
(ii) second, from the remaining Available Funds and other
funds deposited in the Collection Account pursuant to Section 5.1(b),
to the Indenture Trustee, the Owner Trustee and the Backup Servicer,
since the Closing Date, any accrued and unpaid fees and in the case of
the Backup Servicer, the Servicer Transition Expenses, if any, up to
$75,000 in the aggregate, in each case, to the extent such Person has
not previously received such amount from the Servicer;
(iii) third, from the remaining Available Funds and other
funds deposited in the Collection Account pursuant to Section 5.1(b),
to the Note Distribution Account, the Interest Payment Amount for such
Payment Date and the Interest Carryover Shortfall, if any;
(iv) fourth, from the remaining Available Funds and other
funds deposited in the Collection Account pursuant to Section 5.1(b),
to the Note Distribution Account, the Principal Payment Amount for such
Payment Date and the Principal Carryover Shortfall, if any;
(v) fifth, from the remaining Available Funds and other funds
deposited in the Collection Account pursuant to Section 5.1(b), to the
Insurer to the extent of any amounts owing the Insurer under the
Insurance Agreement;
(vi) sixth, from the remaining Available Funds, to the Reserve
Account to the extent necessary to increase the amount on deposit
therein to the required amount in accordance with the Reserve Account
Agreement;
(vii) seventh, on or prior to the OC Stabilization Date, from
the remaining Available Funds, and together with amounts available in
accordance with the terms of the Reserve Account Agreement, to the Note
Distribution Account until the Target Overcollateralization Amount is
achieved;
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(viii) eighth, from the remaining Available Funds to the
Reserve Account, any remaining funds;
(ix) ninth, from the amounts released pursuant to and in
accordance with the Reserve Account Agreement, to the Indenture Trustee
and the Owner Trustee and the Backup Servicer any expenses (including
reasonable legal fees and expenses), including Servicer Transition
Expenses, to the extent not previously paid on or prior to such date;
(x) tenth, from the amounts (after giving effect to the
distributions in clause (ix) above) released pursuant to and in
accordance with the Reserve Account Agreement to the holder of the
Certificate;
provided, however, that following (x) an acceleration of the Notes or, (y) in
the event that an Insurer Default shall have occurred and be continuing, the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iv),
5.1(v) or 5.1(vi) of the Indenture or (z) the receipt of Insolvency Proceeds
pursuant to Section 10.1(b) hereof, amounts deposited in the Note Distribution
Account (including any such Insolvency Proceeds) shall be paid to the
Noteholders pursuant to Section 5.4 of the Indenture.
(c) On each Payment Date, the Indenture Trustee shall (based solely on
the information contained in the Servicer's Certificate delivered with respect
to the related Determination Date, unless the Insurer shall have notified the
Indenture Trustee in writing of any errors or deficiencies with respect thereto)
distribute from the Collection Account, the Deficiency Claim Amount, if any,
then on deposit in the Collection Account, which amount shall be applied solely
to the payment of amounts then due and unpaid on the Notes in accordance with
the priorities set forth in Section 4.7(a).
(d) In the event that the Collection Account is maintained with an
institution other than the Indenture Trustee, the Indenture Trustee shall
instruct and cause such institution to make all deposits and distributions
pursuant to Sections 4.6(b) and 4.7(a) on the related Payment Date.
SECTION 4.7. Note Distribution Account
(a) On each Payment Date, as applicable, the Indenture Trustee shall
(based solely on the information contained in the Servicer's Certificate
delivered on the related Determination Date) cause to be made the following
distribution of all amounts on deposit in the Note Distribution Account to each
Noteholder of record on the preceding Record Date in the following order of
priority:
(i) first, the Interest Payment Amount for such Payment Date
and the Interest Carryover Shortfall, if any;
(ii) second, the Principal Payment Amount for such Payment
Date and the Principal Carryover Shortfall, if any; and
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(iii) third, on or prior to the OC Stabilization Date, as
principal, until the Target Overcollateralization Amount is reached.
(b) On each Payment Date, the Indenture Trustee shall send to each
Noteholder the statement provided to the Indenture Trustee by the Servicer
pursuant to Section 4.10 hereof.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Noteholder, such tax shall reduce the
amount otherwise distributable to the Noteholder in accordance with this
Section. The Indenture Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Noteholders sufficient funds for the
payment of any tax attributable to the Trust (but such authorization shall not
prevent the Indenture Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Noteholder shall be treated as cash distributed to such Noteholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-US Noteholder), the
Indenture Trustee may in its sole discretion withhold such amounts in accordance
with this clause (c). In the event that a Noteholder wishes to apply for a
refund of any such withholding tax, the Indenture Trustee shall reasonably
cooperate with such Noteholder in making such claim so long as such Noteholder
agrees to reimburse the Indenture Trustee for any out-of-pocket expenses
(including legal fees and expenses) incurred.
(d) Subject to Section 10.1 respecting the final payment upon
retirement of each Note, and provided that the Indenture Trustee has received
the applicable Servicer's Certificate, on each Payment Date, the Indenture
Trustee shall distribute to each Noteholder of record on the preceding Record
Date the distributions required to be made to such Noteholders in accordance
with the terms of the Related Documents either (i) by wire transfer, in
immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Noteholder holds Notes
representing at least $1,000,000 in Class A Notes as of the Closing Date, and if
such Noteholder shall have provided to the Indenture Trustee appropriate
instructions not later than the Determination Date, or (ii) by check mailed to
such Noteholder at the address of such Holder appearing in the Note Register.
SECTION 4.8. Pre-Funding Account
(a) On the Closing Date, the Indenture Trustee shall deposit, on behalf
of and at the written direction of the Company, in the Pre-Funding Account
$13,876,489.17 from the proceeds of the sale of the Notes. On each Subsequent
Transfer Date, the Servicer shall instruct the Indenture Trustee in writing to
withdraw from the Pre-Funding Account an amount equal to the Principal Balance
of the Subsequent Receivables transferred to the Issuer on such Subsequent
Transfer Date and to distribute such amount to or upon the order of the Company
upon satisfaction of the conditions set forth in this Agreement with respect to
such transfer.
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(b) If the Pre-Funded Amount has not been reduced to zero on the date
on which the Funding Period ends after giving effect to any reductions in the
Pre-Funded Amount on such date, the Servicer shall instruct the Indenture
Trustee in writing to withdraw from the Pre-Funding Account on the Mandatory
Redemption Date, the Pre-Funded Amount (exclusive of any Pre-Funding Earnings,
which shall be deposited in the Collection Account) and deposit such an amount
in the Note Distribution Account.
SECTION 4.9. Net Deposits. So long as no Servicer Termination Event has
occurred and is continuing, the Servicer may make the remittances to be made by
it pursuant to Section 4.1 net of amounts (which amounts may be netted prior to
any such remittance for a Collection Period) to be distributed to it pursuant to
Section 4.2; provided, however, that the Servicer shall account for all of such
amounts in the related Servicer's Certificate as if such amounts were deposited
and distributed separately; and provided, further, that if an error is made by
the Servicer in calculating the amount to be deposited or retained by it, with
the result that an amount less than required is deposited in the Collection
Account, the Servicer shall make a payment of the deficiency to the Collection
Account, immediately upon becoming aware, or receiving notice from the Indenture
Trustee, the Backup Servicer, the Insurer or any Noteholder, of such error.
SECTION 4.10. Statements to Noteholders; Tax Returns.
(a) On each Payment Date, the Indenture Trustee shall include with each
payment to each Noteholder, a statement prepared by the Servicer (which
statement shall also be provided to the Certificateholders, the Insurer and the
Rating Agencies), based on information in the Servicer's Certificate delivered
on the related Determination Date pursuant to Section 3.9, setting forth for
such Payment Date and the Collection Period relating to such Payment Date the
following information:
(i) in the case of the Noteholders, the amount of such payment
allocable to interest;
(ii) in the case of the Noteholders, the amount of such
payment allocable to principal;
(iii) the amount of such payment allocable to a claim on the
Note Policy;
(iv) the amount of fees paid by the Trust with respect to such
Collection Period, including any Servicer Fee and Servicer Expenses;
(v) the Note Balance (after giving effect to all payments made
on such Payment Date);
(vi) the amount of the Interest Carryover Shortfall and
Principal Carryover Shortfall, if any, on such Payment Date and the
change in such amount from that of the prior Payment Date;
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(vii) the Class A Note Factor as of such Payment Date (after
giving effect to payments made on such Payment Date);
(viii) for each date during the Funding Period, the remaining
Pre-Funded Amount and the amount remaining in the Capitalized Interest
Account;
(ix) for the final Subsequent Transfer Date, the amount of any
remaining Pre-Funded Amount that has not been used to fund the purchase
of Subsequent Receivables and is passed through as principal to
Noteholders;
(x) the number of Receivables and the aggregate Principal
Balance due thereof, for which the related Obligors are delinquent in
making Contract Scheduled Payments (A) between 31 and 60 days, (B)
between 61 and 90 Days and (C) between 91 and 120 days;
(xi) the number of Receivables which became Liquidated
Receivables, and the aggregate principal amount thereof net of
Recoveries;
(xii) the number of Receivables which became Defaulted
Receivables, and the aggregate principal amount thereof;
(xiii) the number and the aggregate Purchase Amount of
Receivables that became Purchased Receivables during the related
Collection Period and the number and aggregate Purchase Amount of
Receivables that were required to be repurchased during the related
Collection Period but were not so repurchased;
(xiv) the Principal Balance, APR and model year of each
Receivable that was replaced and the Principal Balance, APR and model
year of the corresponding Replacement Receivable;
(xv) the number and the aggregate Principal Balance of
Receivables with respect to which, to the knowledge of the Servicer,
Obligors became the subject of bankruptcy proceedings during such
Collection Period (or during a prior Collection Period, if the Servicer
first became aware of such proceeding during the current Collection
Period);
(xvi) the amount of any Deficiency Claim Amounts deposited in
the Collection Account from the Reserve Account;
(xvii) the Overcollateralization Amount and the Target
Overcollateralization Amount; and
(xviii) the beginning balance, amount of claims paid, amount
of deposits made, and ending balance of the applicable collateral
self-insurance fund, if any.
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Each amount set forth pursuant to clauses (i), (ii) and (v) above shall be
expressed as a dollar amount per $1,000 of original principal balance of a Note.
(b) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of this Agreement, the
Indenture Trustee shall mail, provided it has received the necessary information
from the Servicer, to each Person who at any time during such calendar year
shall have been a Holder of a Note and received any payment thereon, a statement
containing the amounts set forth in clauses (i), (ii), and (iv) and such other
information, requested in writing by the Noteholder necessary to permit such
Noteholder to ascertain its share of the gross income and deductions of the
Trust, for such calendar year or, in the event such Person shall have been a
Holder of a Note during a portion of such calendar year, for the applicable
portion of such year, for the purposes of such Noteholder's preparation of
federal income tax returns.
(c) The Indenture Trustee shall provide any Holder of Notes
representing at least 25% of the Note Balance, with such additional information
available to the Indenture Trustee relating to the Notes and the Trust Property
as such Holder may reasonably request from time to time. Such additional
information (to the extent provided to the Indenture Trustee by the Servicer)
shall also be available to any Noteholder from the Indenture Trustee upon
reasonable request and upon payment by the Noteholder of the Indenture Trustee's
and the Servicer's reasonable fees and expenses in connection with providing and
preparing such information. Any Noteholder desiring such additional information
shall have delivered to the Indenture Trustee an executed Information Request.
SECTION 4.11. Optional Deposits by the Insurer. The Insurer shall at
any time, and from time to time, with respect to a Payment Date, have the option
(but shall not be required, except in accordance with the terms of the Note
Policy) to deliver amounts to the Indenture Trustee for deposit into the
Collection Account for any of the following purposes: (i) to provide funds in
respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Payment Date, or (ii) to include such amount to the
extent that without such amount a draw would be required to be made on the Note
Policy.
ARTICLE V
THE RESERVE ACCOUNT
SECTION 5.1. Withdrawals from Reserve Account.
(a) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Available Funds for the related
Collection Period are less than the sum of the Scheduled Payments (as defined in
the Note Policy) plus the amounts payable on the related Payment Date pursuant
to clauses (i), (ii) and (v) of Section 4.6(b), (such deficiency being a
"Deficiency Claim Amount") then on the Deficiency Claim Date (as defined below)
immediately
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preceding the related Payment Date, the Indenture Trustee shall deliver to the
Collateral Agent, the Owner Trustee, the Insurer and the Servicer, by hand
delivery or facsimile transmission, a written notice (a "Deficiency Notice")
specifying the Deficiency Claim Amount for such Payment Date, if any. Such
Deficiency Notice shall direct the Collateral Agent to remit such Deficiency
Claim Amount (to the extent of the funds available to be distributed pursuant to
the Reserve Account Agreement) to the Indenture Trustee for deposit in the
Collection Account on the related Payment Date.
Any Deficiency Notice shall be delivered by 5:00 p.m., Eastern time, on
the fourth Business Day preceding such Payment Date (the "Deficiency Claim
Date").
(b) The amounts distributed by the Collateral Agent to the Indenture
Trustee pursuant to a Deficiency Notice shall be deposited by the Indenture
Trustee into the Collection Account pursuant to Section 4.5.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1 Claims Under Note Policy.
(a) In the event that the Indenture Trustee has delivered a Deficiency
Notice with respect to any Determination Date pursuant to Section 5.1 hereof,
the Indenture Trustee shall on the related Draw Date determine the Note Policy
Claim Amount for the related Payment Date. If the Note Policy Claim Amount for
such Payment Date is greater than zero, the Indenture Trustee shall furnish to
the Insurer no later than 12:00 noon New York City time on the related Draw Date
a completed Notice of Claim (as defined in (b) below) in the amount of the Note
Policy Claim Amount. Amounts paid by the Insurer pursuant to a claim submitted
under this Section shall be deposited by the Indenture Trustee into the Note
Distribution Account for payment to Noteholders on the related Payment Date.
(b) Any notice delivered by the Indenture Trustee to the Insurer
pursuant to subsection 6.1(a) shall specify the Note Policy Claim Amount claimed
under the Note Policy and shall constitute a "Notice of Claim" (as defined in
the Note Policy) under the Note Policy. In accordance with the provisions of the
Note Policy, the Insurer is required to pay to the Indenture Trustee the Note
Policy Claim Amount properly claimed thereunder by 12:00 noon, New York City
time, on the later of (i) the third (3) Business Day (as defined in the Note
Policy) following Receipt (as defined in the Note Policy) on a Business Day (as
defined in the Note Policy) of the Notice of Claim, and (ii) the applicable
Payment Date. Any payment made by the Insurer under the Note Policy shall be
applied solely to the payment of principal of and interest on the Notes, and for
no other purpose.
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(c) The Indenture Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Note Policy Claim Amount from the Insurer and (ii) deposit the
same in the Note Distribution Account for distribution to Noteholders. Any and
all Note Policy Claim Amounts disbursed by the Indenture Trustee from claims
made under the Note Policy shall not be considered payment by the Trust with
respect to such Notes, and shall not discharge the obligations of the Trust with
respect thereto. The Insurer shall, to the extent it makes any payment with
respect to the Notes, become subrogated to the rights of the recipients of such
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Notes by or on behalf of the Insurer, the Indenture
Trustee shall assign to the Insurer all rights to the payment of interest or
principal with respect to the Notes which are then due for payment to the extent
of all payments made by the Insurer, and the Insurer may exercise any option,
vote, right, power or the like with respect to the Notes to the extent that it
has made payment pursuant to the Note Policy. To evidence such subrogation, the
Note Registrar shall note the Insurer's rights as subrogee upon the register of
Noteholders upon receipt from the Insurer of proof of payment by the Insurer of
any Scheduled Payment (as defined in the Note Policy). The foregoing subrogation
shall in all cases be subject to the rights of the Noteholders to receive all
Scheduled Payments (as defined in the Note Policy) in respect of the Notes.
(d) The Indenture Trustee shall keep a complete and accurate record of
all funds deposited by the Insurer into the Collection Account and the Note
Distribution Account and the allocation of such funds to payment of interest on
and principal paid in respect of any Note. The Insurer shall have the right to
inspect such records at reasonable times upon one Business Day's prior notice to
the Indenture Trustee.
(e) The Indenture Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Related Document,
the Noteholders are not entitled to institute proceedings directly against the
Insurer.
SECTION 6.2. Preference Claims.
(a) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Interest Payment Amount or
Principal Payment Amount paid on a Note has been avoided in whole or in part as
a preference payment under applicable bankruptcy law, the Indenture Trustee
shall so notify the Insurer, shall comply with the provisions of the Note Policy
to obtain payment by the Insurer of such avoided payment, and shall, at the time
it provides notice to the Insurer, notify Holders of the Notes by mail that, in
the event that any Noteholder's payment is so recoverable, such Noteholder will
be entitled to payment pursuant to the terms of the Note Policy. The Indenture
Trustee shall furnish to the Insurer its records evidencing the payments of
principal of and interest on Notes, if any, which have been made by the
Indenture Trustee and subsequently recovered from Noteholders, and the dates on
which such payments were made. Pursuant to the terms of the Note Policy, the
Insurer will make such payment on behalf of the Noteholder to the receiver,
conservator, debtor-in-possession or trustee in
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bankruptcy named in the Order (as defined in the Note Policy) and not to the
Indenture Trustee or any Noteholder directly (unless a Noteholder has previously
paid such payment to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy, in which case the Insurer will make such payment to the Indenture
Trustee for distribution to such Noteholder upon proof of such payment
reasonably satisfactory to the Insurer).
(b) The Indenture Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Indenture Trustee has actual knowledge) seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Note Preference Claim") of any distribution
made with respect to the Notes. Each Holder, by its purchase of Notes, and the
Indenture Trustee hereby agree that so long as an Insurer Default shall not have
occurred and be continuing, the Insurer may at any time during the continuation
of any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedesas or performance bond pending any such appeal at the expense
of the Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 6.1(c), the Insurer shall be subrogated to, and each Noteholder and the
Indenture Trustee hereby delegate and assign, to the fullest extent permitted by
law, the rights of the Indenture Trustee and each Noteholder in the conduct of
any proceeding with respect to a Note Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Note Preference
Claim.
SECTION 6.3. Surrender of Policy. The Indenture Trustee shall surrender
the Note Policy to the Insurer for cancellation upon the expiration of such
policy in accordance with the terms thereof.
ARTICLE VII
THE COMPANY
SECTION 7.1 Liability of Company; Indemnities. (a) The Company shall be
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Company and the representations made by the
Company.
(b) The Company shall indemnify, defend and hold harmless the Servicer,
the Indenture Trustee, the Owner Trustee, the Backup Servicer, the Insurer, and
their respective officers, directors, agents and employees, the Trust and the
Noteholders from and against any and all costs, expenses, losses, claims,
penalties, fines, forfeitures, judgments, damages and liabilities to the extent
that such cost, expense, loss, claim, penalty, fine, forfeiture, judgment,
damage or liability arose out of, or was imposed upon the Servicer, the
Indenture Trustee, the Owner Trustee, the Trust, the Insurer or the Backup
Servicer by reason of, the gross negligence (other
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than errors in judgment), willful misfeasance or bad faith of the Company in the
performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
SECTION 7.2. Merger or Consolidation of the Company. The Company shall
not merge or consolidate with any other Person or permit any other Person to
become the successor to all or substantially all of the Company's business or
assets unless the conditions precedent set forth in this Section 7.2 have been
satisfied and the Rating Agency Condition shall have been satisfied. Any such
successor corporation shall execute an agreement of assumption of every
obligation of the Company under its Related Documents and, whether or not such
assumption agreement is executed, shall be the successor to the Company under
this Agreement without the execution or filing of any document (or any further
act on the part of any of the parties to this Agreement). The Company shall
provide prompt notice of any merger, consolidation or succession pursuant to
this Section 7.2 to the Indenture Trustee, the Seller, Owner Trustee, the
Noteholders, the Insurer and each Rating Agency. Notwithstanding the foregoing,
the Company shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Company's business, unless: (a)
immediately after giving effect to such transaction if such transaction occurs
during the Funding Period, no representation or warranty made pursuant to
Section 2.5 shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time, would become an
Event of Default or an Insurance Agreement Event of Default shall have occurred
and be continuing; (b) the Company shall have delivered to the Owner Trustee,
the Seller, the Indenture Trustee, the Insurer and each Rating Agency an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 7.2 and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with; (c) the Company
shall have delivered to the Owner Trustee, the Seller, the Indenture Trustee,
the Insurer and each Rating Agency an Opinion of Counsel, stating, in the
opinion of such counsel, either (i) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to preserve and protect the interests of the Trust and the Indenture
Trustee in the Receivables and other Trust Property or (ii) no such action shall
be necessary to preserve and protect such interest and (d) such entity shall
since commencing its existence have been subject to the restrictions of Section
7.4.
SECTION 7.3. Limitation on Liability of Company and Others. The Company
and any director or officer or employee or agent of the Company may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Company shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
obligations as Company of the Receivables under this Agreement and that in its
opinion may involve it in any expense or liability.
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SECTION 7.4. Special Purpose Entity.
(a) The Company shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead others as to
the identity of the entity with which such persons are concerned, and shall use
its best efforts to avoid the appearance that it is conducting business on
behalf of any Affiliate thereof or that the assets of the Company are available
to pay the creditors of any Affiliate thereof (other than as expressly provided
herein).
(b) The Company shall maintain corporate records and books of account
separate from those of any Affiliate thereof.
(c) The Company shall obtain proper authorization for all corporate
action requiring such authorization.
(d) The Company shall pay its own operating expenses and liabilities
from its own funds.
(e) The resolutions, agreements and other instruments of the Company
underlying the transactions described in the Related Documents shall be
continuously maintained by the Company as official records of the Company.
(f) The Company shall maintain an arm's-length relationship with its
Affiliates, and shall not hold itself out as being liable for the debts of any
of its Affiliates.
(g) The Company shall keep its assets and liabilities separate from
those of all other entities other than as permitted by the Related Documents.
(h) The books and records of the Company shall be maintained at the
address designated herein for receipt of notices, unless the Company shall
otherwise advise the parties hereto in writing.
(i) The Company shall not maintain bank accounts or other depository
accounts to which any Affiliate is an account party, into which any Affiliate
makes deposits or from which any Affiliate has the power to make withdrawals,
except as otherwise permitted by the Related Documents.
(j) The Company shall not amend, supplement or otherwise modify its
certificate of incorporation or bylaws except in accordance therewith.
SECTION 7.5. Restrictions on Liens. The Company shall not (i) create,
incur or suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any Lien on, or restriction
on transferability of, the Receivables except for Permitted Liens or (ii) sign
or file under the UCC of any jurisdiction any financing statement that names
Triad or the Company as a debtor, or sign any security agreement authorizing any
secured party thereunder to file such financing statement, with respect to the
Receivables, except in each case any such
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instrument solely securing the rights and preserving the Lien of the Trust and
the Lien of the Indenture Trustee for the benefit of the Noteholders and the
Insurer.
SECTION 7.6. Creation of Indebtedness, Guarantees. The Company shall
not create, incur, assume or suffer to exist any indebtedness other than
indebtedness permitted under the Related Documents. The Company shall incur no
additional borrowed money indebtedness secured by the Trust Property other than
the Notes. The Company shall not assume, guarantee, endorse or otherwise be or
become directly or contingently liable for the obligations of any Person by,
among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person to
maintain any amount of capital.
SECTION 7.7. Compliance with Laws. The Company shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Company to perform its obligations under any Related Document.
SECTION 7.8. Further Instruments and Acts. Upon request of the Trust or
the Indenture Trustee, the Company shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Agreement.
SECTION 7.9. Investment Company Act. The Company shall conduct its
operations in a manner that will not subject it to registration as an
"Investment Company" under the Investment Company Act of 1940, as amended.
ARTICLE VIIi
THE SERVICER
SECTION 8.1. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such) shall be liable hereunder
only to the extent of the obligations in this Agreement specifically undertaken
by the Servicer and the representations made by the Servicer.
(b) The Servicer shall defend, indemnify and hold harmless the Company,
the Indenture Trustee, the Owner Trustee, the Backup Servicer, the Insurer, and
their respective officers, directors, agents and employees, the Trust and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the use, ownership or
operation, if any, by the Servicer or any Affiliate thereof of a Financed
Vehicle.
(c) The Servicer shall defend, indemnify and hold harmless the
Indenture Trustee, the Owner Trustee, the Backup Servicer, the Insurer, their
respective officers, directors, agents and
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employees, the Trust and the Noteholders from and against any taxes (other than
franchise and income taxes other than income taxes imposed on the Trust) that
may at any time be asserted against the Indenture Trustee, the Owner Trustee,
the Backup Servicer, the Trust, the Insurer or the Noteholders, with respect to
the transactions contemplated herein, including, without limitation, any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes and costs and expenses in defending against the same.
(d) The Servicer shall indemnify, defend and hold harmless the Company,
the Indenture Trustee, the Owner Trustee, the Backup Servicer, the Insurer, and
their respective officers, directors, agents and employees, the Trust and the
Noteholders from and against any and all costs, expenses, losses, claims,
penalties, fines, forfeitures, judgments, damages and liabilities to the extent
that such cost, expense, loss, claim, penalty, fine, forfeiture, judgment,
damage or liability arose out of, or was imposed upon the Company, the Indenture
Trustee, the Owner Trustee, the Trust, the Insurer or the Backup Servicer by
reason of, the breach of this Agreement by the Servicer, the negligence (other
than errors in judgment), willful misfeasance or bad faith of the Servicer in
the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
(e) For purposes of this Section, in the event of the termination of
the rights and obligations of the Servicer (or any successor thereto pursuant to
Section 9.3) as Servicer pursuant to Section 9.2, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 9.3.
The provisions of this Section 8.1(e) shall in no way affect the survival
pursuant to Section 8.1(f) of the indemnification by the Servicer provided by
Section 8.1(b), (c) or (d).
(f) Indemnification under this Section 8.1 shall survive the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer has made any indemnity
payments pursuant to this Section 8.1 and the recipient thereafter collects any
of such amounts from others, the recipient shall promptly repay such amounts
collected to the Servicer, without interest.
(g) Notwithstanding the indemnity provisions contained in Sections
8.1(b) through (d), the Servicer shall not be required to indemnify any party
pursuant to this Agreement, or their respective officers, directors, agents or
employees against any costs, expenses, losses, damages, claims or liabilities to
the extent the same shall have been (i) caused by the misfeasance, bad faith or
negligence (other than errors in judgment) of such party, or (ii) suffered by
reason of uncollectible or uncollected Receivables not caused by the Servicer's
negligence (other than errors in judgment), willful misfeasance or bad faith.
(h) Notwithstanding the indemnity provisions contained in Sections
8.1(b) through (d), the Servicer shall not be required to indemnify the Owner
Trustee in its individual capacity for any liability, obligation, loss, damage,
penalty, tax, claim, action, suit, cost, expense or disbursement which might
result from the gross negligence (or negligence in the case of handling
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of funds) or willful misconduct of Owner Trustee or the inaccuracy of any
representation or warranty of Owner Trustee in its individual capacity. The
payor of any indemnity under this Section 8.1(h) shall be subrogated to any
right of the person indemnified in respect of the matter as to which such
indemnity was paid.
SECTION 8.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Backup Servicer.
(a) The Servicer shall not merge or consolidate with any other Person
or, other than sales of assets in its ordinary course of business, convey,
transfer or lease all or substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to all or
substantially all of its business or assets, unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be capable of fulfilling the duties of the Servicer
contained in this Agreement and shall be an Eligible Servicer. Any Person (i)
into which the Servicer may be merged or consolidated, (ii) resulting from any
merger or consolidation to which the Servicer shall be a party, (iii) that
acquires by conveyance, transfer, or lease substantially all of the assets of
the Servicer, or (iv) succeeding to the business of the Servicer, in any of the
foregoing cases shall execute an agreement of assumption to perform every
obligation of the Servicer under this Agreement and making representations
substantially equivalent to those made by the Servicer hereunder and, whether or
not such assumption agreement is executed, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement, anything in
this Agreement to the contrary notwithstanding; provided, however, that nothing
contained herein shall be deemed to release the Servicer from any obligation
hereunder. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section 8.2(a) to the Owner Trustee, the Indenture
Trustee, the Noteholders, the Insurer and each Rating Agency, and the Rating
Agency Condition in respect of such merger, consolidation or succession shall
have been satisfied. Notwithstanding the foregoing, the Servicer shall not merge
or consolidate with any other Person or permit any other Person to become a
successor to all or substantially all of its business or assets, unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.6 shall have been breached in any material
respect (for purposes hereof, such representations and warranties shall speak as
of the date of the consummation of such transaction) and no event that, after
notice or lapse of time, would become an Event of Default, Insurance Agreement
Event of Default or Servicer Termination Event shall have occurred and be
continuing, (y) the Servicer shall have delivered to the Owner Trustee, the
Indenture Trustee, the Insurer and each Rating Agency an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 8.2(a) and
that all conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with, and (z) the Servicer shall have
delivered to the Owner Trustee, the Indenture Trustee, the Insurer and each
Rating Agency an Opinion of Counsel, stating in the opinion of such counsel,
either (1) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Trust and the
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Indenture Trustee in the Receivables and the proceeds thereof and reciting the
details of the filings or (2) no such action shall be necessary to preserve and
protect such interest.
(b) Any Person (i) into which the Backup Servicer may be merged,
consolidated or converted, (ii) resulting from any merger, consolidation or
conversion to which the Backup Servicer shall be a party, (iii) that acquires by
conveyance, transfer or lease substantially all of the assets of the Backup
Servicer, or (iv) succeeding to the business of the Backup Servicer, in any of
the foregoing cases shall execute an agreement of assumption to perform every
obligation of the Backup Servicer under this Agreement and, whether or not such
assumption agreement is executed, shall be the successor to the Backup Servicer
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in this
Agreement to the contrary notwithstanding; provided, however, that nothing
contained herein shall be deemed to release the Backup Servicer from any
obligation under this Agreement.
SECTION 8.3. Limitation on Liability of Servicer, Backup Servicer and
Others.
(a) Neither the Servicer, the Backup Servicer nor any of the directors,
officers, employees or agents of the Servicer or the Backup Servicer shall be
under any liability to the Trust, the Noteholders, the Indenture Trustee, the
Owner Trustee or the Company, except as provided in this Agreement, for any
action taken or for refraining from the taking of any action pursuant to this
Agreement; provided, however, that this provision shall not protect the
Servicer, the Backup Servicer or any such Person against any liability that
would otherwise be imposed by reason of a breach of this Agreement or willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties or by reason of reckless disregard of obligations and
duties under this Agreement or any violation of law, or the inaccuracy of any
representation made by the Servicer, Backup Servicer or such Person, as the case
may be; and, provided, further, that this provision shall not affect any
liability to indemnify the Indenture Trustee for costs, expenses, claims,
liabilities, losses or damages paid by the Indenture Trustee in its individual
capacity. The Servicer, the Backup Servicer and any director, officer, employee
or agent of the Servicer or the Backup Servicer may rely in good faith on the
written advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
(b) Except as provided in this Agreement, neither the Servicer nor the
Backup Servicer shall be under any obligation to appear in, prosecute, or defend
any legal action that shall not be incidental to its duties to service the
Receivables in accordance with this Agreement, and that in its opinion may
involve it in any expense or liability.
(c) Other than the duties specifically set forth in this Agreement, the
Backup Servicer shall have no obligation hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer (however, in the event the Backup Servicer shall have knowledge of the
Servicer's failure to perform its duties as required in this Agreement, the
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Backup Servicer shall promptly notify the Indenture Trustee and the Insurer of
such failure). The Backup Servicer shall have no liability for any action taken
or omitted by the Servicer. The duties and obligations of the Backup Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Backup Servicer.
(d) The Backup Servicer in its capacity as such shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder (unless as a result of the Backup
Servicer's failure to perform its duties as required therein), or in the
exercise of any of its rights or powers, if the repayment of such funds or
adequate written indemnity against such risk or liability is not reasonably
assured to it in writing prior to the expenditure or risk of such funds or
incurrence of financial liability.
(e) The Backup Servicer will not be responsible for delays attributable
to the Servicer's failure to deliver information, defects in the information
supplied by the Servicer or other circumstances beyond the control of the Backup
Servicer.
(f) Unless acting as Servicer hereunder, the Backup Servicer shall not
be liable for any obligation of the Servicer contained in this Agreement, and
the Indenture Trustee, the Owner Trustee, the Company, the Insurer and the
Noteholders shall look only to the Servicer to perform such obligations.
(g) The parties expressly acknowledge and consent to The Chase
Manhattan Bank acting in the possible dual capacity of Backup Servicer or
successor Servicer and in the capacity as Indenture Trustee. The Chase Manhattan
Bank may, in such dual capacity, discharge its separate functions fully, without
hindrance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by The Chase Manhattan Bank of
express duties set forth in this Agreement in any of such capacities, all of
which defenses, claims or assertions are hereby expressly waived by the other
parties hereto except in the case of negligence (other than errors in judgment)
and willful misconduct by The Chase Manhattan Bank. Notwithstanding the
foregoing, no provision of this Agreement shall be deemed to relieve the
Indenture Trustee of any of its duties specified in the Indenture.
(h) The Backup Servicer shall have no responsibility and shall not be
in default hereunder nor incur any liability for any failure, error, malfunction
or any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Backup Servicer acting in accordance with
information prepared or supplied by a Person other than the Backup Servicer or
the failure of any such Person to prepare or provide such information. The
Backup Servicer shall have no responsibility, shall not be in default and shall
incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Company, the Controlling Party, the Insurer, the
Indenture Trustee or the Owner Trustee or for any inaccuracy or omission in a
notice or communication received by the Backup Servicer from any third party or
(ii) that is due
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to or results from the invalidity or unenforceability of any Receivable under
applicable law or the breach or the inaccuracy of any representation or warranty
made with respect to any Receivable.
SECTION 8.4. Servicer and Backup Servicer Not to Resign. Subject to the
provisions of Section 8.2, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would result in a material adverse effect on the Servicer or the Backup
Servicer, as the case may be, and the Insurer (so long as an Insurer Default
shall not have occurred and be continuing) or a Note Majority (if an Insurer
Default shall have occurred and be continuing) does not elect to waive the
obligations of the Servicer or the Backup Servicer, as the case may be, to
perform the duties that render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Servicer or Backup Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner Trustee, the Indenture Trustee and the
Insurer (unless an Insurer Default shall have occurred and be continuing). No
resignation of the Servicer shall become effective, so long as no Insurer
Default shall have occurred and be continuing, until the Backup Servicer or an
entity acceptable to the Insurer shall have assumed the responsibilities and
obligations of the Servicer or, if a Insurer Default shall have occurred and be
continuing, until the Backup Servicer or a successor Servicer that is an
Eligible Servicer shall have assumed the responsibilities and obligations of the
Servicer. No resignation of the Backup Servicer shall become effective until, so
long as no Insurer Default shall have occurred and be continuing, an entity
acceptable to the Insurer shall have assumed the responsibilities and
obligations of the Backup Servicer or, if an Insurer Default shall have occurred
and be continuing, the Indenture Trustee or an entity appointed by the Indenture
Trustee acceptable to a Note Majority shall have assumed the responsibilities
and obligations of the Backup Servicer; provided, however, that if a successor
Backup Servicer is not appointed within one hundred eighty (180) days after the
Backup Servicer has given notice of its resignation and has provided the Opinion
of Counsel required by this Section 8.4, the Backup Servicer may petition a
court for the appointment of a successor Backup Servicer. No resignation of the
Servicer or the Backup Servicer shall relieve the Servicer or the Backup
Servicer, as the case may be, of any liability to which it has previously become
subject under this Agreement or any Related Document. Notwithstanding the
foregoing, the Backup Servicer may resign for any reason, provided 180 days
notice of such resignation has been given by the Backup Servicer to the
Servicer, the Indenture Trustee, the Owner Trustee and the Insurer, (ii) an
entity acceptable to the Insurer (so long as no Insurer Default has occurred and
is continuing), in its sole and absolute discretion, shall have assumed the
responsibilities and obligations of the Backup Servicer prior to the
effectiveness of any such resignation and the Rating Agency Condition is
satisfied with respect thereto, (iii) the Backup Servicer agrees to pay all fees
of the successor backup servicer above the amounts which would be payable to the
Backup Servicer if it continued in such capacity, and (iv) the Backup Servicer
agrees to pay all backup servicer transition expenses upon the assumption of the
succcessor backup servicer of such duties and obligations.
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SECTION 8.5. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall perform
all its duties and in accordance with this Section 8.5 the duties of the Issuer
under the Indenture. In addition, the Servicer shall consult with the Owner
Trustee as the Servicer deems appropriate regarding the duties of the Issuer
under the Indenture. The Servicer shall monitor the performance of the Issuer
and shall advise the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture. The Servicer shall prepare for execution by
the Owner Trustee or shall cause the preparation by other appropriate Persons of
all such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to Sections
2.9, 3.3, 3.4, 3.5, 3.6, 3.7, 3.9, 3.19, 3.21, 3.23, 4.1, 5.1, 5.16, 8.4, 8.5,
9.5 and 11.1 of the Indenture. Notwithstanding any other provision of this
Agreement, no delegation of the Issuer's duties under any Related Document shall
relieve the Issuer of liability therefor.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Related Documents, the Servicer shall
perform such calculations and shall prepare for execution by the Owner
Trustee or shall cause the preparation by other appropriate Persons of
all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the
Related Documents or under state and federal tax and securities laws
and shall take all appropriate action that it is the duty of the Issuer
to take pursuant to this Agreement or any of the Related Documents. In
accordance with the directions of the Issuer or the Owner Trustee, the
Servicer shall administer, perform or supervise the performance of such
other activities in connection with the Related Documents as are not
covered by any of the foregoing provisions and as are expressly
requested by the Issuer or the Owner Trustee and are reasonably within
the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Related Documents to the contrary, the Servicer shall be responsible
for promptly notifying the Owner Trustee if any withholding tax is
imposed on the Issuer's payments (or allocations of income) to any
Certificateholder. Any such notice shall be in writing and specify the
amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(c) Records. The Servicer shall maintain appropriate books of account
and records relating to the services performed under this Agreement, which books
of account and records shall be accessible for inspection by the Owner Trustee
or the Insurer at any time upon reasonable prior notice during normal business
hours.
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SECTION 8.6. Representations and Warranties of Backup Servicer.
The Backup Servicer hereby makes the following representations and
warranties to the other parties hereto, on which the Indenture Trustee on behalf
of itself and the Noteholders relies in accepting the Receivables in trust and
authenticating the Notes and on which the Insurer relies in issuing the Note
Policy. Unless otherwise specified, the representations and warranties are made
as of the Closing Date and shall survive the transfer of interest in the
Receivables hereunder to the Indenture Trustee.
(a) Organization and Good Standing. The Backup Servicer has been duly
organized and is validly existing as a New York banking corporation in good
standing under the laws of the State of New York, with power, authority and
legal right to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at all
relevant times, and now has, power, authority and legal right to service the
Receivables and to enter into and perform its obligations under this Agreement
and each of its Related Documents.
(b) Due Qualification. The Backup Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables) requires or shall require such qualifications, licenses or
approvals.
(c) Power and Authority. The Backup Servicer has the power and
authority to execute and deliver this Agreement and each of its Related
Documents has been duly executed and delivered by the Backup Servicer, and to
carry out its terms; and the execution, delivery, and performance of this
Agreement and each of its Related Documents have been duly authorized by the
Backup Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement and each of its Related
Documents constitutes a legal, valid and binding obligation of the Backup
Servicer enforceable in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The execution, delivery and performance by the Backup
Servicer of this Agreement and each of its Related Documents, and the
consummation of the transactions contemplated hereby and the fulfillment of the
terms hereof shall not conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without notice, lapse of time or both)
a default under, the articles of incorporation or by-laws of the Backup
Servicer, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Backup Servicer is a party or by which it is bound or to
which any of its properties is subject, or result in the creation or imposition
of any lien upon any of its properties pursuant to the terms of any
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indenture, agreement, mortgage, deed of trust or other instrument (other than
this Agreement), nor violate any law, order, rule, or regulation applicable to
the Backup Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Backup Servicer or any its properties, or in any way materially
adversely affect the interest of the Noteholders, the Insurer or the Trust in
any Receivable, or affect the Backup Servicer's ability to perform its
obligations under this Agreement.
(f) No Proceedings. There are no proceedings or investigations pending,
or to the Backup Servicer's knowledge, threatened against the Backup Servicer,
before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Backup Servicer or its properties:
(i) asserting the invalidity of this Agreement or any of its Related Documents,
(ii) seeking to prevent the issuance of the Notes or the consummation of any of
the transactions contemplated by this Agreement or any of its Related Documents,
(iii) seeking any determination or ruling that might materially and adversely
affect the performance by the Backup Servicer of its obligations under, or the
validity or enforceability of, this Agreement or any of its Related Documents,
(iv) relating to the Backup Servicer and which might adversely affect the
federal or state income, excise, franchise or similar tax attributes of the
Notes, or (v) that could have a material adverse effect on the Receivables or
the Trust Property.
(g) No Consents. No consent, approval, license, authorization or order
of or declaration or filing with any governmental authority, bureau or agency is
required for the consummation of the other transactions contemplated by this
Agreement or any of the Backup Servicer's Related Documents, except such as have
been duly made or obtained.
(h) Taxes. The Backup Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent that such
taxes have become due. (i) No Injunctions. There are no existing injunctions,
writs, restraining orders or other similar orders which might adversely affect
the performance by the Backup Servicer or its obligations under, or the validity
and enforceability of, this Agreement.
(j) Compliance with Law. The Backup Servicer is in compliance with all
requirements of federal and state laws, rules, regulations and orders, except
where the failure so to comply would not have a material adverse effect on the
Backup Servicer, its business or its properties, or the ability of the Backup
Servicer to perform its obligations under this Agreement.
SECTION 8.7. Duties of Backup Servicer.
(a) The Backup Servicer hereby agrees, on the date (the "Assumption
Date") specified in the written notice to the Backup Servicer from the Insurer
or the Indenture Trustee, as the case may be, of the termination of the rights
and obligations of the Servicer pursuant to Section 9.2 hereof or the
resignation of the Servicer pursuant to Section 8.4 hereof, and without any
further notice, to assume the obligations of the Servicer hereunder, to be the
successor in all respects to
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the Servicer and to be subject to all the responsibilities, duties and
liabilities arising thereafter relating thereto placed on the Servicer. From and
after the Assumption Date and except as expressly set forth herein, the Backup
Servicer shall be entitled to all of the rights granted to the Servicer by the
terms and provisions of this Agreement.
(b) Notwithstanding the Backup Servicer's assumption of, and its
agreement to perform and observe, all duties, responsibilities and obligations
of the Servicer under this Agreement arising on and after the Assumption Date,
the Backup Servicer shall not be deemed to have assumed or to become liable for,
or otherwise have any liability for, any duties, responsibilities, obligations
or liabilities of the Servicer arising on or before the Assumption Date, whether
provided for by the terms of this Agreement, arising by operation of law or
otherwise, including, without limitation, any liability for any duties,
responsibilities, obligations or liabilities of the Servicer arising on or
before the Assumption Date regardless of when the liability, duty,
responsibility or obligation of the Servicer arose, whether provided by the
terms of this Agreement, arising by operation of law or otherwise.
(c) Up to but not including the Assumption Date, the Backup Servicer
shall be paid the Backup Servicing Fee, as provided in Section 4.6 of this
Agreement, for services rendered hereunder on each Payment Date.
(d) On each Payment Date following the Assumption Date, the Backup
Servicer shall be entitled to the Servicing Fee and the Servicer Transition
Expenses.
(e) The Backup Servicer agrees to execute, acknowledge and deliver from
time to time all such further instruments and documents and to take all
reasonable actions as the Indenture Trustee may from time to time request to
better assure the Indenture Trustee and to preserve the rights and obligations
created hereunder.
ARTICLE IX
SERVICER TERMINATION EVENTS
SECTION 9.1 Servicer Termination Event. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Indenture Trustee for
deposits into the Collection Account or to deliver to the Indenture Trustee for
distribution any proceeds or payment required to be so deposited or delivered
under the terms of this Agreement that continues unremedied for a period of two
(2) Business Days (one (1) Business Day with respect to payment of Purchase
Amounts) after written notice is received by the Servicer from the Indenture
Trustee or (unless an Insurer Default shall have occurred and be continuing) the
Insurer or after discovery of such failure by an Authorized Officer of the
Servicer.
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(b) Failure by the Servicer to deliver to the Indenture Trustee and (so
long as an Insurer Default shall not have occurred and be continuing), the
Insurer (i) the Servicer's Certificate required by Section 3.9 on any
Determination Date, (ii) any annual statement as to compliance pursuant to
Section 3.10, in each case within five (5) Business Days after the date such
annual statement is required to be delivered and (iii) any Accountant's Report
pursuant to Section 3.11; or
(c) Failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 8.2(a) or repudiation by the Servicer of any of
its covenants and agreements in this Agreement; or
(d) Failure or failures on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement, which failure or failures, individually or in the aggregate, (i)
materially and adversely affect the rights of Noteholders (determined without
regard to the availability of funds under the Note Policy), or the Insurer
(unless an Insurer Default shall have occurred and be continuing) and (ii)
continue unremedied for a period of sixty (60) days after the earlier of actual
knowledge thereof by a Responsible Officer of the Servicer or the date on which
written notice of such failure or failures, requiring the same to be remedied,
shall have been given to the Servicer by the Owner Trustee, the Indenture
Trustee, the Insurer (or if an Insurer Default shall have occurred and be
continuing, by the Note Majority; or
(e) The occurrence of an Insolvency Event with respect to the Servicer;
or
(f) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered pursuant
hereto shall prove to be incorrect as of the time when the same shall have been
made, and the incorrectness of such representation or warranty has a material
adverse effect on the Noteholders or the Insurer and, within thirty (30) days
after the earlier of knowledge thereof by a Responsible Officer of the Servicer
or the date written notice thereof shall have been given to the Servicer by the
Owner Trustee, the Indenture Trustee, the Insurer (or, if an Insurer Default
shall have occurred and be continuing, the Note Majority), the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred and be
continuing, the Insurer shall not have delivered a Servicer Extension Notice
pursuant to Section 3.19; or
(h) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default or under any other Insurance
and Indemnity Agreement relating to any Series (as defined in the Insurance
Agreement) an event of default thereunder shall have occurred and be continuing;
or
(i) A claim is made under the Note Policy.
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SECTION 9.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Insurer (or, if an
Insurer Default shall have occurred and be continuing), either the Indenture
Trustee (to the extent it has actual knowledge thereof) or a Note Majority, by
notice given in writing to the Servicer and each Rating Agency (and to the
Indenture Trustee if given by the Insurer or the Noteholders), may terminate all
of the rights and obligations of the Servicer under this Agreement; provided,
however, that no termination shall relieve the Servicer of any liability to
which it has previously become subject under this Agreement. On or after the
receipt by the Servicer of such written notice, the expiration without renewal
of the term of the Servicer pursuant to Section 3.19 all authority, power,
obligations and responsibilities of the Servicer under this Agreement, whether
with respect to the Notes, the Receivables, the other Trust Property or
otherwise, automatically shall pass to, be vested in and become obligations and
responsibilities of the Backup Servicer (or such other successor Servicer
appointed by the Controlling Party); provided, however, that the successor
Servicer shall have no liability with respect to (i) any obligation that was
required to be performed by the terminated Servicer prior to the date that the
successor Servicer becomes the Servicer or (ii) any claim of a third party based
on any alleged action or inaction of the terminated Servicer. The successor
Servicer is authorized and empowered by this Agreement to execute and deliver,
on behalf of the terminated Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the
Receivables, the other Trust Property and related documents to show the Trust or
the Indenture Trustee as lienholder or secured party on the related Lien
Certificates, or otherwise. The terminated Servicer agrees to cooperate with the
successor Servicer in effecting the termination of the responsibilities and
rights of the terminated Servicer under this Agreement, including the transfer
to the successor Servicer for administration by it of all cash amounts that
shall at the time be held by the terminated Servicer for deposit, or have been
deposited by the terminated Servicer, in the Collection Account or the Lockbox
Account or thereafter received with respect to the Receivables and the delivery
to the successor Servicer of all Receivable Files and Monthly Records and a
computer tape in readable form as of the most recent Business Day containing all
information necessary to enable the successor Servicer to service the Trust
Property. The Servicer shall, if requested by the Controlling Party, cooperate
with the successor Servicer in the establishment of a new Lockbox Account. The
Indenture Trustee and the Backup Servicer may set off and deduct any amounts
owed by the terminated Servicer from any amounts payable to the terminated
Servicer pursuant to this Agreement. For the purposes of succession hereunder,
the terminated Servicer shall, upon reasonable prior notice, grant the Indenture
Trustee, and the successor Servicer and the Controlling Party reasonable access
during normal business hours to the terminated Servicer's premises.
SECTION 9.3. Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 9.2, upon non-extension of the servicing term as referred to
in Section 3.19 or upon the resignation of the Servicer pursuant to Section 8.4,
the Backup Servicer (unless the Insurer shall
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have exercised its option pursuant to Section 9.3(b) to appoint an alternate
successor Servicer) shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement and the transactions set forth or
provided for in this Agreement, and shall be subject to all the rights,
responsibilities, restrictions, duties, liabilities and termination provisions
relating thereto placed on the Servicer by the terms and provisions of this
Agreement, except as otherwise stated herein; provided; however, that the Backup
Servicer shall not be liable for any acts, omissions or obligations of the
Servicer prior to such succession or for any breach by the Servicer of any of
its representations and warranties contained in this Agreement or in any of its
Related Documents. The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to term-to-term servicing as referred to in Section 3.19 and to
termination under Section 9.2 upon the occurrence of any Servicer Termination
Event applicable to it as Servicer.
(b) The Controlling Party may exercise at any time its right to appoint
as Backup Servicer or as successor to the Servicer a Person other than the
Person serving as Backup Servicer at the time, and (without limiting its
obligations under the Note Policy) shall have no liability to the Indenture
Trustee, the Servicer, the Company, the Person then serving as Backup Servicer,
any Noteholders or any other Person if it does so. Notwithstanding the above, if
the Backup Servicer shall be legally unable or unwilling to act as Servicer, and
an Insurer Default shall have occurred and be continuing, the Backup Servicer,
the Indenture Trustee or a Note Majority may petition a court of competent
jurisdiction to appoint any Eligible Servicer as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Backup Servicer
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. Subject to Section 8.4, no
provision of this Agreement shall be construed as relieving the Backup Servicer
of its obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant to Section 9.2, the resignation of the Servicer pursuant to
Section 8.4 or the non-extension of the servicing term of the Servicer as
referred to in Section 3.19. If upon the termination of the Servicer pursuant to
Section 9.2 or the resignation of the Servicer pursuant to Section 8.4, the
Controlling Party appoints a successor Servicer other than the Backup Servicer,
the Backup Servicer shall not be relieved of its duties as Backup Servicer
hereunder.
(c) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement if the Servicer had not
resigned or been terminated hereunder. If any successor Servicer is appointed
for any reason, the Insurer and such successor Servicer may agree on additional
compensation to be paid to such successor Servicer. Any successor Servicer shall
be entitled to reasonable transition expenses incurred in acting as successor
Servicer (the "Servicer Transition Expenses"), payable in accordance with
Section 4.6(b) hereof.
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SECTION 9.4. Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article IX, the
Indenture Trustee shall give prompt written notice thereof to the each Rating
Agency and to the Noteholders at their respective addresses appearing in the
Note Register.
SECTION 9.5. Action Upon Certain Failures of the Servicer. If the
Backup Servicer shall obtain actual knowledge of any Servicer Termination Event
or event but for the lapse of time or the giving of notice, or both, would
constitute a Servicer Termination Event, it shall be obligated to notify
promptly the Indenture Trustee, the Insurer and each Rating Agency of such
occurrence or circumstance. In the event a Responsible Officer of the Indenture
Trustee shall have received such notice (or any comparable notice from the
Servicer, the Insurer or by a Noteholder) or otherwise obtained actual knowledge
of any failure of the Servicer specified in Section 9.1 which would give rise to
a right of termination under such Section 9.1 upon the Servicer's failure to
remedy the same after notice, the Indenture Trustee shall give prompt notice
thereof to the Servicer, each Rating Agency, the Insurer and the Noteholders.
The Indenture Trustee shall be under no duty or obligation to investigate or
inquire as to any potential failure of the Servicer specified in Section 9.1.
SECTION 9.6. Waiver of Past Defaults. So long as an Insurer Default
shall not have occurred and be continuing, the Insurer (or if an Insurer Default
shall have occurred and be continuing, a Note Majority) may, on behalf of the
Noteholders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Termination Event
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon. The Indenture Trustee shall provide the
Noteholders with notice of any waiver of any default by the Servicer hereunder.
ARTICLE X
TERMINATION
SECTION 10.1 Optional Purchase of All Receivables.
(a) As an administrative convenience, the Servicer shall have the
option to purchase the Receivables and the other Trust Property on any Payment
Date if, as of the related Accounting Date, the Aggregate Principal Balance is
less than or equal to 10% of the Original Pool Balance (with the prior written
consent of the Insurer if such purchase would result in a claim on the Note
Policy or would result in any amount owing to the Insurer under the Insurance
Agreement remaining unpaid). To exercise such option, the Servicer shall pay the
aggregate Purchase Amounts for the Receivables and shall succeed to all
interests in and to the Trust Property. Not later than ten (10) days prior to
any proposed exercise of such option, the Servicer shall notify each Rating
Agency, the Indenture Trustee, the Insurer and the Owner Trustee of any
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proposed exercise of such option. To exercise such option, the Servicer shall
deposit pursuant to Section 4.5 in the Collection Account an amount equal to the
aggregate Purchase Amount for the Receivables (including Liquidated
Receivables), plus the appraised value of any other property held by the Trust,
such value to be determined by an appraiser mutually agreed upon by the
Servicer, the Insurer and the Indenture Trustee, and shall succeed to all
interests in and to the Trust.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.1 of
the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the "Insolvency Proceeds")
in the Collection Account.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Backup Servicer, the Indenture Trustee, the
Insurer and the Rating Agencies as soon as practicable after the Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the payment of
all amounts due to the Insurer under the Insurance Agreement, the end of the
Term of the Note Policy (as defined therein) and the surrender of the Note
Policy by the Indenture Trustee to the Insurer, the Certificateholders will
succeed to the rights of the Noteholders hereunder and the Owner Trustee will
succeed to the rights of, and assume the obligations of, the Indenture Trustee
pursuant to this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Amendment.
(a) This Agreement may be amended by the parties hereto with the prior
written consent of the Insurer (so long as no Insurer Default shall have
occurred and be continuing) but without the consent of any of the
Certificateholders or the Noteholders, (i) to cure any ambiguity, (ii) to
correct or supplement any provisions in this Agreement which may be inconsistent
with any other provision in this Agreement or (iii) for the purpose of making
any other provisions with respect to matters or questions arising under this
Agreement which are not inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Indenture Trustee and each Rating Agency, materially
and adversely affect the interests of the Certificateholders and the
Noteholders.
(b) This Agreement may also be amended from time to time by the parties
hereto with the prior written consent of the Insurer (so long as an Insurer
Default shall not have occurred and be continuing), the Indenture Trustee, and a
Note Majority (which consent of any Holder of a Note given pursuant to this
Section 11.1(b) or pursuant to any other provision of this Agreement
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shall be conclusive and binding on such Holder and on all future Holders of such
Note and of any Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the Note),
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Notes; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables,
distributions that shall be required to be made for the benefit of Noteholders
or Certificateholders, (ii) reduce the aforesaid percentage required to consent
to any such amendment or any waiver hereunder, without the consent of the
Holders of all Notes then outstanding, provided further, that if an Insurer
Default has occurred and is continuing, such action shall not materially
adversely affect the interest of the Insurer, or (iii) result in a downgrade or
withdrawal of the then current rating of the Notes by either Rating Agency
without the consent of each Noteholder. The provisions of this Section 11.1(b)
shall in no event be construed to require the consent of the Noteholders or the
Certificateholders to a reduction in the Target Overcollateralization Amount or
the required level of the Reserve Account.
(c) Prior to the execution of any such amendment or consent under
Section 11.1(a) or (b), the Servicer shall furnish the Indenture Trustee with a
written notice describing the substance of such amendment and the Indenture
Trustee shall forward such written notification of the substance of such
amendment or consent to the Insurer, Noteholders and the Rating Agencies within
the five (5) days of receipt thereof.
(d) Prior to the execution of any such amendment and receipt thereof by
the Indenture Trustee or consent under Section 11.1(a) or (b), the Indenture
Trustee shall furnish a true copy of such amendment or consent to each
Noteholder and to the Insurer.
(e) The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(f) Prior to the execution of any amendment to this Agreement, the
Owner Trustee, the Backup Servicer, the Insurer and the Indenture Trustee, upon
request, shall be entitled to receive and rely upon an Opinion of Counsel
(delivered at the expense of the Servicer) stating that the execution of such
amendment is authorized or permitted by this Agreement. The Owner Trustee, the
Backup Servicer and the Indenture Trustee may, but shall not be obligated to,
enter into any such amendment that affects the Issuer's, the Owner Trustee's,
the Backup Servicer's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
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SECTION 11.2. Protection of Title to Trust.
(a) The Company shall execute such financing statements prepared by the
Servicer and Servicer shall cause to be executed, filed, recorded and registered
such continuation and other statements or documents, all in such manner and in
such places as may be required by law or deemed reasonably necessary by the
Controlling Party fully to preserve, maintain and protect the interest of the
Trust, the Insurer and the Indenture Trustee under this Agreement in the Trust
Property and in the proceeds thereof against all other Persons. The Servicer
shall deliver (or cause to be delivered) to the Indenture Trustee and the
Insurer file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recordation, registration or filing. Triad and the Company shall cooperate fully
with the Servicer in connection with the obligations set forth above and shall
execute any and all documents reasonably required to fulfill the intent of this
Section 11.2(a).
(b) Neither the Company nor the Servicer shall change its name,
identity or corporate structure in any manner that would make any financing
statement or continuation statement filed in accordance with Section 11.2(a)
seriously misleading within the meaning of the applicable provisions of the UCC
or any title statute, unless it shall have given the Owner Trustee, the Insurer
and the Indenture Trustee at least sixty (60) days prior written notice thereof,
and promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Each of the Company and the Servicer shall give the Owner Trustee,
the Insurer and the Indenture Trustee at least sixty (60) days prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement. The Servicer shall at all times maintain each
office from which it services Receivables and its principal executive office
within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement, the Servicer's master computer
records (including any backup archives) that refer to any Receivable indicate
clearly that such Receivable is owned by the Trust. Indication of the Trust's
ownership of a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Receivable shall become a Purchased
Receivable, purchased in accordance with Section 10.1(a) hereof, a replaced
Receivable, or shall have been paid in full.
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(f) If at any time the Company or the Servicer proposes to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables (other than the Receivables) to any prospective purchaser, lender or
other transferee, the Servicer shall give to such prospective purchaser, lender
or other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they refer in any manner whatsoever to any
Receivable, indicate clearly that such Receivable has been sold and is owned by
the Trust (unless such Receivable shall become a Purchased Receivable, a
replaced Receivable, or shall have been paid in full).
(g) Upon reasonable notice, the Servicer shall permit the Insurer, the
Indenture Trustee, the Backup Servicer, the Company, each Rating Agency and
their respective agents, at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Receivables or any other portion of the Trust Property in its possession; any
Noteholder shall be afforded the same rights as described in this clause (g),
provided that such Noteholder agrees to pay for its own fees and expenses
incurred in such inspection, audit and making copies and abstracts.
(h) The Servicer shall furnish to the Owner Trustee, the Insurer, the
Indenture Trustee, the Backup Servicer and the Company upon request within five
(5) Business Days of such request the Schedule of Receivables, setting forth the
Receivables then held as part of the Trust and reconciling the list of
Receivables then held as part of the Trust to each of the Servicing Certificates
furnished before such request indicating removal of Receivables from the Trust
and the addition of Replacement Receivables to the Trust. A copy of such
Schedule and reconciliation may be obtained by any Noteholder by a request in
writing to the Indenture Trustee addressed to the Corporate Trust Office.
(i) In the event any of the events described in Section 9.1(e) shall
have occurred, or in the event Triad shall have been removed or replaced as
Servicer for any reason, then Triad and/or the Servicer shall immediately cause,
at the expense of Triad, each Certificate of Title for a Financed Vehicle to be
marked to reflect the security interest of the Indenture Trustee in the Financed
Vehicle, and Triad hereby appoints the Indenture Trustee its attorney-in-fact to
effect such marking, and the Indenture Trustee hereby accepts such appointment.
The appointment of the Indenture Trustee hereunder shall not operate to relieve
Triad and/or the Servicer of its obligations to mark each Certificate of Title
under this provision. Triad shall be liable for all costs, fees and expenses
incurred under this Section 11.2(i).
(j) The Servicer (or the applicable party in the case of Section
11.2(b) or (c)) shall deliver to the Insurer, Owner Trustee and the Indenture
Trustee (i) simultaneously with the execution and delivery of this Agreement and
any Subsequent Transfer Agreement and of each amendment thereto, (ii) upon the
occurrence of the events giving rise to an obligation to give notice pursuant to
Section 11.2(b) or (c), and (iii) within 90 days after the beginning of each
calendar year beginning in March 2000, and dated with such 90-day period, an
Opinion of Counsel in form and substance reasonably satisfactory to the Insurer
(i) stating that, in the opinion
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of such counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interests of the Trust and the Indenture Trustee in the Receivables, and
reciting the details of such filing or referring to prior Opinions of Counsel in
which such details are given or (ii) stating that, in the opinion of such
counsel, no such action is necessary to preserve and protect such interest
during the following 12-month period.
SECTION 11.3. Limitation on Rights of Noteholders.
(a) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
(b) No Noteholder shall have any right to vote (except as provided in
this Section 11.3 or Sections 9.2 or 11.1) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties to
this Agreement, nor shall anything set forth in this Agreement, or contained in
the terms of the Notes, be construed so as to constitute the Noteholders from
time to time as partners or members of an association; nor shall any Noteholder
be under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision of this Agreement or any
Related Document.
(c) No Noteholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Indenture Trustee a written notice of
default and of the continuance thereof, as provided in Section 5.6 of the
Indenture and unless also the Holders of Notes evidencing not less than 25% of
the Note Balance shall have made written request upon the Indenture Trustee to
institute such action, suit or proceeding in its own name as Indenture Trustee
under this Agreement and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Indenture Trustee, for
sixty (60) days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding and no direction inconsistent with such written request has been
given to the Indenture Trustee during such sixty (60) day period by a Note
Majority; it being understood and intended, and being expressly covenanted by
each Noteholder with every other Noteholder and the Indenture Trustee, that no
one or more Holders of Notes shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb, or prejudice the rights of the Holders of any other of the
Notes, or to obtain or seek to obtain priority over or preference to any other
such Holder, or to enforce any right under this Agreement, except in the manner
provided in this Agreement and for the equal, ratable and common benefit of all
Noteholders. For the protection and enforcement of the provisions of this
Section 11.3, each and every Noteholder and the Indenture Trustee shall be
entitled to such relief as can be given either at law or in equity.
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SECTION 11.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.5. SUBMISSION TO JURISDICTION; WAIVERS. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS
OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN ANY INCONVENIENT COURT AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;
(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
IN SECTION 11.12 OR AT SUCH OTHER ADDRESS OF WHICH ALL OF THE OTHER PARTIES
HERETO SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE
IN ANY OTHER JURISDICTION; AND
(5) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN
THIS SUBSECTION ANY SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES.
SECTION 11.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
88
<PAGE> 94
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
SECTION 11.7. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.
SECTION 11.8. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
and as provided in the provisions of the Agreement concerning the resignation of
the Servicer and the Backup Servicer, this Agreement may not be assigned by the
Company or the Servicer without the prior written consent of the Insurer (so
long as no Insurer Default shall have occurred and be continuing). Prior written
notice of any such assignment shall be provided to each Rating Agency by the
assignor.
SECTION 11.9. Notes Nonassessable and Fully Paid. Noteholders shall not
be personally liable for obligations of the Trust. The interests represented by
the Notes shall be nonassessable for any losses or expenses of the Trust or for
any reason whatsoever, and Notes upon authentication thereof by the Indenture
Trustee pursuant to the Indenture are and shall be deemed fully paid.
SECTION 11.10. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Certificateholders, the Owner Trustee and the Noteholders, as third-party
beneficiaries. The Insurer and its successors and assigns shall be a third-party
beneficiary with respect to the provisions, and shall be entitled to rely upon
and directly enforce such provisions so long as no Insurer Default shall have
occurred and be continuing. Except as expressly stated otherwise herein, any
right of the Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Insurer in its
sole and absolute discretion. The Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Note
Policy) upon delivery of a written notice to the Indenture Trustee. Nothing in
this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.11. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
SECTION 11.12. Notices. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt
89
<PAGE> 95
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Company, at the following address: Asset Backed Securities
Corporation, 11 Madison Avenue, New York, New York 10010, Telecopy No.: (212)
325-8261, (b) in the case of the Servicer, at the following address: Triad
Financial Corporation, 7711 Center Avenue, Suite 100, Huntington Beach,
California 92647, Telecopy No.: (714) 894-8617, (c) in the case of the Indenture
Trustee, and for so long as the Indenture Trustee is the Backup Servicer, the
Backup Servicer, at the following address: The Chase Manhattan Bank, 450 West
33rd Street, New York, New York 10001-2697, Telecopy No.: (212) 946-8191, (d) in
the case of the Trust or the Owner Trustee, at the following address: Wilmington
Trust Company, 1100 North Market Street, Wilmington, Delaware 19890, Telecopy
No.: (302) 651-1576, with a copy to the Servicer and (e) in the case of the
Insurer, to Financial Security Assurance Inc., 350 Park Avenue, New York, New
York 10022; Attention: Senior Vice President, Transaction Oversight (in each
case in which notice or other communication to the Insurer refers to a Servicer
Termination Event or an Insurance Agreement Event of Default, a claim on the
Note Policy, a Deficiency Notice pursuant to Section 5.1 of this Agreement or
with respect to which failure on the part of the Insurer to respond shall be
deemed to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the General
Counsel and the Head-Financial Guaranty Group and shall be marked to indicate
"URGENT MATERIAL ENCLOSED"); (f) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007; and (g) in the case of Standard & Poor's, to Standard & Poor's Ratings
Group, 25 Broadway - 15th Floor, New York, New York 10004, Attention: Asset
Backed Surveillance Department; or at such other address as shall be designated
by any such party in a written notice to the other parties. Any notice required
or permitted to be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Note Register,
and any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Noteholder
receives such notice.
SECTION 11.13. 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 hereunder. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Trust, the Indenture Trustee, the Insurer and the Noteholders and their
respective permitted successors and assigns, if any. Any request, notice,
direction, consent, waiver or other instrument or action by any Noteholder shall
bind its successors and assigns. Except as otherwise provided in this Article
XI, no other Person shall have any right or obligation hereunder.
SECTION 11.14. Assignment to Indenture Trustee. The Company hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Trust to the Indenture Trustee pursuant to the
Indenture, for the benefit of the Noteholders and the Insurer, of all right,
title and interest of the Issuer in, to and under the Receivables and the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
90
<PAGE> 96
SECTION 11.15. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer, the Company and the Seller shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to the
Trust, acquiesce, petition or otherwise invoke or cause the Trust to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with respect to the Company, acquiesce to,
petition or otherwise invoke or cause the Company to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Company under any federal or state bankruptcy, insolvency or similar
law, appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of the Company or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Company.
91
<PAGE> 97
IN WITNESS WHEREOF, the Company, the Servicer, the Trust and
the Indenture Trustee have caused this Sale and Servicing Agreement to be duly
executed by their respective officers, effective as of the day and year first
above written.
TRIAD FINANCIAL CORPORATION, in its
individual capacity and as Servicer
By:
----------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
THE CHASE MANHATTAN BANK, as Indenture
Trustee and as Backup Servicer
By:
-----------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
ASSET BACKED SECURITIES CORPORATION, as
Company
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TRIAD AUTO RECEIVABLES OWNER TRUST
1998-4, as Purchaser
By: Wilmington Trust Company,
not in its individual capacity but solely
as Owner Trustee
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
92
<PAGE> 98
SCHEDULE A
SCHEDULE OF RECEIVABLES
ON FILE WITH THE SERVICER AND THE INDENTURE TRUSTEE.
SCHEDULE A
<PAGE> 99
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF company
WITH RESPECT TO RECEIVABLES
The Company hereby makes the following representations and warranties
as to the Receivables. Unless otherwise specified, such representations and
warranties are made as of the Closing Date with respect to Initial Receivables
and as of the Subsequent Transfer Date, with respect to Subsequent Receivables,
as applicable. Such representations and warranties shall survive the sale,
transfer, and assignment of the Receivables by the Purchaser.
(a) Lien in Force. The Company has not taken any action which would
have the effect of releasing the related Financed Vehicle from the Lien granted
by such Receivable in whole or in part.
(b) No Liens. The Company has not received notice of any Liens or
claims, including Liens for work, labor, materials or unpaid state or federal
taxes, relating to the Financed Vehicle securing the Receivable, that are or may
be prior to or equal to the Lien granted by the Receivable.
(c) Good Title. It is the intention of the Company that the transfer
and assignment herein contemplated constitutes a sale of the Receivables from
the Company to the Purchaser and that the beneficial interest in and title to
the Receivables not be part of the Company's estate in the event of the filing
of a bankruptcy petition by or against the Company under any bankruptcy law. No
receivable has been sold, transferred, assigned, or pledged by the Company to
any Person other than the Purchaser. Immediately prior to the transfer and
assignment herein contemplated, the Company had good and marketable title to the
Receivable free and clear of any Lien and had full right and power to transfer
and assign the Receivable to the Purchaser and immediately upon the transfer and
assignment of the Receivable to the Purchaser, shall have good and marketable
title to the Receivable, free and clear of any Lien; and the Purchaser's
interest in the Receivable resulting from the transfer has been perfected under
the UCC.
(d) No Assignment. As of the Closing Date with respect to Initial
Receivables and as of the Subsequent Transfer Date with respect to Subsequent
Receivables, the Company shall not have taken any action to convey any right to
any Person that would result in such Person having a right to payments received
under the Insurance Policies or Dealer Agreements, or payments due under the
Receivable, that is senior to, or equal with, that of the Purchaser.
SCHEDULE B-1
<PAGE> 100
SCHEDULE C
[Form of Information Request]
__________ ___, 199_
The Chase Manhattan Bank, as Indenture Trustee
450 West 33rd Street
New York, NY 10001-2697
Re: Triad Auto Receivables Owner Trust 1998-4
This information request is delivered to you pursuant to Sections
3.11(d) and 4.10(c) of the Sale and Servicing Agreement, dated as of November 1,
1998, among Triad Financial Corporation individually and as servicer, Asset
Backed Securities Corporation, as company, Triad Auto Receivables Owner Trust
1998-4, as purchaser, and The Chase Manhattan Bank, as indenture trustee and
backup servicer (as amended, supplemented or otherwise modified from time to
time, the "Sale and Servicing Agreement"). Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in the Sale and
Servicing Agreement.
The undersigned hereby certifies that it is a Noteholder holding
$___________ aggregate principal amount of Class A Notes. Please provide copies
of the Accountant's Report and the audited annual financial statements of the
Servicer for the fiscal year ended _____] [additional information delivered
pursuant to Section 4.10(c) of the Sale and Servicing Agreement] to the
undersigned at the following address: _______________________.
Very truly yours,
By:
-----------------------------------------
Name:
Title:
SCHEDULE C
<PAGE> 101
SCHEDULE D
THREATENED LITIGATION
In or about September 1997, New York Life Insurance Company ("New York
Life") notified Triad that certain loans originated by Triad for the NAFCO Auto
Trusts may not satisfy NAFCO underwriting criteria and that Triad may be
obligated to repurchase certain loans. In response, Triad provided certain
information to New York Life concerning the underwriting of loans. In May 1998,
New York Life demanded that Triad repurchase approximately $2.6 million of loans
based upon a claim that Triad breached certain representations and warranties
under the loan sale agreement between Triad and a New York Life affiliate. At
New York Life's request, Triad entered into a series of Standstill and Tolling
Agreements which tolls until December 16, 1998 any applicable statute of
limitations with respect to New York Life's claim. Triad intends to vigorously
defend any action which may be brought with respect to this matter. No
prediction can be made with respect to the outcome of any litigation that may
result from New York Life's claim.
SCHEDULE D
<PAGE> 102
EXHIBIT A
FORM OF SERVICER'S CERTIFICATE
EXHIBIT A-1
<PAGE> 103
EXHIBIT B
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: The Chase Manhattan Bank
Re: Sale and Servicing Agreement (the "Servicing
Agreement"), dated as of November 1, 1998, among
Asset Backed Securities Corporation, as Company
("Company") Triad Auto Receivables Owner Trust
1998-4, as purchaser (the "Trust"), Triad Financial
Corporation, individually and in its capacity as
Servicer (the "Servicer"), and The Chase Manhattan
Bank, as Indenture Trustee and Backup Servicer (the
"Indenture Trustee" and the "Backup Servicer"
respectively)
In connection with the administration of the Receivables held by you as
the Indenture Trustee, we request the release, and acknowledge receipt, of the
Receivable and related Receivable File described below, for the reason
indicated.
Obligor's Name, Customer Account Number and Vehicle Identification Number
Reason for Requesting Documents (check one)
_____1. Receivable Paid in Full. All amounts received in connection with such
payments have been deposited as required pursuant to Section 3.2 of the
Servicing Agreement
_____2. Receivable Purchased or replaced from Trust pursuant to Section 2.6 or
3.7 of the Servicing Agreement
_____3. Receivable is being serviced or subject to enforcement of rights and
remedies pursuant to Section 2.3(b) -------------- of the Servicing
Agreement
_____4. Other (explain) ______________________________________
If item 1 or 2 above is checked, and if all or part of the Receivable or
Receivable File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Receivable.
EXHIBIT B-1
<PAGE> 104
If item 3 or 4 above is checked, upon our return of all of the above documents
to you as the Indenture Trustee, please acknowledge your receipt by signing in
the space indicated below, and returning this form.
TRIAD FINANCIAL CORPORATION
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
---------------------------------
DOCUMENTS RETURNED TO INDENTURE TRUSTEE
THE CHASE MANHATTAN BANK
(Indenture Trustee)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
---------------------------------
EXHIBIT B-2
<PAGE> 1
Exhibit 10.3.2
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
TRIAD FINANCIAL CORPORATION
and
CREDIT SUISSE FIRST BOSTON
Dated as of November 1, 1998
Triad Auto Receivables Owner Trust 1998-4
$100,000,000 5.98% Asset Backed Notes, Class A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Definitions...........................................................................................1
Section 2. Representations, Warranties and Agreements of Financial Security......................................3
Section 3. Representations, Warranties and Agreements of the Underwriter.........................................5
Section 4. Indemnification.......................................................................................6
Section 5. Indemnification Procedures............................................................................7
Section 6. Contribution..........................................................................................8
Section 7. Miscellaneous.........................................................................................9
EXHIBIT A - Opinion of Assistant General Counsel
</TABLE>
<PAGE> 3
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of November 1, 1998, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), TRIAD FINANCIAL CORPORATION (the
"Company") and CREDIT SUISSE FIRST BOSTON (the "Underwriter").
Section 2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Commission" means the Securities and Exchange Commission.
"Company Party" means any of the Company, its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Federal Securities Laws" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement, the Stock Pledge
Agreement, the Spread Account Agreement and the Insurance Agreement.
"Financial Security Information" has the meaning provided in
Section 2(g) hereof.
"Financial Security Party" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Indenture" means the Indenture dated as of November 1, 1998 between
Triad Auto Receivables Owner Trust 1998-4 and The Chase Manhattan Bank, as
trustee, as the same may be amended and supplemented from time to time in
accordance with its terms.
"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of November 1, 1998, among Financial Security, Triad Auto Receivables
Owner Trust 1998-4, the
-1-
<PAGE> 4
Triad Financial Special Purpose Corporation II and the Company, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Losses" means (a) any actual out-of-pocket damages incurred by the
party entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including reasonable
fees or expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such payment
to the date of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of contract.
"Note Policy" means the financial guaranty insurance policy delivered
by Financial Security with respect to the Securities.
"Offering Document" means the Prospectus and any other material or
documents delivered by the Underwriter or any Underwriter Party to any Person in
connection with the offer or sale of the Securities.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other organization or entity (whether
governmental or private).
"Prospectus" means, collectively, the Prospectus relating to the
Securities dated November 19, 1998, and the Prospectus Supplement.
"Prospectus Supplement" means the Prospectus Supplement dated December
10, 1998 relating to the Securities.
"Rating Agencies" has the meaning provided in the last paragraph of
Section 2 hereof.
"Securities" means the Triad Auto Receivables Owner Trust 1998-4
$100,000,000 5.98% Asset Backed Notes, Class A described in the Offering
Document and issued pursuant to the Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule or regulation in effect from time to time under such Act.
"Spread Account Agreement" means the Master Spread Account Agreement
dated as of November 1, 1998, among the Triad Financial Special Purpose
Corporation II, Financial Security, the Collateral Agent and the Trustee
specified therein, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
-2-
<PAGE> 5
"Stock Pledge Agreement" means the Stock Pledge and Collateral Agency
Agreement dated as of November 1, 1998 between the Company, Triad Financial
Special Purpose Corporation II, The Chase Manhattan Bank, as Collateral Agent,
and Financial Security Assurance.
"Underwriter Information" has the meaning provided in Section 3(c)
hereof.
"Underwriting Agreement" means the Underwriting Agreement dated as of
December 7, 1998 between the Company and the Underwriter with respect to the
offer and sale of the Securities, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Underwriting Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent of "controlling person" (as such item is used in the Securities Act) of
any of the foregoing.
Section 3. Representations, Warranties and Agreements of Financial
Security. Financial Security represents, warrants and agrees with the parties
hereto as follows:
(a) Organization, Etc. Financial Security is a stock insurance
company duly organized, validly existing and authorized to transact
financial guaranty insurance business under the laws of the State of
New York.
(b) Authorization, Etc. The Note Policy and the Financial
Security Agreements have been duly authorized, executed and delivered
by Financial Security.
(c) Validity, Etc. The Note Policy and the Financial Security
Agreements constitute valid and binding obligations of Financial
Security, enforceable against Financial Security in accordance with
their terms, subject, as to the enforcement of remedies, to bankruptcy,
insolvency, reorganization, rehabilitation, moratorium and other
similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of
Financial Security and to the application of general principles of
equity and subject, in the case of this Agreement, to principles of
public policy limiting the right to enforce the indemnification
provisions contained herein.
(d) Exemption From Registration. The Note Policy is exempt
from registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by
Financial Security of the Note Policy or the Financial Security
Agreements, nor the performance by Financial Security of its
obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security nor
result in a breach of, or constitute a default under, any material
agreement or other instrument to which Financial Security is a
-3-
<PAGE> 6
party or by which any of its property is bound nor violate any
judgment, order or decree applicable to Financial Security of any
governmental or regulatory body, administrative agency, court or
arbitrator having jurisdiction over Financial Security (except that, in
the published opinion of the Securities and Exchange Commission, the
indemnification provisions of this Agreement, insofar as they relate to
indemnification for liabilities arising under the Securities Act, are
against public policy as expressed in the Securities Act and are
therefore unenforceable).
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 1997 and December 31, 1996 and
the related consolidated statements of income, changes in shareholder's
equity and cash flows for the fiscal years then ended and the interim
consolidated balance sheet of Financial Security as of September 30,
1998, and the related statements of income, changes in shareholder's
equity and cash flows for the interim period then ended, furnished by
Financial Security to the Underwriter, fairly present in all material
respects the financial condition of Financial Security as of such dates
and for such periods in accordance with generally accepted accounting
principles consistently applied (subject as to interim statements to
normal year-end adjustments) and since the date of the most current
interim consolidated balance sheet referred to above there has been no
change in the financial condition of Financial Security which would
materially and adversely affect its ability to perform its obligations
under the Note Policy.
(g) Financial Security Information. The information in the
Prospectus Supplement set forth under the caption "THE INSURER"(as
revised from time to time in accordance with the provisions hereof, the
"Financial Security Information") is limited and does not purport to
provide the scope of disclosure required to be included in a prospectus
with respect to a registrant in connection with the offer and sale of
securities of such registrant registered under the Securities Act.
Within such limited scope of disclosure, however, as of the date of the
Prospectus Supplement and as of the date hereof, the Financial Security
Information does not contain any untrue statement of a material fact,
or omit to state a material fact necessary to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading.
(h) Additional Information. Financial Security will furnish to
the Underwriter or the Company, upon request of the Underwriter or the
Company, as the case may be, copies of Financial Security's most recent
financial statements (annual or interim, as the case may be) which
fairly present in all material respects the financial condition of
Financial Security as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently
applied except as noted therein (subject, as to interim statements, to
normal year-end adjustments). In addition, if the delivery of a
Prospectus relating to the Securities is required at any time prior to
the expiration of nine months after the time of issuance of the
Prospectus in connection with the offering or sale of the Securities,
the Company or the Underwriter will notify Financial Security of such
requirement to deliver a Prospectus and Financial Security will
promptly
-4-
<PAGE> 7
provide the Underwriter with any revisions to the Financial Security
Information that are in the judgment of Financial Security necessary to
prepare a supplement to the Prospectus.
(i) Opinion of Counsel. Financial Security will furnish to the
Underwriter and the Company, on the closing date for the sale of the
Securities an opinion of its Assistant General Counsel, to the effect
set forth in Exhibit A attached hereto, dated such closing date and
addressed to the Company and the Underwriter.
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Underwriter and the Company, upon request,
as comfort from its independent accountants in respect of its financial
condition, (i) at the expense of the Person specified in the Insurance
Agreement, a copy of the Prospectus, including either a manually signed
consent or a manually signed report of Financial Security's independent
accountants and (ii) the quarterly review letter by Financial
Security's independent accountants in respect of the most recent
interim financial statements of Financial Security.
Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its insurance financial strength by
Moody's Investors Service, Inc. or its insurer financial strength by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, or any other
rating agency (collectively, the "Rating Agencies"). The Rating Agencies, in
assigning such ratings, take into account facts and assumptions not described in
the Prospectus and the facts and assumptions considered by the Rating Agencies,
and the ratings issued thereby, are subject to change over time.
Section 4. Representations, Warranties and Agreements of the
Underwriter. The Underwriter represents, warrants and agrees with the parties
hereto as follows:
(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers
and sales of the Securities and make such offers and sales in the
manner provided in the Offering Document.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Securities unless such
Offering Document includes such information as has been furnished by
Financial Security for inclusion therein and the information therein
concerning Financial Security has been approved by Financial Security
in writing. Financial Security hereby consents to the information in
respect of Financial Security included in the Prospectus Supplement.
Each Offering Document will include the following statement:
"The Note Policy is not covered by the property/casualty
insurance security fund specified in Article 76 of the New
York Insurance Law".
Each Offering Document including financial information with respect to
Financial Security prepared in accordance with generally accepted
accounting principles will include the following statement immediately
preceding such financial information:
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<PAGE> 8
"The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its
stockholders. No consideration is given by the New York State
Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in
making such determinations."
(c) Underwriter Information. All material provided by the
Underwriter for inclusion in the Offering Document (as revised from
time to time, the "Underwriter Information"), insofar as such
information relates to the Underwriter is true and correct in all
material respects. In respect of the Prospectus Supplement, the
Underwriter Information is limited to the information set forth on the
cover page in the third paragraph and the information set under the
caption "UNDERWRITING".
Section 5. Indemnification.
(a) Financial Security agrees, upon the terms and subject to
the conditions provided herein, to indemnify, defend and hold harmless
each Company Party and each Underwriter Party against (i) any and all
Losses incurred by them with respect to the offer and sale of the
Securities and resulting from Financial Security's breach of any of its
representations, warranties or agreements set forth in Section 2 hereof
and (ii) any and all Losses to which any Company Party or Underwriter
Party may become subject, under the Securities Act or otherwise,
insofar as such Losses arise out of or result from an untrue statement
of a material fact contained in any Offering Document or the omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
omission was made in the Financial Security Information included
therein in accordance with the provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party against (i) any and all Losses incurred by
them with respect to the offer and sale of the Securities and resulting
from the Underwriter's breach of any of its representations, warranties
or agreements set forth in Section 3 hereof and (ii) any and all Losses
to which any Financial Security Party may become subject, under the
Securities Act or otherwise, insofar as such Losses arise out of or
result from an untrue statement of a material fact contained in any
Offering Document or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission was made in the
Underwriter Information included therein.
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<PAGE> 9
(c) Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party shall
reimburse the Indemnified Party promptly upon establishment by the
Indemnified Party to the Indemnifying Party of the Losses incurred.
Section 6. Indemnification Procedures. Except as provided below in
Section 6 with respect to contribution, the indemnification provided herein by
an Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; provided, however, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel satisfactory to the Indemnified Party in any such
action or proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that (A) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party and
(B) the representation of the Indemnifying Party and the Indemnified Party by
the same counsel would be inappropriate or contrary to prudent practice, in
which case, if the Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all the
Company Parties, one such firm for all Underwriter Parties and one such firm for
all Financial Security Parties, as the case may be, which firm shall be
designated in writing by the Company in respect of the Company Parties, by the
Underwriter in respect of the Underwriter Parties and by Financial Security in
respect of the Financial Security Parties. The Indemnifying Party shall not be
liable for any settlement of any such claim or action unless the Indemnifying
Party shall have consented thereto or be in default in its obligations
hereunder. Any failure by an Indemnified Party to comply with the provisions of
this Section shall relieve the Indemnifying Party of liability only if such
failure is prejudicial to the position of the Indemnifying Party and then only
to the extent of such prejudice.
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<PAGE> 10
Section 7. Contribution.
(a) To provide for just and equitable contribution if the
indemnification provided by any Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of this
Section), each Indemnifying Party shall contribute to the Losses arising from
any breach of any of its representations, warranties or agreements contained in
this Agreement on the basis of the relative fault of each of the parties as set
forth in Section 6(b) below; provided, however, that an Indemnifying Party shall
in no event be required to contribute to all Indemnified Parties an aggregate
amount in excess of the Losses incurred by such Indemnified Parties resulting
from the breach of representations, warranties or agreements contained in this
Agreement.
(b) The relative fault of each Indemnifying Party, on the one hand, and
of each Indemnified Party, on the other, shall be determined by reference to,
among other things, whether the breach of, or alleged breach of, any
representations, warranties or agreements contained in this Agreement relates to
information supplied by, or action within the control of, the Indemnifying Party
or the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such breach.
(c) The parties agree that Financial Security shall be solely
responsible for the Financial Security Information and the Underwriter shall be
solely responsible for the Underwriter Information and that the balance of each
Offering Document shall be the responsibility of the Company.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount in excess of the
amount by which the total underwriting discounts and commissions received by the
Underwriter exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of any breach by the Underwriter of
its representations or warranties contained in Section 3 hereof.
(e) No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(f) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
Section 8. Miscellaneous.
(a) Notices. All notices and other communications provided for under
this Agreement shall be delivered to the address set forth below or to such
other address as shall be designated by the recipient in a written notice to the
other party or parties hereto:
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If to Financial Security: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President -- Transaction
Oversight Department (with a copy to the attention
of the General Counsel)
Re: Triad Auto Receivables Owner Trust, 1998-4,
$100,000,000 5.98% Asset Backed Notes, Class A.
Confirmation: (212) 826-0100
Facsimile Nos.: (212) 339-3518, (212) 339-3529
(in each case in which notice or other communication
to Financial Security refers to an Event of Default,
a claim on the Note Policy or with respect to which
failure on the part of Financial Security to respond
shall be deemed to constitute consent or acceptance,
then a copy of such notice or other communication
should also be sent to the attention of each of the
General Counsel and the Head-Financial Guaranty Group
and shall be marked to indicate "URGENT MATERIAL
ENCLOSED.")
If to the Company: Triad Financial Corporation
7711 Center Avenue, Suite 100
Huntington Beach, California 92647
Facsimile No: (714) 373-6428
Confirm No: (714) 373-8300
If to the Underwriter: Credit Suisse First Boston
Eleven Madison Avenue
New York, New York 10010
Attention: Legal Department
Facsimile No: (212) 325-8261
Confirm No: (212) 325-2000
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) Assignments. This Agreement may not be assigned by any party
without the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing signed
by each party hereto.
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<PAGE> 12
(e) Survival, Etc. The indemnity and contribution agreements contained
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnifying
Party, (ii) the issuance of the Securities or (iii) any termination of this
Agreement or the Note Policy. The indemnification provided in this Agreement
will be in addition to any liability which the parties may otherwise have and
shall in no way limit any obligations of the parties to the Underwriting
Agreement or the Insurance Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
--------------------------------------
Name:
Title:
TRIAD FINANCIAL CORPORATION
By:
--------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:
--------------------------------------
Name:
Title:
<PAGE> 14
EXHIBIT A
OPINION OF ASSISTANT GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized,
validly existing and authorized to transact financial guaranty insurance
business under the laws of the State of New York.
2. The Note Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.
3. The Note Policy and the Financial Security Agreements constitute
valid and binding obligations of Financial Security, enforceable against
Financial Security in accordance with their terms, subject, as to the
enforcement of remedies, to bankruptcy, insolvency, reorganization,
rehabilitation, moratorium and other similar laws affecting the enforceability
of creditors' rights generally applicable in the event of the bankruptcy or
insolvency of Financial Security and to the application of general principles of
equity and subject, in the case of the Indemnification Agreement, to principles
of public policy limiting the right to enforce the indemnification provisions
contained therein insofar as they relate to indemnification for liabilities
arising under applicable securities laws.
4. The Note Policy is exempt from registration under the Securities Act
of 1933, as amended (the "Act").
5. Neither the execution nor delivery by Financial Security of the Note
Policy or the Financial Security Agreements, nor the performance by Financial
Security of its obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security or, to the best
of my knowledge, result in a breach of, or constitute a default under, any
agreement or other instrument to which Financial Security is a party or by which
it or any of its property is bound or, to the best of my knowledge, violate any
judgment, order or decree applicable to Financial Security of any governmental
or regulatory body, administrative agency, court or arbitrator having
jurisdiction over Financial Security (except that in the published opinion of
the Securities and Exchange Commission the indemnification provisions of the
Indemnification Agreement, insofar as they relate to indemnification for
liabilities arising under the Act, are against public policy as expressed in the
Act and are therefore unenforceable).
In addition, please be advised that I have reviewed the description of
Financial Security under the caption "THE INSURER" in the Prospectus Supplement
dated December 10, 1998 (the "Offering Document") with respect to the
Securities. The information provided in the Offering
<PAGE> 15
Document with respect to Financial Security is limited and does not purport to
provide the scope of disclosure required to be included in a prospectus with
respect to a registrant under the Act in connection with the public offer and
sale of securities of such registrant. Within such limited scope of disclosure,
however, there has not come to my attention any information which would cause me
to believe that the description of Financial Security referred to above, as of
the date of the Offering Document, contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that no opinion is rendered with respect to any financial
statements or other financial information contained or referred to therein).
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