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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) June 30, 1998
--------------------------
Asset Backed Securities Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or 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.
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<CAPTION>
Exhibit
No. Document Description
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<S> <C>
1.2 Underwriting Agreement, dated as of June 24, 1998, between Credit
Suisse First Boston Corporation and Asset Backed Securities
Corporation.
4.1.4 Indenture, dated as of June 30, 1998 between Compass Auto Receivables
Trust 1998-A, as Issuer, and The Chase Manhattan Bank, as Indenture
Trustee.
4.4.7 Amended and Restated Declaration of Trust, dated as of June 30, 1998,
between Asset Backed Securities Corporation, Compass Auto Receivables
Corporation, as initial Certificateholder and Settlor, and The Bank of
New York Trust Company of Florida, N.A., as Owner Trustee.
10.1.4 First Tier Receivables Purchase Agreement, dated as of June 30, 1998
between Compass Bank, an Alabama state banking corporation, as Seller,
Compass Bank, a Texas state bank, as Seller, and Compass Auto
Receivables Corporation, as Purchaser.
10.1.5 Second Tier Receivables Purchase Agreement, dated as of June 24,
between Compass Auto Receivables Corporation, Compass Bank, an Alabama
state banking corporation, and Compass Bank, a Texas state bank.
10.2.2 Sale and Servicing Agreement, dated as of June 30, 1998, between
Compass Auto Receivables Trust 1998-A, as Issuer, Asset Backed
Securities Corporation, Compass Bank, an Alabama state banking
corporation, as Servicer, and The Chase Manhattan Bank, as Indenture
Trustee.
10.3 Security Agreement, dated as of June 30, 1998, given by Compass Bank,
an Alabama state banking corporation, and Compass Bank, a Texas state
bank.
</TABLE>
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SIGNATURES
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)
Dated: July 14, 1998 By: /s/ Erik A. Falk
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Name: Erik A. Falk
Title: Vice President
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INDEX TO EXHIBITS
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<CAPTION>
Exhibit
No. Document Description
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<S> <C>
1.2 Underwriting Agreement, dated as of June 24, 1998, between Credit
Suisse First Boston Corporation and Asset Backed Securities
Corporation.
4.1.4 Indenture, dated as of June 30, 1998 between Compass Auto Receivables
Trust 1998-A, as Issuer, and The Chase Manhattan Bank, as Indenture
Trustee.
4.4.7 Amended and Restated Declaration of Trust, dated as of June 30, 1998,
between Asset Backed Securities Corporation, Compass Auto Receivables
Corporation, as initial Certificateholder and Settlor, and The Bank of
New York Trust Company of Florida, N.A., as Owner Trustee.
10.1.4 First Tier Receivables Purchase Agreement, dated as of June 30, 1998
between Compass Bank, an Alabama state banking corporation, as Seller,
Compass Bank, a Texas state bank, as Seller, and Compass Auto
Receivables Corporation, as Purchaser.
10.1.5 Second Tier Receivables Purchase Agreement, dated as of June 24,
between Compass Auto Receivables Corporation, Compass Bank, an Alabama
state banking corporation, and Compass Bank, a Texas state bank.
10.2.2 Sale and Servicing Agreement, dated as of June 30, 1998, between
Compass Auto Receivables Trust 1998-A, as Issuer, Asset Backed
Securities Corporation, Compass Bank, an Alabama state banking
corporation, as Servicer, and The Chase Manhattan Bank, as Indenture
Trustee.
10.3 Security Agreement, dated as of June 30, 1998, given by Compass Bank,
an Alabama state banking corporation, and Compass Bank, a Texas state
bank.
</TABLE>
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Exhibit 1.2
Execution Copy
COMPASS AUTO RECEIVABLES TRUST 1998-A
$127,235,000 CLASS A-1 5.659% ASSET BACKED NOTES
$81,700,000 CLASS A-2 5.709% ASSET BACKED NOTES
$170,445,000 CLASS A-3 5.900% ASSET BACKED NOTES
ASSET BACKED SECURITIES CORPORATION
Company
UNDERWRITING AGREEMENT
----------------------
June 24, 1998
Credit Suisse First Boston Corporation,
as Representative (the "Representative")
of the Several Underwriters named herein
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 Compass Auto Receivables Trust 1998-A (the "Trust") to
issue and sell $127,235,000 principal amount of its 5.659% Class A-1 Asset
Backed Notes (the "Class A-1 Notes"), $81,700,000 principal amount of its 5.709%
Class A-2 Asset Backed Notes (the "Class A-2 Notes") and $170,445,000 principal
amount of its 5.900% Class A-3 Asset Backed Notes (the "Class A-3 Notes and
together with the Class A-1 Notes and Class A-2 Notes, the "Notes") to the
several underwriters named in Schedule I attached hereto (the "Underwriters").
The Trust will also issue $22,080,879 6.650% Asset Backed Certificates (the
"Certificates" and together with the Notes, the "Securities") which will be
retained by the Compass Auto Receivables Corporation ("Compass Auto"). 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 June 1, 1998 (the "Cutoff Date"),
(including payments on the Receivables allocated to principal on and after the
Cutoff Date and payments on the Receivables allocated to interest on and after
July 1, 1998) and the other property and the
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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, Compass Bank, an Alabama state banking
corporation ("Compass Bank"), 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 Agreement") to be dated as
the Closing Date, among the Company, Compass Auto and The Bank of New York Trust
Company of Florida, N.A., as owner trustee (the "Owner Trustee").
The Receivables were originated or acquired by Compass Bank, an Alabama
state banking corporation and Compass Bank, a Texas state bank (each a "Seller"
and together, the "Sellers"). The Sellers will transfer the Receivables owned
by it to Compass Auto pursuant to the terms of a First Tier Receivables Purchase
Agreement (the "First Tier Receivables Purchase Agreement") to be dated as of
the Closing Date among the Sellers and Compass Auto. Compass Auto will sell the
Receivables to the Company pursuant to the terms of a Second Tier Receivables
Purchase Agreement (the "Second Tier Receivables Purchase Agreement") dated as
of June 24, 1998 among the Sellers, the Company and Compass Auto.
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, First Tier Receivables Purchase Agreement, Second Tier Receivables
Purchase Agreement and Note Depository Agreement.
2. Representations and Warranties of the Company. The Company represents
and warrants to each of the Underwriters as of the date hereof as follows:
(a) A registration statement on Form S-3 (No. 333-359), 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
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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 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 Underwriters 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
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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 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 Sellers' 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 First Tier Receivables Purchase Agreement
and assigned to the Trust pursuant to the Sale and Servicing Agreement.
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(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 Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Trust, the principal amount of each class of Notes set
forth opposite the name of such 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
Representative for the account of the Underwriters, 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 Mayer, Brown & Platt, Chicago, Illinois,
at 10:00 a.m., Chicago time on June 30 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 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 Underwriters. It is understood that the Underwriters
propose 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
several Underwriters 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
Underwriters, 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 Representative 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 Representative, or if the
Representative shall have reasonably objected thereto promptly after
receipt thereof, the Company will, during such period, immediately advise
the Representative 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
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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 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 Underwriters pursuant to Section 8(a) hereof or any
amendments or supplements of such Collateral Term Sheets that are furnished
to the Company by the Underwriters 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 an
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 Underwriters 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, an
Underwriter has delivered to any prospective investor a subsequent
Collateral Term Sheet that reflects, in the reasonable judgment of the
Representative 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 a 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.
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(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 Representative 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 Representative 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 Representative designates and will
continue such qualifications in effect so long as required for the
distribution of the Notes; provided, however, that neither the Company, the
Sellers, nor the Trust shall be required to do business in any jurisdiction
where it is now not 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
Representative, and upon request of each other Underwriter, information
with respect to the Trust or the Receivables, as the Representative or any
such 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 Representative
and the Underwriters 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 Underwriters.
(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 Underwriters. The obligations of
the Underwriters 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
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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 Representative shall have received letters dated the date of
this Agreement, in form and substance acceptable to the Representative and
its counsel, prepared by independent certified public accountants
acceptable to the Representative and its counsel, (i) regarding the
numerical information contained in the Prospectus and (ii) relating to
certain agreed upon procedures as specified by the Representative.
(b) The Representative and each 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 any Underwriter, shall be contemplated
by the Commission.
(d) The Class A-1 Notes shall be rated "P-1" by Moody's Investors
Service, Inc. ("Moody's") and "A-1+" by Standard & Poor's Ratings Group, a
division of The McGraw Hill Companies, Inc. ("S&P" and, together with
Moody's, the "Rating Agencies"). The Class A-2 and Class A-3 Notes shall be
rated "Aaa" by Moody's and "AAA" by S&P.
(e) The Representative 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.
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(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.
(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 Representative shall have received an opinion of counsel to
the Sellers, addressed to the Underwriters 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 Representative shall have received from Stroock & Stroock &
Lavan LLP, counsel for the Underwriters, 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
Underwriters 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.
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(h) The Representative shall have received a certificate or
certificates signed by such of the principal executive, financial and
accounting officers of the Company as the Representative 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 Representative shall have received letters dated the Closing
Date from counsel rendering opinions to either Rating Agency, to the effect
that the Representative may rely upon their opinion to such rating
organization, as if such opinion were rendered to the Representative.
(j) The Representative shall have received copies of all documents,
certificates, legal opinions and accountant's letters delivered to the
Company pursuant to the Second Tier Receivables Purchase Agreement in form
and substance satisfactory to the Representative and with the legal
opinions and accountant's letters addressed to the Representative or
accompanied by a letter entitling the Representative to rely thereon.
(k) The Company will furnish the Representative with such copies of
such other opinions, certificates, letters and documents as the
Representative reasonably requests.
7. Indemnification.
(a) The Company will indemnify and hold harmless the Representative
and each Underwriter and each person, if any, who controls the
Representative or such Underwriter within the meaning of the Act or the
Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which the Representative or such 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 Representative and each Underwriter and
each such
10
<PAGE>
controlling person for any legal or other expenses reasonably incurred by
the Representative or such 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 Representative or the relevant
Underwriter specifically for use therein, or (B) in any Computational
Materials or ABS Term Sheets furnished to prospective investors by the
Underwriters 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 the Seller or the Company to the Representative or
any 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) Each Underwriter agrees, severally, and not jointly, 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 each Underwriter,
but only with reference to (A) written information furnished to the Company
by or on behalf of such Underwriter through the Representative 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 such 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 Underwriters); provided, however, that
in no event shall an 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
Representative or such 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 Underwriters, constitute
11
<PAGE>
the only information furnished to the Company by the Underwriters 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.
(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 Underwriters 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 Underwriters 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 Underwriters 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
Underwriters. 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
12
<PAGE>
the Underwriters 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. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations and not joint.
8. Computational Materials and Structural Term Sheets.
(a) Each 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 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) Each 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
13
<PAGE>
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, each 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.
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 Underwriters 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 Underwriters shall deliver to the Company one complete copy
of all materials provided by the Underwriters 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
14
<PAGE>
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) Each 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, each 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.
(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 any
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. Each 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, each such
Underwriter makes no representation or warranty as to whether any such
15
<PAGE>
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 Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase the Notes hereunder and the aggregate principal
amount of such Notes which such defaulting Underwriter or Underwriters agreed,
but failed, to purchase does not exceed 10% of the total principal amount of the
Notes, the Representative may make arrangements satisfactory to the Company for
the purchase of such Notes by other persons, including any of the Underwriters
participating in such offering, but regardless of whether such arrangements are
made the non-defaulting Underwriters shall remain obligated severally to
purchase the Notes which they committed to purchase in accordance with the terms
hereunder. If any Underwriter or Underwriters so default 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 Representative and the Company for the purchase of such
Notes by other persons are not made, this Agreement will terminate without
liability on the part of any nondefaulting 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 Underwriters. The obligations of
the Underwriters to purchase the Notes on the Closing Date shall be terminable
by the Underwriters 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 the Seller or the Company, or for the winding up
or liquidation of the affairs of the Seller or the Company; (c) there shall have
been the consent by the Seller 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
16
<PAGE>
proceedings of or relating to the Seller or the Company or of or relating to
substantially all of the property of the Seller or the Company; (d) any purchase
and assumption agreement with respect to the Sellers, Compass Auto or the
Company of substantially all of the assets and properties of the Seller 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 either Seller or
the Company reasonably determined by the Representative 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 Compass Bancshares Inc. 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 Representative
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.
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 Underwriters 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 Underwriters, 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 Underwriters 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
Underwriters pursuant to Sections 7 and 8 shall remain in effect.
14. Notices. All communications hereunder will be in writing and, if sent
to an Underwriter will be mailed, delivered or telegraphed and confirmed to the
Representative at 11 Madison Avenue, New York, New York 10010 or if sent the
Company, will be mailed, delivered
17
<PAGE>
or telegraphed and confirmed to it at 11 Madison Avenue, New York, New York
10010 Attention: President; provided, however, that any notice to an 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. Third-party beneficiary. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless Compass Auto and the Sellers to the
extent, and subject to the same procedures, that the Company is indemnifying
Compass Auto and the Sellers pursuant to Section 4.3 of the Second Tier
Receivables Purchase Agreement, provided that such indemnification shall be
limited to untrue statements or alleged untrue statements of any material fact
contained in the Prospectus Supplement that constitute Underwriter Information.
The parties agree that Compass Auto and the Sellers are intended third-party
beneficiaries of this Section 16.
17. Representation of Underwriters. The Representative will act for the
several Underwriters in connection with the transactions described in this
Agreement and any action taken by the Representative under this Agreement will
be binding upon all the Underwriters for.
18. 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.
19. 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.
18
<PAGE>
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 among the Company, the Representative and the other
Underwriters, in accordance with its terms.
Very truly yours,
ASSET BACKED SECURITIES CORPORATION,
as Company
By: /s/ Philip Weingord
--------------------------------
Name: Philip Weingord
Title: Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION,
as Representative
By: /s/ Philip Weingord
--------------------------------
Name: Philip Weingord
Title: Managing Director
19
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Initial Principal
Balance of
Underwriter Class A-1 Notes
<S> <C>
Credit Suisse First Boston Corporation........... $ 63,618,000
Goldman, Sachs & Co.............................. 63,617,000
------------
Total $127,235,000
Initial Principal
Balance of
Underwriter Class A-2 Notes
Credit Suisse First Boston Corporation........... $ 40,850,000
Goldman, Sachs & Co.............................. 40,850,000
------------
Total $ 81,700,000
Initial Principal
Balance of
Underwriter Class A-3 Notes
Credit Suisse First Boston Corporation........... 85,223,000
Goldman, Sachs & Co.............................. 85,222,000
------------
Total $170,445,000
</TABLE>
20
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Original
Principal Investor Investor
Security Balance $ Price % Price $ Price % Price $ Rate %
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Notes 127,235,000 100% $127,235,000.00 99.85% $127,064,147.50 5.659%
Class A-2 Notes 81,700,000 100% $ 81,700,000.00 99.65% $ 81,414,050.00 5.709%
Class A-3 Notes 170,445,000 99.875% $170,231,943.75 99.375% $169,379,718.75 5.900%
</TABLE>
Total Price to Public: $379,166,943.75
Total Price to Seller: 377,837,916.25
Underwriting Discounts
and Commissions: $ 1,329,027.50
21
<PAGE>
Exhibit 4.1.4
COMPASS AUTO RECEIVABLES TRUST 1998-A
Class A-1 5.659% Asset Backed Notes
Class A-2 5.709% Asset Backed Notes
Class A-3 5.900% Asset Backed Notes
-------------------
INDENTURE
Dated as of June 30, 1998
THE CHASE MANHATTAN BANK
as Indenture Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE ...................... 2
SECTION 1.1 Definitions ............................................ 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act ...... 2
SECTION 1.3 Other Interpretive Provisions .......................... 2
ARTICLE II THE NOTES ...................................................... 3
SECTION 2.1 Form ................................................... 3
SECTION 2.2 Execution, Authentication and Delivery ................. 3
SECTION 2.3 Temporary Notes ........................................ 4
SECTION 2.4 Registration of Transfer and Exchange .................. 4
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes ............. 6
SECTION 2.6 Persons Deemed Owner ................................... 7
SECTION 2.7 Payment of Principal and Interest ...................... 7
SECTION 2.8 Cancellation ........................................... 8
SECTION 2.9 Release of Collateral .................................. 8
SECTION 2.10 Book Entry Notes ....................................... 8
SECTION 2.11 Notices to Clearing Agency ............................. 9
SECTION 2.12 Definitive Notes ....................................... 9
SECTION 2.13 Authenticating Agents .................................. 10
SECTION 2.14 Tax Treatment .......................................... 11
ARTICLE III COVENANTS ..................................................... 11
SECTION 3.1 Payment of Principal and Interest ...................... 11
SECTION 3.2 Maintenance of Office or Agency ........................ 11
SECTION 3.3 Money for Payments To Be Held in Trust ................. 11
SECTION 3.4 Existence .............................................. 13
SECTION 3.5 Protection of Trust Estate ............................. 13
SECTION 3.6 Opinion as to Trust Estate ............................. 14
SECTION 3.7 Performance of Obligations; Servicing of Receivables ... 14
SECTION 3.8 Negative Covenants ..................................... 16
SECTION 3.9 Annual Statement as to Compliance ...................... 17
SECTION 3.10 Issuer May Consolidate, Etc. ........................... 17
SECTION 3.11 Successor or Transferee ................................ 19
SECTION 3.12 No Other Business ...................................... 19
SECTION 3.13 No Borrowing ........................................... 20
SECTION 3.14 [Reserved] ............................................. 20
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities ...... 20
SECTION 3.16 Notice of Events of Default ............................ 20
SECTION 3.17 Further Instruments and Acts ........................... 20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV SATISFACTION AND DISCHARGE ..................................... 20
SECTION 4.1 Satisfaction and Discharge of Indenture ................ 20
SECTION 4.2 Application of Trust Money ............................. 22
SECTION 4.3 Repayment of Moneys Held by Paying Agent ............... 22
ARTICLE V REMEDIES ........................................................ 22
SECTION 5.1 Events of Default ...................................... 22
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment ..... 23
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee ................................. 24
SECTION 5.4 Remedies; Priorities ................................... 27
SECTION 5.5 Optional Preservation of the Receivables ............... 28
SECTION 5.6 Limitation of Suits .................................... 29
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest ............................... 29
SECTION 5.8 Restoration of Rights and Remedies ..................... 30
SECTION 5.9 Rights and Remedies Cumulative ......................... 30
SECTION 5.10 Delay or Omission Not a Waiver ......................... 30
SECTION 5.11 Control by Noteholders ................................. 30
SECTION 5.12 Waiver of Past Defaults ................................ 31
SECTION 5.13 Undertaking for Costs .................................. 31
SECTION 5.14 Waiver of Stay or Extension Laws ....................... 32
SECTION 5.15 Action on Notes ........................................ 32
SECTION 5.16 Performance and Enforcement of Certain Obligations ..... 32
ARTICLE VI INDENTURE TRUSTEE .............................................. 33
SECTION 6.1 Duties of Indenture Trustee ............................ 33
SECTION 6.2 Rights of Indenture Trustee ............................ 35
SECTION 6.3 Individual Rights of Indenture Trustee ................. 35
SECTION 6.4 Indenture Trustee's Disclaimer ......................... 36
SECTION 6.5 Notice of Defaults ..................................... 36
SECTION 6.6 Reports by Indenture Trustee to Holders ................ 36
SECTION 6.7 Compensation and Indemnity ............................. 36
SECTION 6.8 Replacement of Indenture Trustee ....................... 37
SECTION 6.9 Successor Indenture Trustee by Merger .................. 38
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee .................................... 38
SECTION 6.11 Eligibility; Disqualification .......................... 39
SECTION 6.12 Preferential Collection of Claims Against Issuer ....... 41
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS ................................ 41
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SECTION 7.1 Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders ............................. 41
SECTION 7.2 Preservation of Information; Communications to
Noteholders .......................................... 41
SECTION 7.3 Reports by Issuer ...................................... 42
SECTION 7.4 Reports by Indenture Trustee ........................... 42
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES ......................... 42
SECTION 8.1 Collection of Money .................................... 42
SECTION 8.2 Trust Accounts ......................................... 43
SECTION 8.3 General Provisions Regarding Accounts .................. 44
SECTION 8.4 Release of Trust Estate ................................ 45
SECTION 8.5 Opinion of Counsel ..................................... 45
ARTICLE IX SUPPLEMENTAL INDENTURES ........................................ 46
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders .......................................... 46
SECTION 9.2 Supplemental Indentures with Consent of Noteholders .... 47
SECTION 9.3 Execution of Supplemental Indentures ................... 48
SECTION 9.4 Effect of Supplemental Indenture ....................... 48
SECTION 9.5 Reference in Notes to Supplemental Indentures .......... 48
ARTICLE X REDEMPTION OF NOTES ............................................. 49
SECTION 10.1 Redemption ............................................. 49
SECTION 10.2 Form of Redemption Notice .............................. 49
SECTION 10.3 Notes Payable on Redemption Date ....................... 50
ARTICLE XI MISCELLANEOUS .................................................. 50
SECTION 11.1 Compliance Certificates and Opinions, etc. ............. 50
SECTION 11.2 Form of Documents Delivered to Indenture Trustee ....... 52
SECTION 11.3 Acts of Noteholders .................................... 53
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies ............................................. 54
SECTION 11.5 Notices to Noteholders; Waiver ......................... 54
SECTION 11.6 Alternate Payment and Notice Provisions ................ 55
SECTION 11.7 Conflict with Trust Indenture Act ...................... 55
SECTION 11.8 Effect of Headings and Table of Contents ............... 55
SECTION 11.9 Successors and Assigns ................................. 55
SECTION 11.10 Separability ........................................... 56
SECTION 11.11 Benefits of Indenture .................................. 56
SECTION 11.12 Legal Holidays ......................................... 56
SECTION 11.13 Governing Law .......................................... 56
SECTION 11.14 Counterparts ........................................... 56
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SECTION 11.15 Recording of Indenture ................................. 56
SECTION 11.16 Trust Obligation ....................................... 56
SECTION 11.17 No Petition ............................................ 57
SECTION 11.18 Inspection ............................................. 57
SECTION 11.19 ERISA Matters .......................................... 58
EXHIBITS
Exhibit A Schedule of Receivables
Exhibit B Form of Note Depository Agreement
Exhibit C Form of Class A-1 Note
Exhibit D Form of Class A-2 Note
Exhibit E Form of Class A-3 Note
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INDENTURE, dated as of June 30, 1998, between COMPASS AUTO RECEIVABLES
TRUST 1998-A, an Alabama business trust ("Issuer"), and THE CHASE MANHATTAN
BANK, a New York banking corporation, solely as indenture trustee and not in its
individual capacity ("Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of Issuer's Class A-1 5.659 % Asset
Backed Notes (the "Class A-1 Notes"), Class A-2 5.709 % Asset Backed Notes (the
"Class A-2 Notes") and Class A-3 5.900% Asset Backed Notes (the "Class A-3
Notes"):
GRANTING CLAUSE
Issuer hereby Grants to Indenture Trustee at the Closing Date, as Indenture
Trustee for the benefit of the Holders of the Notes, all of Issuer's right,
title and interest in and to (a) the Receivables, and (i) all monies received
thereon and allocable to principal on and after the Cutoff Date and (ii) all
monies received thereon allocable to interest on and after July 1, 1998; (b) the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and, to the extent permitted by law, any accessions thereto; (c) any
proceeds with respect to the Receivables from claims on any Insurance Policies
covering Financed Vehicles or the Obligors; (d) any recourse against Dealers
with respect to the Receivables under the Dealer Agreements; (e) all funds on
deposit from time to time in the Certificate Distribution Account and the Trust
Accounts, and in all investments and proceeds thereof (but excluding all
investment income thereon); (f) the Sale and Servicing Agreement, the Second
Tier Receivables Purchase Agreement, including the right of Company to cause
Compass Auto to repurchase Receivables thereunder, and the First Tier
Receivables Purchase Agreement, including the right of Compass Auto to cause a
Seller to repurchase Receivables thereunder; and (g) any and all proceeds of the
foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction except as set forth
herein, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
Indenture Trustee, as Indenture Trustee on behalf of the Holders of the
Notes, acknowledges such Grant, and accepts the trusts under this Indenture in
accordance with the provisions of this Indenture.
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.
SECTION 1.1 Definitions. Capitalized terms are used in this Indenture as
defined in Appendix X to the Sale and Servicing Agreement, dated as of June 30,
1998, between Asset Backed Securities Corporation, as Seller, Issuer, Compass
Bank, as Servicer, and Indenture Trustee.
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 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 Indenture Trustee.
"obligor" on the indenture securities means Issuer and any other obligor on
the indenture securities.
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 Other Interpretive Provisions. All terms defined in this
Indenture shall have the defined meanings when used in any certificate or other
document delivered pursuant hereto unless otherwise defined therein. For
purposes of this Indenture and all such certificates and other documents, unless
the context otherwise requires: (a) accounting terms not otherwise defined in
this Indenture, and accounting terms partly defined in this Indenture to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles; (b) terms defined in Article 9 of the
UCC as in effect in the relevant jurisdiction and not otherwise defined in this
Agreement are used as defined in that Article; (c) the words "hereof," "herein"
and "hereunder" and words of similar import refer to this Indenture as a whole
and not to any particular provision of this Indenture; (d) references to any
Article, Section, Schedule, Appendix or Exhibit are references to Articles,
Sections, Schedules, Appendices and Exhibits in or to this Indenture and
references to any paragraph, subsection, clause or other subdivision within any
Section or definition refer to such paragraph, subsection, clause or other
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subdivision of such Section or definition; (e) the term "including" means
"including without limitation"; (f) except as otherwise expressly provided
herein, references to any law or regulation refer to that law or regulation as
amended from time to time and include any successor law or regulation; (g)
references to any Person include that Person's successors and assigns; and (h)
headings are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
ARTICLE II THE NOTES.
SECTION 2.1 Form. The Class A-1 Notes, Class A-2 Notes and Class A-3
Notes, in each case together with Indenture Trustee's certificate of
authentication, shall be in substantially the forms set forth in Exhibits C, D
and E, respectively, with such 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 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 steel
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 C, D and E are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of 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 Issuer shall bind 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.
Indenture Trustee shall upon Issuer Order authenticate and deliver Class A-
1 Notes for original issue in an aggregate principal amount of $127,235,000
Class A-2 Notes for original issue in an aggregate principal amount of
$81,700,000, and Class A-3 Notes for original issue in an aggregate principal
amount of $170,445,000. The aggregate principal amount of Class A-1 Notes, Class
A-2 Notes and Class A-3 Notes outstanding at any time may not exceed such
amounts except as provided in Section 2.5.
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Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples thereof (except for one Note of each class which may be
issued in a denomination other than an integral multiple of $1,000).
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
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note 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,
Issuer may execute, and upon receipt of an Issuer Order, Indenture Trustee shall
authenticate and deliver, temporary Notes which 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 the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, Issuer shall 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 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, Issuer shall execute and
Indenture Trustee upon Issuer Order 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 of Transfer and Exchange. Issuer shall cause to
be kept a register (the "Note Register") in which, subject to such reasonable
regulations as it may prescribe, Issuer shall provide for the registration of
Notes and the registration of transfers of Notes. Indenture Trustee shall
initially be "Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided. Upon any resignation of any Note Registrar, 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 Indenture Trustee is appointed by Issuer as Note
Registrar, Issuer shall give Indenture Trustee 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 Indenture Trustee shall have the right to
inspect
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the Note Register at all reasonable times and to obtain copies thereof, and
Indenture Trustee shall have the right to conclusively rely upon a certificate
executed on behalf of Note Registrar by an Executive Officer thereof as to the
names and addresses of the Holders of the Notes and the principal amounts and
number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met Issuer shall execute and
upon its written request Indenture Trustee shall authenticate and the Noteholder
shall obtain from Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes, in any authorized denominations, of the same
class and a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of the same class and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met Issuer shall execute and upon Issuer
Request, Indenture Trustee shall authenticate and the Noteholder shall obtain
from Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of 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.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in substantially the form attached to the form of each
class of Note set forth as an exhibit hereto 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 Note Registrar which requirements include membership or
participation in a Securities Transfer Agents Medallion Program ("Stamp") or
such other "signature guarantee program" as may be determined by Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as Indenture Trustee
may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
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Notwithstanding the provisions of this Section, Issuer shall not be
required to make and Note Registrar need not register transfers or exchanges of
Notes selected for redemption or of any Note for a period of 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 Indenture Trustee, or Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, (ii) there is delivered to Indenture Trustee such security or indemnity as
may be required by it to hold Issuer and Indenture Trustee harmless, then, in
the absence of notice to Issuer, Note Registrar or Indenture Trustee that such
Note has been acquired by a bona fide purchaser, and (iii) a certification
delivered to Issuer and Indenture Trustee stating that the requirements of
Section 8-405 of the UCC are met, Issuer shall execute and upon Issuer's Order,
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
that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall
have become or within seven days shall be due and payable, or shall have been
called for redemption, instead of issuing a replacement Note, Indenture Trustee
may upon delivery of the security or indemnity herein required shall inform
Issuer of such receipt and Issuer may be required 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 bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, Issuer and
Indenture Trustee 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
any assignee of such Person, except a bona fide 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 Issuer or Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, Issuer 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 Indenture Trustee)
connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of 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.
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The provisions of this Section 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 Owner. Prior to due presentment for
registration of transfer of any Note, Issuer, Indenture Trustee and any agent of
Issuer or Indenture Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) 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
neither Issuer, Indenture Trustee nor any agent of Issuer or Indenture Trustee
shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest. (a) The Notes shall accrue
interest as provided in the forms of the Class A-1 Note, Class A-2 Note and
Class A-3 Note set forth in Exhibits C, D and E, respectively, and such interest
shall be payable on each Distribution Date as specified therein. Any installment
of interest or principal, if any, payable on any Note which is punctually paid
or duly provided for by Issuer on the applicable Distribution Date shall be paid
to the Person in whose name such Note is registered on the Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date; provided 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 shall be made by wire transfer in
immediately available funds to the account designated by such nominee; and
provided, further, that the final installment of principal payable with respect
to such Note on a Distribution Date or on the Final Scheduled Distribution Date
(except for the Redemption Price for any Note called for redemption pursuant to
Section 10.1(a)) 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 on each Distribution Date
as provided in Section 8.2(c) of this Indenture. Notwithstanding the foregoing,
the entire unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and be continuing, if Indenture Trustee or the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.2 and, in such event, all principal payments shall be made on the Class A-1
Notes until the Class A-1 Notes have been paid in full, and then on the Class
A-2 Notes and the Class A-3 Notes pro rata to the Noteholders of such class
entitled thereto. Indenture Trustee upon Issuer Order shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which
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Issuer expects that the final installment of principal of and interest on such
Note shall be paid. Such notice shall be mailed or transmitted by facsimile
prior to such final Distribution Date and shall specify that such final
installment shall 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. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.2.
SECTION 2.8 Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than Indenture Trustee, be delivered to Indenture Trustee and shall be promptly
cancelled by Indenture Trustee. Issuer may at any time deliver to Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which Issuer may have acquired in any manner whatsoever, and all Notes
so delivered shall be promptly cancelled by Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section, except as expressly permitted by this Indenture. All cancelled
Notes may be held or disposed of by Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time unless Issuer
shall direct by an Issuer Order that they be destroyed or returned to it;
provided that such Issuer Order is timely and the Notes have not been previously
disposed of by Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, Indenture
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA (S)(S) 314(c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates. If
the Commission shall issue an exemptive order under TIA Section 304(d) modifying
Owner Trustee's obligations under TIA Sections 314(c) and 314(d)(1), subject to
Section 11.1 and the terms of the Basic Documents, Indenture Trustee shall
release property from the lien of this Indenture in accordance with the
conditions and procedures set forth in such exemptive order.
SECTION 2.10 Book Entry Notes. The Notes, upon original issuance, shall be
issued in the form of typewritten Notes representing the Book Entry Notes, to be
delivered to The Chase Manhattan Bank, as agent for The Depository Trust
Company, the initial Clearing Agency, by or on behalf of 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 definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:
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(a) the provisions of this Section shall be in full force and effect;
(b) Note Registrar and 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;
(c) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(d) 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 or Persons acting through Clearing Agency
Participants. Pursuant to the Note Depository Agreement, unless and until
Definitive Notes are issued pursuant to Section 2.12, the initial Clearing
Agency shall 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; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received written instructions to such effect from Note Owners and/or
Clearing Agency Participants or Persons acting through Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such written
instructions to Indenture Trustee.
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, Indenture Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (a) Servicer advises 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 Servicer is unable
to locate a qualified successor, (b) Servicer at its option advises Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (c) after the occurrence of an Event of Default, Note Owners
representing beneficial
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interests aggregating at least a majority of the Outstanding Amount of the Notes
advise 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 Note Owners, then the Clearing Agency shall notify in
writing all Note Owners and 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 Indenture Trustee of the typewritten Note or Notes
representing the Book Entry Notes by the Clearing Agency, accompanied by
registration instructions, Issuer shall execute and Indenture Trustee shall
authenticate the Definitive Notes in accordance with the written instructions of
the Clearing Agency. None of Issuer, Note Registrar or Indenture Trustee shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such written instructions. Upon
the issuance of Definitive Notes, 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 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 Sections 2.8 and
6.4 shall be applicable to any Authenticating Agent.
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SECTION 2.14 Tax Treatment. Issuer has entered into this Indenture, and
the Notes shall be issued, with the intention that, solely for federal, state
and local income and franchise tax purposes, the Notes shall qualify as
indebtedness secured by the Trust Estate. Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of a Note (and each Note Owner
by its acceptance of an interest in the applicable Book Entry Note), agree to
treat the Notes for federal, state and local income and franchise tax purposes
as indebtedness.
ARTICLE III COVENANTS.
SECTION 3.1 Payment of Principal and Interest. Issuer shall duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, subject
to Section 8.2(c), Issuer shall cause to be distributed all amounts on deposit
in the Note Distribution Account on a Distribution Date deposited therein
pursuant to the Sale and Servicing Agreement (i) in the Class A-1 Noteholders'
Principal Distributable Amount and the Class A-1 Noteholders' Interest
Distributable Amount, to Class A-1 Noteholders, (ii) in the Class A-2
Noteholders' Principal Distributable Amount and the Class A-2 Noteholders'
Interest Distributable Amount, to Class A-2 Noteholders, and (iii) in the Class
A-3 Noteholders' Principal Distributable Amount and the Class A-3 Noteholders'
Interest Distributable Amount, to Class A-3 Noteholders. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by Issuer to
such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. Issuer shall maintain in the
Borough of Manhattan, The City of 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 Issuer in respect of the Notes and this Indenture may be
served. Issuer hereby initially appoints Indenture Trustee to serve as its agent
for the foregoing purposes. Issuer shall give prompt written notice to Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time Issuer shall fail to maintain any such office or
agency or shall fail to furnish Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and Issuer hereby appoints Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in Section
8.2, all payments of amounts due and payable with respect to any Notes that are
to be made from amounts withdrawn from the Collection Account and the Note
Distribution Account pursuant to Section 8.2(c) shall be made on behalf of
Issuer by Indenture Trustee or by another Paying Agent, and no amounts so
withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to Issuer except as provided in this
Section.
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On or before each Distribution Date and Redemption Date, 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, such sum to
be held in trust for the benefit of the Persons entitled thereto and (unless the
Paying Agent is Indenture Trustee) shall promptly notify Indenture Trustee in
writing of its action or failure so to act.
Issuer shall cause each Paying Agent other than Indenture Trustee to
execute and deliver to Indenture Trustee an instrument in which such Paying
Agent shall agree with Indenture Trustee (and if Indenture Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Paying Agent shall:
(i) hold all sums received 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 Indenture Trustee written notice of any default by 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 Indenture Trustee, forthwith pay to Indenture Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
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 at the time of its appointment; and
(v) comply with all requirements of the Code 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.
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 Indenture Trustee all sums held in trust by such Paying
Agent, such sums to be held by Indenture Trustee upon the same trusts as those
upon which the sums were held by such Paying Agent; and upon such a payment by
any Paying Agent to Indenture Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
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Subject to applicable laws with respect to the escheat of funds, any money
held by 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
be paid to Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to Issuer for payment
thereof (but only to the extent of the amounts so paid to Issuer), and all
liability of Indenture Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided that Indenture Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense of
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 30 days from the
date of such publication, any unclaimed balance of such money then remaining
shall be repaid to Issuer. Indenture Trustee may also adopt and employ, at the
written direction of and at the expense of Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, 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 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, Issuer shall keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Alabama (unless it
becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case Issuer
shall keep in full effect its existence, rights and franchises under the laws of
such other jurisdiction) 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 Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 Protection of Trust Estate. Issuer shall from time to time
prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments
as required under the Basic Documents, shall provide Indenture Trustee with
copies of each of the foregoing and shall take such other action necessary or
advisable to:
(a) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
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(b) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(c) enforce any of the Collateral; or
(d) preserve and defend title to the Trust Estate and the rights of
Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all Persons.
Issuer hereby designates Indenture Trustee its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
designated in writing by Issuer pursuant to this Section; provided that, unless
Indenture Trustee shall have been appointed as Successor Servicer pursuant to
Section 8.2 of the Sale and Servicing Agreement, Indenture Trustee shall have no
responsibility for filing any financing statement or continuation statement or
otherwise maintaining the perfection of any security interest or lien granted
hereunder or under the Basic Documents.
SECTION 3.6 Opinion as to Trust Estate. On the Closing Date, Issuer shall
furnish to Indenture Trustee an Opinion of Counsel either stating that, in the
opinion of such counsel, such action has been taken 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 of this Indenture in the Receivables and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a)
Issuer shall not 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 of such
Person's 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
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) Issuer may contract with other Persons to assist it in performing its
duties under this Indenture, and any performance of such duties by a Person
identified to Indenture Trustee in an Officer's Certificate of Issuer shall be
deemed to be action taken by Issuer. Initially, Issuer has contracted with
Servicer to assist Issuer in performing its duties under this Indenture.
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(c) Issuer shall punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including preparing (or
causing to prepared) and filing (or causing to be filed) all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within the
time periods provided for herein and therein.
(d) If Issuer shall have knowledge of the occurrence of a Servicer
Termination Event under the Sale and Servicing Agreement, Issuer shall promptly
notify Indenture Trustee and the Rating Agencies thereof in writing in
accordance with Section 11.4, and shall specify in such notice the action, if
any, Issuer is taking in respect of such default. If a Servicer Termination
Event shall arise from the failure of Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Receivables, Issuer shall take all reasonable steps available to it to remedy
such failure.
(e) As promptly as possible after the giving of notice of termination to
Servicer of Servicer's rights and powers pursuant to Section 8.1 of the Sale and
Servicing Agreement, Issuer shall appoint a successor servicer (the "Successor
Servicer"), and such Successor Servicer shall accept its appointment by a
written assumption in a form acceptable to Indenture Trustee. If a Successor
Servicer has not been appointed and accepted its appointment at the time when
Servicer ceases to act as Servicer, Indenture Trustee without further action
shall automatically be appointed the Successor Servicer and shall be entitled to
the Servicing Fee and the Supplemental Servicing Fee. Indenture Trustee may
resign as Servicer by giving written notice of such resignation to Issuer and in
such event shall be released from such duties and obligations, such release not
to be effective until the date a new servicer enters into a servicing agreement
with Issuer as provided below. Upon delivery of any such notice to Issuer,
Issuer shall obtain a new servicer as the Successor Servicer under the Sale and
Servicing Agreement. Any Successor Servicer other than Indenture Trustee shall
(i) be an established financial institution having a net worth or combined
capital and surplus, as applicable, of not less than $100,000,000 and whose
regular business includes the servicing of motor vehicle loans and (ii) enter
into a servicing agreement with Issuer having substantially the same provisions
as the provisions of the Sale and Servicing Agreement applicable to Servicer. If
within 30 days after the delivery of the notice referred to above, Issuer shall
not have obtained such a new servicer, Indenture Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a Successor Servicer. In
connection with any such appointment, Indenture Trustee may make such
arrangements for the compensation of such successor as it and such successor
shall agree, subject to the limitations set forth below and in the Sale and
Servicing Agreement, and in accordance with Section 8.2 of the Sale and
Servicing Agreement, Issuer shall enter into an agreement with such successor
for the servicing of the
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Receivables (such agreement to be in form and substance satisfactory to
Indenture Trustee). If Indenture Trustee shall succeed to Servicer's duties as
servicer of the Receivables as provided herein, it shall do so in its individual
capacity and not in its capacity as Indenture Trustee and, accordingly, the
provisions of Article VI shall be inapplicable to Indenture Trustee in its
duties as the successor to Servicer and the servicing of the Receivables. If
Indenture Trustee shall become successor to Servicer under the Sale and
Servicing Agreement, Indenture Trustee shall be entitled to reasonable
transition costs up to $10,000 to be paid by Issuer, and shall be entitled to
appoint as Servicer any one of its Affiliates, or delegate any of its
responsibilities as Servicer to agents, subject to the terms of the Sale and
Servicing Agreement, provided that such appointment or delegation shall not
affect or alter in any way the liability of Indenture Trustee as a successor for
the performance of the duties and obligations of Servicer in accordance with the
terms hereof.
(f) Upon any termination of Servicer's rights and powers pursuant to the
Sale and Servicing Agreement, Issuer shall promptly notify Indenture Trustee in
writing. As soon as a Successor Servicer (other than Indenture Trustee) is
appointed, Issuer shall notify Indenture Trustee in writing of such appointment,
specifying in such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment granted
to Indenture Trustee under this Indenture or the rights of Indenture Trustee
hereunder, Issuer agrees that, unless such action is specifically permitted
hereunder or under the Basic Documents, it shall not, without the prior written
consent of Indenture Trustee at the direction of the Holders of at least a
majority in Outstanding Amount of the Notes, amend, waive, terminate or
surrender, or agree to any amendment, waiver, supplement, termination or
surrender of, the terms of any Collateral or waive timely performance or
observance by Servicer of its obligations under the Sale and Servicing
Agreement. If any such amendment, waiver, supplement, termination or surrender
shall be so consented to by Indenture Trustee at the direction of such Holders,
Issuer agrees, promptly following a request by Indenture Trustee to do so, to
execute and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as Indenture Trustee may deem
necessary or appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
Issuer shall not:
(a) except as expressly permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of Issuer, including those included in the Trust
Estate, unless directed to do so by Indenture Trustee;
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(b) 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 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;
(c) dissolve or liquidate in whole or in part; or
(d) (i) 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, (ii) permit any
Lien, (other than the Lien of this Indenture) to be created on or extend to
or other wise arise upon or burden the Trust Estate or any part thereof or
any interest therein or the proceeds thereof or (iii) permit the Lien of
this Indenture not to constitute a valid first priority (other than liens
for taxes not yet due and payable, mechanics' or materialmen's liens and
other liens that may attach by operation of law) security interest in the
Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. Issuer shall deliver to
Indenture Trustee, on or before April 30 after the end of each fiscal year ended
December 31 (or in the case of the first such delivery, after the end of the
period from the Closing Date to December 31, 1998), beginning on December 31,
1998, an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(a) a review of the activities of Issuer during such fiscal year and
of performance under this Indenture has been made under such Authorized
Officer's supervision;
(b) to the best of such Authorized Officer's knowledge, based on such
review, Issuer has complied in all material respects with all conditions
and covenants under this Indenture throughout such year, or, if there has
been such 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
(c) 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) Issuer
shall not consolidate or merge with or into any other Person, unless it shall
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have obtained written consent from the Holders of Certificates representing a
majority of the Adjusted Certificate Balance then outstanding and unless:
(i) the Person (if other than 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
Indenture Trustee, in form satisfactory to Indenture Trustee, 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 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;
(iv) Issuer shall have received an Opinion of Counsel (and shall have
delivered copies thereof to Indenture Trustee) to the effect that such
transaction shall not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) Issuer shall have delivered to Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation
or merger and such supplemental indenture comply with this Article III and
that all conditions precedent provided for in this Article III relating to
such transaction have been complied with (including any filing required by
the Exchange Act).
(b) Except as expressly contemplated by the Basic Documents, 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 it shall
have obtained written consent from the Holders of Certificates representing a
majority of the Adjusted Certificate Balance then outstanding and unless:
(i) the Person that acquires by conveyance or transfer the properties
and assets of Issuer the conveyance or transfer of which is hereby
restricted shall be a United States citizen or 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
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Indenture Trustee, in form satisfactory to Indenture Trustee, 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 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;
(iv) Issuer shall have received an Opinion of Counsel (and shall have
delivered copies thereof to Indenture Trustee) to the effect that such
transaction shall not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) Issuer shall have delivered to Indenture Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or merger
of Issuer in accordance with Section 3.10(a), the Person formed by or surviving
such consolidation or merger (if other than Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, Issuer under this
Indenture with the same effect as if such Person had been named as Issuer
herein.
(b) Upon a conveyance or transfer of all the assets and properties of
Issuer pursuant to Section 3.10(b), Compass Auto Receivables Trust 1998-A shall
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of Issuer with respect to the Notes immediately upon
the delivery of written notice to Indenture Trustee stating that Compass Auto
Receivables Trust 1998-A is to be so released.
SECTION 3.12 No Other Business. Issuer shall not engage in any business
other than financing, purchasing, owning, selling and managing the Receivables
in the manner contemplated by this Indenture and the Basic Documents and
activities incidental thereto.
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SECTION 3.13 No Borrowing. Except as contemplated by the Basic Documents,
Issuer shall not issue, incur, assume, guarantee or otherwise become liable,
directly or indirectly, for any indebtedness except for the Notes.
SECTION 3.14 [Reserved].
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Basic Documents, 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 Notice of Events of Default. Issuer agrees to give Indenture
Trustee and the Rating Agencies prompt written notice of each Event of Default
hereunder immediately after obtaining knowledge thereof.
SECTION 3.17 Further Instruments and Acts. Upon request of Indenture
Trustee, Issuer 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 Indenture.
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 as to (a) rights
of registration of transfer and exchange, (b) substitution of mutilated,
destroyed, lost or stolen Notes, (c) rights of Noteholders to receive payments
of principal thereof and interest thereon, (d) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13 and 3.16, (e) the rights, obligations and immunities of
Indenture Trustee hereunder (including the rights of Indenture Trustee under
Section 6.7 and the obligations of Indenture Trustee under Section 4.2) and (f)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with Indenture Trustee payable to all or any of them, and Indenture
Trustee, on demand of and at the expense of Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(i) either
(A) all Notes theretofore authenticated and delivered (other
than (1) Notes that have been destroyed, lost or stolen and that have
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been replaced or paid as provided in Section 2.5 and (2) Notes for
which payment money has theretofore been deposited in trust or
segregated and held in trust by Issuer and thereafter repaid to Issuer
or discharged from such trust, as provided in Section 3.3) have been
delivered to Indenture Trustee for cancellation; or
(B) all Notes not theretofore delivered to Indenture Trustee for
cancellation
(1) have become due and payable,
(2) shall become due and payable at the Final Scheduled
Distribution Date within one year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to Indenture Trustee for the giving of
notice of redemption by Indenture Trustee in the name, and at the
expense, of Issuer,
and Issuer, in the case of clauses (1), (2) or (3), has irrevocably
deposited or caused to be irrevocably deposited with Indenture Trustee
cash or direct obligations of or obligations guaranteed by the United
States of America (which shall 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 Indenture Trustee for cancellation when due
to the Final Scheduled Distribution Date or Redemption Date (if Notes
shall have been called for redemption pursuant to Section 10.1), as
the case may be;
(ii) Issuer has paid or caused to be paid all other sums payable
hereunder by Issuer;
(iii) Issuer has delivered to Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or Indenture
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.1(a)
and each stating that all conditions precedent provided in this Article IV
for relating to the satisfaction and discharge of this Indenture have been
complied with; and
(iv) 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.
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Promptly after the satisfaction and discharge of the Indenture in
accordance with clauses (i) through (iv) above, the Indenture Trustee shall
provide written notice of such satisfaction and discharge to the Rating
Agencies.
SECTION 4.2 Application of Trust Money. All moneys deposited with
Indenture Trustee pursuant to Section 4.1 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 Indenture Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with Indenture Trustee, of all sums due
and to become due thereon for principal and interest; provided, that such moneys
need not be segregated from other funds except to the extent required herein or
in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment 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 Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
Issuer, be paid to Indenture Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
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 administrative or governmental body):
(a) 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 days;
(b) default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable;
(c) default in the observance or performance of any material covenant
or agreement of 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 specifically dealt with), or any representation or warranty
of Issuer made in this Indenture or in any other Basic Document 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,
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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 (or for such longer period, not in excess of
90 days, as may be reasonably necessary to remedy such default; provided
that such default is capable of remedy within 90 days or less and Servicer
on behalf of Owner Trustee delivers an Officer's Certificate to Indenture
Trustee to the effect that Issuer has commenced, or shall promptly commence
and diligently pursue, all reasonable efforts to remedy such default) after
there shall have been given, by registered or certified mail, to Issuer by
Indenture Trustee or to Issuer and Indenture Trustee by the Holders of at
least 25% of the Outstanding Amount of the Notes, 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" hereunder;
(d) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of Issuer or any substantial part
of the Trust Estate 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 Issuer or for any substantial part of
the Trust Estate, or ordering the winding-up or liquidation of Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(e) the commencement by Issuer 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 Issuer to the entry of an order
for relief in an involuntary case under any such law, or the consent by
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of Issuer or
for any substantial part of the Trust Estate, or the making by Issuer of
any general assignment for the benefit of creditors, or the failure by
Issuer generally to pay its debts as such debts become due, or the taking
of action by Issuer in furtherance of any of the foregoing.
Issuer shall deliver to Indenture Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (c), its status and what action Issuer is taking
or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an Event
of Default should occur and be continuing, then and in every such case Indenture
Trustee may or at the direction of Holders of Notes representing not less
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than a majority of the Outstanding Amount of the Notes shall declare all the
Notes to be immediately due and payable, by a notice in writing to Issuer (and
to Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes,
by written notice to Issuer and Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(a) Issuer has paid or deposited with Indenture Trustee a sum
sufficient to pay
(i) 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
(ii) all sums paid by Indenture Trustee hereunder and the
reasonable compensation, expenses and disbursements of Indenture
Trustee and its agents and counsel; and
(b) 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) Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, Issuer shall, upon demand of Indenture
Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the rate specified in Section 2.7 and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of
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collection, including the reasonable compensation, expenses and disbursements of
Indenture Trustee and its agents and counsel.
(b) If Issuer shall fail to pay such amounts immediately upon such demand,
Indenture Trustee, in its own name and as trustee of an express trust, may
institute a proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against Issuer or other obligor upon such Notes and collect in the manner
provided by law out of the property of Issuer or other obligor upon such Notes,
wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, Indenture Trustee
may, as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as Indenture Trustee 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 Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to 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 or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of Issuer or its property or such other obligor or Person, or
in case of any other comparable judicial proceedings relative to Issuer or other
obligor upon the Notes, or to the creditors or property of Issuer or such other
obligor, 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 Indenture Trustee shall have made any
demand pursuant to the provisions of this Section, 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 Indenture Trustee (including any claim for compensation
to 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 Indenture
Trustee and each predecessor Indenture Trustee, except as a result of gross
negligence, bad faith or willful misconduct) and of the Noteholders allowed
in such proceedings;
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(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or 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 Indenture Trustee on their
behalf; and
(iv) to file at Issuer's expense such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of Indenture Trustee or the Holders of Notes allowed in any judicial
proceedings relative to Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to Indenture Trustee, and, in the event that Indenture Trustee shall
consent to the making of payments directly to such Noteholders, to pay to
Indenture Trustee such amounts as shall be sufficient to cover compensation to
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 Indenture Trustee and each predecessor Indenture
Trustee except as a result of gross negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize 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 of any Holder thereof or to
authorize 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.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by 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
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of Indenture Trustee, each predecessor Indenture
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes, as provided by Section 5.4(b).
(g) In any proceedings brought by Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which Indenture Trustee shall be a party), Indenture Trustee shall be held to
represent all
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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, Indenture Trustee may do one or more of the
following (subject to Section 5.5):
(i) institute proceedings in its own name and as 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 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 Indenture Trustee and the Holders of the Notes; and
(iv) 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 that 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(a) or (b), unless (A) (i) the Holders of 100% of the Outstanding
Amount of the Notes consent thereto in writing to Indenture Trustee, or (ii) 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 (iii) Indenture Trustee determines that the Trust
Estate shall 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 Indenture Trustee obtains the
written consent of Holders of 66-2/3% of the Outstanding Amount of the Notes and
(B) (i) the Holders of all outstanding Certificates consent thereto or (ii) the
proceeds of such sale or liquidation are sufficient to pay in full the principal
of and accrued interest on all of the outstanding Notes and Certificates on the
date of such sale or liquidation. In determining such sufficiency or
insufficiency with respect to clause (A)(ii) and (iii) or clause (B)(ii),
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 (at Issuer's expense). In the event of a sale of the
Receivables by the Indenture Trustee following an Event of Default, the
Noteholders and
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Certificateholders shall receive notice and an opportunity to submit a bid in
respect of such sale.
(b) If Indenture Trustee collects any money or property pursuant to this
Article V, it shall on each Distribution Date pay out such money or property
(and other amounts including amounts held on deposit in the Reserve Account)
held as Collateral for the benefit of the Noteholders in the following order:
FIRST: to Indenture Trustee for amounts due under Section 6.7;
SECOND: to Servicer for due and unpaid Servicing Fees;
THIRD: to the Holders of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes for amounts due and unpaid on the Class A-1 Notes, Class
A-2 Notes and Class A-3 Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Class
A-1 Notes, Class A-2 Notes and Class A-3 Notes for interest;
FOURTH: to the Holders of the Class A-1 Notes, for amounts due and
unpaid on the Class A-1 Notes for principal, until the Class A-1 Notes have
been paid in full;
FIFTH: to the Holders of the Class A-2 Notes and Class A-3 Notes for
amounts due and unpaid on the Class A-2 Notes and Class A-3 Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Class A-2 Notes and Class A-3 Notes
for principal, until the Class A-2 Notes and Class A-3 Notes have been paid
in full;
SIXTH: to Issuer for distribution to the Certificateholders.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, Indenture Trustee may, but need not, elect to maintain possession of
the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and Indenture Trustee shall take such desire into account
when determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, Indenture
Trustee may (at Issuer's expense), 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.
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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:
(a) such Holder has previously given written notice to Indenture
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount of the
Notes have made written request to Indenture Trustee to institute such
proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(c) such Holder or Holders have offered to Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(d) Indenture Trustee for 60 days after its receipt of such written
notice, request and offer of indemnity has failed to institute such
proceedings; and
(e) no direction inconsistent with such written request has been
given to Indenture Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except, in
each case, to the extent and in the manner herein provided.
In the event 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 Outstanding Amount of the Notes,
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
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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 Indenture Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to Indenture Trustee or to such
Noteholder, then and in every such case Issuer, Indenture Trustee 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 Indenture Trustee 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 Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
Indenture Trustee or any Holder of any Note 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 Indenture Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by Indenture Trustee or by the
Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
Indenture Trustee; provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.4, any direction to
Indenture Trustee to sell or liquidate the Trust Estate shall be in writing
by
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the Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(c) if the conditions set forth in Section 5.5 have been satisfied and
Indenture Trustee elects to retain the Trust Estate pursuant to such
Section, then any written direction to Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect;
(d) Indenture Trustee may take any other action deemed proper by
Indenture Trustee that is not inconsistent with such direction; and
(e) such direction shall be in writing;
provided, further, that, subject to Section 6.1, Indenture Trustee need not take
any action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes 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 which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
Issuer, 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 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 Event of Default or impair any right consequent thereto.
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 Indenture Trustee for any action taken, suffered or 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 attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but
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the provisions of this Section shall not apply to (a) any suit instituted by
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes 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. Issuer covenants (to the
extent that it may lawfully do so) that it shall 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
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 shall not hinder,
delay or impede the execution of any power herein granted to Indenture Trustee,
but shall suffer and permit the execution of every such power as though no such
law had been enacted.
SECTION 5.15 Action on Notes. 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 this Indenture. Neither the lien of this Indenture nor any rights or remedies
of Indenture Trustee or the Noteholders shall be impaired by the recovery of any
judgment by Indenture Trustee against 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 Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from Indenture Trustee to do so and at Servicer's
expense, Issuer agrees to take all such lawful action as Indenture Trustee may
request to compel or secure the performance and observance by Servicer of its
obligations to Issuer under or in connection with the Sale and Servicing
Agreement or by the Sellers, Compass Auto, Company or any Affiliate thereof, as
applicable, of each of their obligations under or in connection with each
Purchase Agreement, in each case, in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to Issuer under or in connection with the Sale and Servicing Agreement and each
Purchase Agreement, as the case may be, to the extent and in the manner directed
by Indenture Trustee, including the transmission of notices of default on the
part of Sellers, Servicer, Compass Auto, Company or any applicable Affiliate
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by Servicer of its obligations under the Sale
and Servicing Agreement or by Sellers, Compass Auto, Company or any Affiliate
thereof, as applicable, of each of their obligations under or in connection with
each Purchase Agreement.
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(b) If an Event of Default has occurred and is continuing, Indenture
Trustee may, and, at the direction (which direction shall be in writing) of the
Holders of 66-2/3% of the Outstanding Amount of the Notes shall, exercise all
rights, remedies, powers, privileges and claims of Issuer against Servicer under
or in connection with the Sale and Servicing Agreement, or against the Sellers,
Compass Auto, Company or any applicable Affiliate under the applicable Purchase
Agreement, including the right or power to take any action to compel or secure
performance or observance by Sellers, Servicer, Compass Auto, Company or any
applicable Affiliate of each of their obligations to Issuer thereunder and to
give any consent, request, notice, direction, approval, extension or waiver
under the Sale and Servicing Agreement or any Purchase Agreement, as applicable,
and any right of Issuer to take such action shall be suspended. If Indenture
Trustee has reason to believe that the proceeds of any such action may be
insufficient to reimburse it for its projected legal fees and expenses,
Indenture Trustee shall notify the Noteholders that it is not obligated to
pursue any such action unless indemnity, reasonably satisfactory to Indenture
Trustee, for its legal fees and expenses is provided to it by the Noteholders.
In the event any such reasonably satisfactory indemnity is provided to it,
Indenture Trustee shall take such action as Indenture Trustee shall deem to be
appropriate.
ARTICLE VI INDENTURE TRUSTEE.
SECTION 6.1 Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, of which a Responsible Officer of Indenture Trustee
has actual knowledge or has received written notice, Indenture Trustee shall
exercise the rights and powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) Indenture Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, no implied
covenants or obligations shall be read into this Indenture against
Indenture Trustee and Indenture Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture; and
(ii) in the absence of bad faith on its part, 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
Indenture Trustee and conforming to the requirements of this Indenture;
however, Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
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(c) 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 paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
Indenture Trustee was grossly negligent in ascertaining the pertinent
facts;
(iii) Indenture Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with the terms of the
Basic Documents; and
(iv) Indenture Trustee shall not be required be deemed to have notice
or knowledge of (a) any failure by Issuer or Servicer to comply with its
obligations under any of the Basic Documents or (b) any Event of Default,
in either case unless a Responsible Officer of Indenture Trustee obtains
actual knowledge of such failure or default or shall have received written
notice thereof. In the absence of such knowledge or notice, Indenture
Trustee may conclusively assume that there is no such failure or Event of
Default.
(d) Indenture Trustee shall not be liable for interest on any money
received by it except as Indenture Trustee may agree in writing with Issuer nor
shall Indenture Trustee be liable for any indebtedness of any other Person
(including Issuer) evidenced by or arising under any of the Basic Documents,
including principal of, or interest on the Notes, except to the extent of claims
or losses related thereto caused by any action or omission by Indenture Trustee
for which Indenture Trustee is liable pursuant to this Section.
(e) Money held in trust by Indenture Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture or any other Basic Document shall
require Indenture Trustee to expend, advance or risk its own funds or otherwise
incur financial liability in the performance of any of its duties hereunder or
any other Basic Document or in the exercise of any of its rights or powers under
any Basic Document, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it.
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(g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to Indenture Trustee shall be subject
to the provisions of this Section and to the provisions of the TIA.
(h) Indenture Trustee shall take all actions required to be taken by the
Indenture Trustee under the Sale and Servicing Agreement.
SECTION 6.2 Rights of Indenture Trustee. (a) Indenture Trustee may
conclusively rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. Indenture Trustee need not investigate
any fact or matter stated in the document.
(b) Before Indenture Trustee acts or refrains from acting, it may require
an Officer's Certificate or an Opinion of Counsel (which shall be at Issuer's
expense). Indenture Trustee shall not be liable for any action it takes, suffers
or omits to take in good faith in reliance on the Officer's Certificate or
Opinion of Counsel.
(c) Indenture Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, Sellers, Servicer, Compass Auto or any other such agent,
attorney, custodian or nominee appointed with due care by it hereunder.
Indenture Trustee shall have no duty to monitor the performance of Issuer.
(d) The right of Indenture Trustee to perform any discretionary act
hereunder or in any other Basic Document shall not be construed as a duty, and
Indenture Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or powers;
provided, that Indenture Trustee's conduct does not constitute willful
misconduct, gross negligence or bad faith.
(e) Indenture Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture 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.
SECTION 6.3 Individual Rights of Indenture Trustee. Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However,
Indenture Trustee must comply with Sections 6.11 and 6.12.
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SECTION 6.4 Indenture Trustee's Disclaimer. Indenture Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, shall not be accountable for Issuer's use of the
proceeds from the Notes, and shall not be responsible for any statement of
Issuer in the Indenture or in any document issued in connection with the sale of
the Notes or in the Notes other than Indenture Trustee's certificate of
authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is either actually known or written notice of the existence thereof has
been delivered to a Responsible Officer of Indenture Trustee, Indenture Trustee
shall mail to each Noteholder and Moody's notice of the Default within 90 days
after such knowledge or notice occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note), Indenture Trustee may
withhold the notice 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 Holders. Indenture Trustee
shall deliver to each Noteholder the information set forth in Section 4.9 of the
Sale and Servicing Agreement.
SECTION 6.7 Compensation and Indemnity. Issuer shall pay to Indenture
Trustee from time to time reasonable compensation (as agreed between Servicer
and Indenture Trustee) for its services, including extraordinary services such
as default administration and reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as Indenture
Trustee may employ in connection with the exercise and performance of its rights
and duties under any Basic Document. Indenture Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. In
addition, Issuer shall reimburse any expenses incurred by Indenture Trustee in
pursuing remedies pursuant to Section 5.4; provided that Issuer shall not
reimburse any expense or indemnify against any loss, liability or expense
incurred by Indenture Trustee through Indenture Trustee's own willful
misconduct, gross negligence or bad faith or to the extent arising from the
breach by the Indenture Trustee of any of its representations and warranties and
covenants set forth herein.
Issuer's payment obligations to Indenture Trustee pursuant to this Section
shall survive the discharge of this Indenture subject to a satisfaction of the
Rating Agency Condition or the Indenture Trustee's earlier resignation or
removal. When Indenture Trustee incurs expenses after the occurrence of a
Default specified in Section 5.1(d) or (e) with respect to Issuer, 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.
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SECTION 6.8 Replacement of Indenture Trustee. Indenture Trustee may resign
at any time by so notifying Issuer. The Holders of a majority in Outstanding
Amount of the Notes may remove Indenture Trustee by so notifying Indenture
Trustee in writing and may appoint a successor Indenture Trustee. Issuer shall
remove Indenture Trustee if:
(a) Indenture Trustee fails to comply with Section 6.11;
(b) Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of Indenture
Trustee or its property; or
(d) Indenture Trustee otherwise becomes incapable of acting.
If Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (Indenture Trustee in such event
being referred to herein as the retiring Indenture Trustee), Issuer shall
promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to 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 Indenture Trustee under this Indenture subject to satisfaction of the Rating
Agency Condition. 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.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, Issuer or the Holders of a majority in Outstanding Amount of the Notes
may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
If Indenture Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of Indenture
Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of Indenture Trustee and appointment of a
Successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.8 and payment of all fees and
expenses owed to the outgoing Indenture Trustee.
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Notwithstanding the resignation or removal of Indenture Trustee pursuant to
this Section, Issuer's and Administrator's obligations under Section 6.7 shall
continue for the benefit of the retiring Indenture Trustee.
Indenture Trustee shall not be liable for the acts or omissions of any
successor Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. Subject to Section
6.11, if 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. Indenture Trustee shall provide the Rating Agencies and Servicer
written notice of any such transaction within 30 days of such change.
In case at the time such successor or successors by merger, conversion or
consolidation to Indenture Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to 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 Indenture Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to Indenture Trustee; and
in all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of
Indenture Trustee shall have.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, after delivering written notice to Servicer, for the purpose of satisfying
any of its obligations under the Basic Documents or meeting any legal
requirement of any jurisdiction in which any part of Issuer may at the time be
located, Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or co-
trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as 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.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
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(i) all rights, powers, duties and obligations conferred or imposed
upon Indenture Trustee shall be conferred or imposed upon and exercised or
performed by 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 Indenture 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 Indenture 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
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 Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder, including acts or omissions
of predecessor or successor trustees; and
(iii) Indenture Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to 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
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, Indenture Trustee. Every such instrument shall be filed with
Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute Indenture
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
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 invest in and be exercised by
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. Indenture Trustee shall at all
times satisfy the requirements of TIA (S) 310(a). Indenture Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition and shall have a long term debt
rating of
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investment grade or better by the Rating Agencies or shall otherwise be
acceptable to the Rating Agencies. Indenture Trustee shall comply with TIA (S)
310(b), including the optional provision permitted by the second sentence of TIA
(S) 310(b)(9); provided that there shall be excluded from the operation of TIA
(S) 310(b)(1) any indenture or indentures under which other securities of Issuer
are outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
If a default occurs under this Indenture, and Indenture Trustee is deemed
to have a conflicting interest as a result of acting as trustee for the Class A-
1 Notes, on the one hand, and the Class A-2 Notes and Class A-3 Notes (the "Pro
Rata Notes"), on the other hand, a successor Indenture Trustee shall be
appointed by Issuer (with written notice of such appointment to the existing
Indenture Trustee) for one or both of the Class A-1 Notes, on the one hand, and
the Pro Rata Notes, on the other hand, so that there will be separate Indenture
Trustees for the Class A-1 Notes and the Pro Rata Notes. No such event shall
alter the voting rights of the Class A-1 Noteholders or the Holders of the Pro
Rata Notes under this Indenture or any other Basic Document. However, so long as
any amounts remain unpaid with respect to the Class A-1 Notes, only Indenture
Trustee for the Class A-1 Noteholders shall have the right to exercise remedies
under this Indenture (but subject to the express provisions of Section 5.4 and
to the right of the Holders of the Pro Rata Notes to receive their share of any
proceeds of enforcement, subject to the subordination of the Pro Rata Notes to
the Class A-1 Notes as described herein). Upon repayment of the Class A-1 Notes
in full, all rights to exercise remedies under the Indenture shall transfer to
Indenture Trustee for the Pro Rata Notes.
In the case of the appointment hereunder of a successor Indenture Trustee
with respect to any Class of Notes, Issuer, retiring Indenture Trustee and
successor Indenture Trustee with respect to such Class of Notes shall execute
and deliver an indenture supplemental hereto wherein the each successor
Indenture Trustee shall accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, successor Indenture Trustee all the rights, powers, trusts and duties
of retiring Indenture Trustee with respect to the Notes of the Class to which
the appointment of such successor Indenture Trustee relates, (ii) if retiring
Indenture Trustee is not retiring with respect to all Classes of Notes, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of retiring Indenture Trustee
with respect to the Notes of each Class as to which retiring Indenture Trustee
is not retiring shall continue to be vested in retiring Indenture Trustee, and
(iii) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Indenture Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Indenture
Trustees co-trustees of the same trust and that each such Indenture Trustee
shall be trustee of a
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trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Indenture Trustee; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Indenture Trustee shall become effective to the extent provided
therein.
SECTION 6.12 Preferential Collection of Claims Against Issuer. Indenture
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). An Indenture Trustee who has resigned or been removed
shall be subject to TIA (S) 311(a) to the extent indicated.
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.
SECTION 7.1 Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. Issuer shall furnish or cause to be furnished to Indenture Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as Indenture
Trustee may reasonably require, of the names and addresses of the Holders as of
such Record Date, (b) at such other times as Indenture Trustee may request in
writing, within 30 days after receipt by Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided that so long as (i) Indenture Trustee is Note
Registrar, or (ii) the Notes are Book Entry Notes, no such list shall be
required to be furnished.
SECTION 7.2 Preservation of Information; Communications to Noteholders.
(a) Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to Indenture Trustee as provided in Section 7.1 and
the names and addresses of Holders received by Indenture Trustee in its capacity
as Note Registrar. Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes. Upon receipt by the Indenture Trustee of any request by three or more
Noteholders or by one or more Noteholders of Notes evidencing not less than 25%
of the Outstanding Amount of Notes to receive a copy of the current list of
Noteholders (whether or not made pursuant to TIA (S) 312(b)), the Indenture
Trustee shall promptly notify Servicer thereof by providing to Servicer a copy
of such request and a copy of the list of Noteholders produced in response
thereto.
(c) Issuer, Indenture Trustee and Note Registrar shall have the protection
of TIA (S) 312(c).
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SECTION 7.3 Reports by Issuer. (a) Issuer shall:
(i) deliver to Indenture Trustee, within 15 days after 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 Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) deliver to 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 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 Indenture Trustee (and Indenture Trustee shall
transmit by mail to all Noteholders described in TIA (S) 313(c)) such
summaries of any information, documents and reports required to be filed by
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.
(b) Unless Issuer otherwise determines, the fiscal year of Issuer shall end
on December 31 of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA (S) 313(a),
within 60 days after each March 31, beginning with March 31, 1999, Indenture
Trustee shall mail to each Noteholder as required by TIA (S) 313(c) a brief
report dated as of such date that complies with TIA (S) 313(a). Indenture
Trustee also shall comply with TIA (S) 313(b)(1). A copy of each report at the
time of its mailing to Noteholders shall be delivered to Indenture Trustee for
filing with the Commission and each stock exchange, if any, on which the Notes
are listed. Issuer shall notify 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, Indenture Trustee may demand payment or delivery of, and shall receive,
directly and without intervention or assistance of any fiscal agent or other
intermediary, all money and other property payable to or receivable by Indenture
Trustee pursuant to this Indenture. Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Estate, Indenture Trustee may take such action as may be appropriate to enforce
such payment or performance,
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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, Issuer
shall cause Servicer to establish with and in the name of Indenture Trustee, for
the benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in Section 5.1 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution Amount with
respect to the preceding Collection Period shall be deposited by Servicer in the
Collection Account as provided in Section 5.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, the Noteholders' Distributable
Amount with respect to the preceding Collection Period shall be transferred from
the Collection Account and/or the Reserve Account to the Note Distribution
Account as provided in Sections 5.1 and 5.4 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, Indenture Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)) and
based solely on the information set forth in the Servicer's Report:
(i) accrued and unpaid interest on the Notes (A) in the Class A-1
Noteholders' Interest Distributable Amount, to the Class A-1 Noteholders,
(B) in the Class A-2 Noteholders' Interest Distributable Amount, to the
Class A-2 Noteholders and (C) in the Class A-3 Noteholders' Interest
Distributable Amount, to the Class A-3 Noteholders; provided that if there
are not sufficient funds in the Note Distribution Account to pay the entire
amount of accrued and unpaid interest then due on the Notes for the related
Distribution Date, the amount in the Note Distribution Account shall be
applied to the payment of such interest on each class of the Notes pro rata
on the basis of the total amount of such interest due on such class of
Notes for such Distribution Date or Final Scheduled Distribution Date for
the Class A-1 Notes;
(ii) to Holders of the Class A-1 Notes, on a pro rata basis, an amount
equal to the Class A-1 Noteholders' Principal Distributable Amount for such
Distribution Date;
(iii) to Holders of the Class A-2 Notes, on a pro rata basis, an
amount equal to the Class A-2 Noteholders' Principal Distributable Amount
for such Distribution Date; and
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(iv) to Holders of the Class A-3 Notes, on a pro rata basis, an amount
equal to the Class A-3 Noteholders' Principal Distributable Amount for such
Distribution Date.
SECTION 8.3 General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments selected in writing by Servicer, subject to the provisions of
Section 5.1(b) of the Sale and Servicing Agreement. In accordance with Section
5.1(b) of the Sale and Servicing Agreement, on each Distribution Date, all
interest and other investment income (net of losses and investment expenses) on
funds on deposit in the Trust Accounts shall be distributed to Compass Auto and
shall not be available to pay the distribution provided for in Section 5.4 of
the Sale and Servicing Agreement and shall not otherwise be subject to any
claims or rights of Holders. Issuer shall not direct Indenture Trustee to make
any investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest Granted and perfected in such account
shall continue to be perfected in such investment or the proceeds of such sale,
in either case without any further action by any Person.
(b) Subject to Section 6.1(c), Indenture Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to Indenture Trustee's failure to make payments on such
Eligible Investments issued by Indenture Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(c) If (i) Issuer shall have failed to provide standing instructions or
give investment directions for any funds on deposit in the Trust Accounts to
Indenture Trustee by 11:00 a.m. Eastern Time (or such other time as may be
agreed by Issuer and Indenture Trustee) on any Business Day; (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.2, or (iii) if such Notes shall have been declared due and payable following
an Event of Default, and amounts collected or receivable from the Trust Estate
are being applied in accordance with Section 5.4 as if there had not been such a
declaration; then Indenture Trustee shall, to the fullest extent practicable,
invest and reinvest funds in the Trust Accounts in Vista Prime Money Market Fund
(so long as such fund is an Eligible Investment; provided that such fund shall
be deemed to be an Eligible Investment unless a Responsible Officer of the
Indenture Trustee receives written notice to the contrary) or such other
Eligible Investment designated in advance in writing by Servicer. Indenture
Trustee shall not be liable for losses in respect of such investments in
Eligible Investments that comply with the requirements of the Basic Documents.
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SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.7, Indenture Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey Indenture Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by Indenture Trustee as provided in this Article VIII shall
be bound to ascertain Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) Indenture Trustee shall, at such time as there are no Notes outstanding
and all sums due Indenture Trustee pursuant to Section 6.7 have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture and release to Issuer or any other Person entitled
thereto any funds then on deposit in the Trust Accounts. Indenture Trustee shall
release property from the lien of this Indenture pursuant to this Section 8.4(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 (S)(S) 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.1.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, acknowledges that from time to
time the Indenture Trustee shall release the lien of this Indenture on any
Receivable to be sold to (i) Company in accordance with Section 3.3 of the Sale
and Servicing Agreement or (ii) Servicer in accordance with Section 4.7 of the
Sale and Servicing Agreement.
SECTION 8.5 Opinion of Counsel. Indenture Trustee shall receive at least
seven days' notice when requested by Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and Indenture
Trustee may also require as a condition to such action, an Opinion of Counsel,
in form and substance satisfactory to Indenture Trustee, 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 shall not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided 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
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. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by Issuer, Issuer and Indenture Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto in form satisfactory to 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 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 Issuer, and the assumption by any
such successor of the covenants of Issuer herein and in the Notes;
(iii) to add to the covenants of Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with Indenture Trustee; or
(v) 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.
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.
(b) Issuer and Indenture Trustee, when authorized by an Issuer Order, may,
also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by Issuer, enter into an indenture or indentures
supplemental hereto (i) to cure any ambiguity, (ii) to correct or supplement any
provisions in this Indenture, or (iii) for the purpose of, among other things,
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture, so long as such action in this clause (iii) shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder.
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SECTION 9.2 Supplemental Indentures with Consent of Noteholders. Issuer
and Indenture Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than a majority of the Outstanding Amount of the Notes, by Act of such Holders
delivered to Issuer and Indenture Trustee, 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 the Notes under this
Indenture; provided that no such supplemental indenture shall, without the
consent of Certificateholders holding a majority of the Adjusted Certificate
Balance, modify Sections 3.10 or 5.4 if such modification would adversely affect
the Certificateholders and provided, further that no such supplemental indenture
shall, without the consent of 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 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 the Notes
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 Outstanding Amount of the Notes, 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 as to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct Indenture Trustee to direct Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.4;
(v) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein or in the
Basic Documents, terminate the lien of this Indenture on any property at
any time
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subject hereto or deprive the Holder of any Note of the security provided
by the lien of this Indenture; or
(vi) become effective if the Rating Agency Condition in respect
thereof shall have not been satisfied.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Noteholders provided for in
this Indenture or in any other Basic Document) and of evidencing the
authorization of the execution thereof by Noteholders shall be subject to such
reasonable requirements as Indenture Trustee may provide.
Promptly after the execution by Issuer and Indenture Trustee of any
supplemental indenture pursuant to this Section, Indenture Trustee shall mail to
the Holders of the Notes to which such amendment or supplemental indenture
relates a copy of such supplemental indenture. Any failure of 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, 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. Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects 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
Indenture Trustee, 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 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may bear a notation in form approved by
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Indenture Trustee as to any matter provided for in such supplemental indenture.
If Issuer shall so determine, new Notes so modified as to conform, in the
opinion of Issuer, to any such supplemental indenture may be prepared and
executed by Issuer and authenticated and delivered by Indenture Trustee in
exchange for Outstanding Notes.
ARTICLE X REDEMPTION OF NOTES.
SECTION 10.1 Redemption. The Class A-3 Notes are subject to redemption in
whole, but not in part, at the written direction of Servicer pursuant to Section
9.1(a) of the Sale and Servicing Agreement, on any Distribution Date on which
Servicer exercises its option to purchase the Owner Trust Estate pursuant to
said Section 9.1(a), for a purchase price equal to the Redemption Price;
provided that Issuer has available funds sufficient to pay the Redemption Price.
Servicer or Issuer shall furnish the Rating Agencies notice of such redemption.
If the Class A-3 Notes are to be redeemed pursuant to this Section 10.1,
Servicer or Issuer shall furnish notice of such election to Indenture Trustee
not later than 10 days prior to the Redemption Date and Issuer shall deposit
with Indenture Trustee in the Note Distribution Account the Redemption Price of
the Class A-3 Notes to be redeemed whereupon all such Class A-3 Notes shall be
due and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.2 to each Holder of the Class A-3 Notes.
SECTION 10.2 Form of Redemption Notice. Notice of redemption under Section
10.1 shall be given by Indenture Trustee by facsimile or by first-class mail,
postage prepaid, transmitted or mailed prior to the applicable Redemption Date
to each Holder of Class A-3 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;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Class A-3 Notes and the place
where such Class A-3 Notes are to be surrendered for payment of the
Redemption Price (which shall be the office or agency of Issuer to be
maintained as provided in Section 3.2); and
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(iv) that interest on the Class A-3 Notes shall cease to accrue
on the Redemption Date.
Notice of redemption of the Class A-3 Notes shall be given by Indenture
Trustee in the name and at the expense of Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Class A-3 Note shall not
impair or affect the validity of the redemption of any other Class A-3 Note.
SECTION 10.3 Notes Payable on Redemption Date. The Class A-3 Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1), on the Redemption Date become
due and payable at the Redemption Price and (unless 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.
ARTICLE XI MISCELLANEOUS.
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by Issuer to Indenture Trustee to take any action under
any provision of this Indenture, Issuer shall furnish to Indenture Trustee (i)
an Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(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 any provision of this Indenture, no additional
certificate or opinion need be furnished.
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 such examination or investigation as is
necessary to enable such signatory to express an informed opinion as
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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) (i) Prior to the deposit of any Collateral or other property
or securities with Indenture Trustee that is to be made the basis for
the release of any property or securities subject to the lien of this
Indenture, Issuer shall, in addition to any obligation imposed in
Section 11.1(a) or elsewhere in this Indenture, furnish to Indenture
Trustee 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 Issuer of the Collateral or other property or
securities to be so deposited.
(ii) Whenever Issuer is required to furnish to Indenture Trustee
an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (i), Issuer shall
also deliver to Indenture Trustee an Independent Certificate as to the
same matters, if the fair value to 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 Issuer, as set forth in the certificates delivered
pursuant to clause (i) and this clause (ii), is 10% or more of the
Outstanding Amount of the Notes, but such a certificate need not be
furnished with respect to any securities so deposited, if the fair
value thereof to Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Defaulted Receivables, whenever any property or
securities are to be released from the lien of this Indenture, Issuer
shall also furnish to Indenture Trustee 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 stating that in
the opinion of such person the proposed release shall not impair the
security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever Issuer is required to furnish to Indenture Trustee
an Officer's Certificate certifying or stating the
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opinion of any signer thereof as to the matters described in clause
(iii), Issuer shall also furnish to Indenture Trustee 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) and this clause (iv), equals 10% or more of the Outstanding
Amount of the Notes, but 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 one percent of the then Outstanding Amount of the
Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section, Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables as and to the extent permitted or required by the Basic
Documents and (B) make cash payments out of the Trust Accounts as and
to the extent permitted or required by the Basic 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 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 or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based 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
Servicer, Sellers or Issuer, stating that the information with respect to such
factual matters is in the possession of Servicer, Sellers or Issuer, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to Indenture Trustee, it is provided that Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of Issuer's compliance with any term hereof, it is intended that the
truth and accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions precedent
to the right of Issuer to have such application granted or to the sufficiency of
such certificate or report. The foregoing shall not, however, be construed to
affect 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 instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to Indenture Trustee, and, where it is
hereby expressly required, to Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of Indenture Trustee and 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 customary manner of Indenture
Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be
done by Indenture Trustee or Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
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SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) Indenture Trustee by any Noteholder, Servicer or Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered
by overnight courier or mailed certified mail, return receipt requested and
shall be deemed to have been duly given upon receipt to Indenture Trustee
at its Corporate Trust Office, or
(b) Issuer by Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered
by overnight courier or mailed certified mail, return receipt requested and
shall be deemed to have been duly given upon receipt to Issuer addressed
to: Compass Auto Receivables Trust 1998-A, in care of The Chase Manhattan
Bank, 450 W. 33rd Street, 8th Floor, New York, New York 10001, Attention:
Structured Finance Services/ABS Administration, or at any other address
previously furnished in writing to Indenture Trustee by Issuer. Issuer
shall promptly transmit any notice received by it from the Noteholders to
Indenture Trustee.
Notices required to be given to the Rating Agencies by Issuer, Indenture
Trustee or Owner Trustee shall be in writing, personally delivered, delivered by
overnight courier, express mail or mailed certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention
of ABS Monitoring Department, and (ii) in the case of S&P, at the following
address: Standard & Poor's Ratings Services, 26 Broadway (15th Floor), New York,
New York 10004, Attention of Asset Backed Surveillance Department or as to each
of the foregoing, at such other address as shall be designated by written notice
to the other parties.
SECTION 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.
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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 Indenture Trustee but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to 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, Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by Indenture Trustee or any Paying Agent to such Holder, that
is different from the methods provided for in this Indenture for such payments
or notices, provided that such methods are reasonable and consented to by
Indenture Trustee (which consent shall not be unreasonably withheld). Issuer
shall furnish to the Indenture Trustee a copy of each such agreement and
Indenture Trustee shall cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.7 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 (S)(S) 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 physically contained herein.
SECTION 11.8 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 11.9 Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by Issuer shall bind its successors and assigns, whether
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so expressed or not. All agreements of Indenture Trustee in this Indenture shall
bind its successors.
SECTION 11.10 Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, 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.
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 succeeding 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 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 appropriate public recording offices, such recording is to be
effected by Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to Indenture Trustee or any other counsel reasonably
acceptable to Indenture Trustee) 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 Indenture
Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of Issuer, Sellers, Servicer,
Compass Auto,
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the Company, Owner Trustee or Indenture Trustee on the Notes or under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith, against (i) Sellers, Servicer, Compass Auto, the Company,
Indenture Trustee or Owner Trustee in its individual capacity, (ii) any owner of
a beneficial interest in Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director, employee or agent of Sellers, Servicer, Compass Auto, the
Company, Indenture Trustee or Owner Trustee in its individual capacity, any
holder of a beneficial interest in Issuer, Sellers, Servicer, Compass Auto, the
Company, Owner Trustee or Indenture Trustee or of any successor or assign of
Sellers, Servicer, Compass Auto, the Company, Indenture Trustee or Owner Trustee
in its individual capacity, except as any such Person may have expressly agreed
(it being understood that Indenture Trustee and Owner Trustee have no such
obligations in their individual capacity) 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. For all purposes of
this Indenture, in the performance of any duties or obligations of Issuer
hereunder, Owner Trustee shall be subject to, and entitled to the benefits of,
the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. 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 Compass Auto, the Company or
Issuer, or join in any institution against Compass Auto, the Company or 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 of the Basic Documents.
SECTION 11.18 Inspection. Issuer agrees that, on reasonable prior notice,
it shall permit any representative of Indenture Trustee, during Issuer's normal
business hours, to examine all the books of account, records, reports, and other
papers of Issuer, to make copies and extracts therefrom, to cause such books to
be audited by Independent certified public accountants, and to discuss Issuer's
affairs, finances and accounts with Issuer's officers, employees, and
independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. Indenture Trustee shall and shall cause
its representatives to hold in confidence all such information except that the
foregoing shall not be construed to prohibit (i) disclosure of any and all
information that is publicly known, or information obtained by the Indenture
Trustee from sources other than Issuer, (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 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,
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arbitrator or arbitration to which the Indenture Trustee or an affiliate or an
officer, director, employer or shareholder thereof is a party, or (D) 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, or (iii) any other disclosure authorized by Issuer.
SECTION 11.19 ERISA Matters. Each Holder and Note Owner, by acceptance
of a Note, or, in the case of a Note Owner, a beneficial interest in the Note,
shall (i) be deemed to represent and warrant that either (a) it is not
acquiring the Note with the plan assets of a Benefit Plan; or (b) the
acquisition and holding of the Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code; or (ii)
provide a certification to Issuer, Servicer and Indenture Trustee certifying
that it meets certain requirements of Prohibited Transaction Exemption 84-14
that is satisfactory to Issuer and Servicer.
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IN WITNESS WHEREOF, Issuer and Indenture Trustee have caused this Indenture
to be duly executed by their respective officers, thereunto duly authorized, all
as of the day and year first above written.
COMPASS AUTO RECEIVABLES TRUST 1998-A
By: THE BANK OF NEW YORK TRUST COMPANY
OF FLORIDA, N.A., a national banking
association, not in its individual
capacity but solely as Owner Trustee
By: /s/ David G. Sampson
-------------------------------------
Name: David G. Sampson
Title: Vice President
THE CHASE MANHATTAN BANK, a New York
banking corporation, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ JoAnn Manieri
-------------------------------------
Name: JoAnn Manieri
Title: Trust Officer
S-1
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EXHIBIT A
SCHEDULE OF RECEIVABLES
Delivered on Disk to Indenture Trustee
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EXHIBIT B
FORM OF NOTE DEPOSITORY AGREEMENT
(see attached)
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EXHIBIT C
FORM OF CLASS A-1 NOTES
REGISTERED $____________/1/
No. R-___ CUSIP NO. 045413AT8
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
COMPASS AUTO RECEIVABLES TRUST 1998-A
5.659% CLASS A-1 ASSET BACKED NOTES
Compass Auto Receivables Trust 1998-A, a trust organized and existing under
the laws of the State of Alabama (including any successor, the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of __________________ DOLLARS ($___________), partially payable on
each Distribution Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial principal amount of this
Note and the denominator of which is the aggregate initial principal amount of
the Class A-1 Notes (the "Fraction") by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the Class
A-1 Notes pursuant to Section 8.2(c) of the Indenture; provided that the entire
unpaid principal amount of this Note shall be due and payable on the Final
Scheduled Distribution Date for the Class A-1 Notes. Issuer shall pay interest
on this Note on each
_______________
/1/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
Distribution Date until the principal of this Note is paid or made available for
payment, in an amount equal to the product of the Class A-1 Noteholders'
Interest Distributable Amount for the related Distribution Date multiplied by
the Fraction subject to certain limitations contained in Section 3.1 and Section
8.2 of the Indenture. 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 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, Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: June 30, 1998
COMPASS AUTO RECEIVABLES TRUST 1998-A
By: THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.A., a
national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust
Agreement
By:
--------------------------------------------------------
Name:
------------------------------------------------------
Title:
-----------------------------------------------------
C-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Dated: June 30, 1998
THE CHASE MANHATTAN BANK, a New York banking corporation,
not in its individual capacity, but solely as Indenture
Trustee
By:
-------------------------------------------------------
Authorized Signatory
C-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of Issuer, designated
as its 5.659% Class A-1 Asset Backed Notes (the "A-1 Notes" or the "Notes"), all
issued under an Indenture, dated as of June 30, 1998 (as supplemented or
amended, the "Indenture"), between Issuer and The Chase Manhattan Bank, a New
York banking corporation, not in its individual capacity but solely as trustee
(the "Indenture Trustee"), which term includes any successor Indenture Trustee
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of 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-1 Notes, the Class A-2 Notes and the Class A-3 Notes are and
shall be equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture.
Issuer shall pay interest on overdue installments of interest at the Class
A-1 Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of Issuer, Sellers, Servicer, Compass Auto, Company, Owner Trustee or Indenture
Trustee on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) Sellers, Servicer,
Compass Auto, Company, Indenture Trustee or Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
Sellers, Servicer, Compass Auto, Company, Indenture Trustee or Owner Trustee in
its individual capacity, any holder of a beneficial interest in Issuer, Sellers,
Servicer, Compass Auto, Company, Owner Trustee or Indenture Trustee or of any
successor or assign of Sellers, Servicer, Compass Auto, Company, Indenture
Trustee or Owner Trustee in its individual capacity, except as any such Person
may have expressly agreed (it being understood that Indenture Trustee and Owner
Trustee have no such obligations in their individual capacity) 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.
C-4
<PAGE>
Each Holder and Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, shall (i) be deemed to represent
and warrant that either (a) it is not acquiring the Note with the plan assets of
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 Title I
of ERISA, or a "plan" as defined in Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (each such entity a "Benefit Plan"); or (b) the
acquisition and holding of the Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code; or (ii)
provide a certification to Issuer, Servicer and Indenture Trustee certifying
that it meets certain requirements of Prohibited Transaction Exemption 84-14
that is satisfactory to Issuer and Servicer.
It is the intent of Sellers, Servicer, Compass Auto, Company, the
Noteholders and the Note Owners that, for purposes of Federal and State income
tax and any other tax measured in whole or in part by income, the Notes shall
qualify as indebtedness of 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 Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that they
shall not at any time institute against Company, Compass Auto or Issuer, or join
in any institution against Company, Compass Auto or 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
of other Basic Document.
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
(other than Section 5-1401 of the New York General Obligations Law), 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 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 Basic Documents, neither The Bank of New York Trust Company of
Florida, N.A., a national banking association, in its individual capacity, any
owner of a beneficial interest in Issuer, nor any of their respective partners,
beneficiaries,
C-5
<PAGE>
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 indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by Owner Trustee for the sole purposes of
binding the interests of Owner Trustee in the assets of Issuer. The Holder of
this Note by the acceptance hereof agrees that, except as expressly provided in
the Basic 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 that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of Issuer for any and
all liabilities, obligations and undertakings contained in the Indenture or in
this Note.
C-6
<PAGE>
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)
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,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
_________________________
*/ 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-7
<PAGE>
EXHIBIT D
FORM OF CLASS A-2 NOTES
REGISTERED $____________/1/
No. R-___ CUSIP NO. 045413AU5
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
COMPASS AUTO RECEIVABLES TRUST 1998-A
5.709% CLASS A-2 ASSET BACKED NOTES
Compass Auto Receivables Trust 1998-A, a trust organized and existing under
the laws of the State of Alabama (including any successor, the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of __________________ DOLLARS ($___________), partially payable on
each Distribution Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial principal amount of this
Note and the denominator of which is the aggregate initial principal amount of
the Class A-2 Notes ("the Fraction") by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the Class
A-2 Notes pursuant to Section 8.2(c) of the Indenture; provided that the entire
unpaid principal amount of this Note shall be due and payable on the Final
Scheduled Distribution Date for the Class A-2 Notes. No payments of principal
of the Class A-2 Notes shall
- ---------------
/1/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
be made until the principal of the Class A-1 Notes has been paid in full. Issuer
shall pay interest on this Note on each Distribution Date until the principal of
this Note is paid or made available for payment in an amount equal to the
product of the Class A-2 Noteholders' Interest Distributable Amount for the
related Distribution Date multiplied by the Fraction, subject to certain
limitations contained in Section 3.1 and Section 8.2 of the Indenture. 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 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, Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: June 30, 1998
COMPASS AUTO RECEIVABLES TRUST 1998-A
By: THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A., a
national banking association,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:_________________________________
Name:_______________________________
Title:______________________________
D-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Dated: June 30, 1998
THE CHASE MANHATTAN BANK, a New York
banking corporation, not in its
individual capacity, but solely as
Indenture Trustee
By:_________________________________
Authorized Signatory
D-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of Issuer, designated
as its 5.709% Class A-2 Asset Backed Notes (the "A-2 Notes" or the "Notes"), all
issued under an Indenture dated as of June 30, 1998 (such Indenture, as
supplemented or amended, the "Indenture"), between Issuer and The Chase
Manhattan Bank, a New York banking corporation, not in its individual capacity
but solely as trustee (the "Indenture Trustee"), which term includes any
successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of 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-1 Notes, the Class A-2 Notes and the Class A-3 Notes are and
shall be equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture.
Issuer shall pay interest on overdue installments of interest at the Class
A-2 Interest Rate to the extent lawful.
D-4
<PAGE>
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of Issuer, Sellers, Servicer, Compass Auto, Company, Owner Trustee or Indenture
Trustee on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) Sellers, Servicer,
Compass Auto, Company, Indenture Trustee or Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
Sellers, Servicer, Compass Auto, Company, Indenture Trustee or Owner Trustee in
its individual capacity, any holder of a beneficial interest in Issuer, Sellers,
Servicer, Compass Auto, Company, Owner Trustee or Indenture Trustee or of any
successor or assign of Sellers, Servicer, Compass Auto, Company, Indenture
Trustee or Owner Trustee in its individual capacity, except as any such Person
may have expressly agreed (it being understood that Indenture Trustee and Owner
Trustee have no such obligations in their individual capacity) 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.
Each Holder and Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, shall (i) be deemed to represent
and warrant that either (a) it is not acquiring the Note with the plan assets of
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 Title I
of ERISA, or a "plan" as defined in Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (each such entity a "Benefit Plan"); or (b) the
acquisition and holding of the Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code; or (ii)
provide a certification to Issuer, Servicer and Indenture Trustee certifying
that it meets certain requirements of Prohibited Transaction Exemption 84-14
that is satisfactory to Issuer and Servicer.
It is the intent of the Sellers, Servicer, Compass Auto, Company, the
Noteholders and the Note Owners that, for purposes of Federal and State income
tax and any other tax measured in whole or in part by income, the Notes shall
qualify as indebtedness of 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 Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that they
shall not at any time institute against Company, Compass Auto or Issuer, or join
in any institution against Company, Compass Auto or Issuer of, any bankruptcy,
D-5
<PAGE>
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 Basic Document.
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
(other than Section 5-1401 of the New York General Obligations Law), 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 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 Basic Documents, neither The Bank of New York Trust Company of
Florida, N.A., a national banking association, in its individual capacity, any
owner of a beneficial interest in 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 indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by Owner Trustee for the sole
purposes of binding the interests of Owner Trustee in the assets of Issuer. The
Holder of this Note by the acceptance hereof agrees that, except as expressly
provided in the Basic 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 that nothing contained herein
shall be taken to prevent recourse to, and enforcement against, the assets of
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.
D-6
<PAGE>
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)
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,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
_________________________
/*/ 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.
D-7
<PAGE>
EXHIBIT E
FORM OF CLASS A-3 NOTES
REGISTERED $____________/1/
No. R-___ CUSIP NO. 045413AV3
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
COMPASS AUTO RECEIVABLES TRUST 1998-A
5.900% CLASS A-3 ASSET BACKED NOTES
Compass Auto Receivables Trust 1998-A, a trust organized and existing under
the laws of the State of Alabama (including any successor, the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of __________________ DOLLARS ($___________), partially payable on
each Distribution Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial principal amount of this
Note and the denominator of which is the aggregate initial principal amount of
the Class A-3 Notes ("the Fraction") by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the Class
A-3 Notes pursuant to Section 8.2(c) of the Indenture; provided that the entire
unpaid principal amount of this Note shall be due and payable on the earlier of
the Final Scheduled Distribution Date for the Class A-3 Notes and the Redemption
Date, if any, pursuant
- -----------------------
/1/ Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
to Section 10.1 of the Indenture. No payments of principal of the Class A-3
Notes shall be made until the principal of the Class A-1 Notes and the Class A-2
Notes has been paid in full. Issuer shall pay interest on this Note on each
Distribution Date until the principal of this Note is paid or made available for
payment in an amount equal to the product of the Class A-3 Noteholders' Interest
Distributable Amount for the related Distribution Date multiplied by the
Fraction, subject to certain limitations contained in Section 3.1 and Section
8.2 of the Indenture. 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 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, Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: June 30, 1998
COMPASS AUTO RECEIVABLES TRUST 1998-A
By: THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A., a
national banking association,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:__________________________________
Name:________________________________
Title:_______________________________
E-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Dated: June 30, 1998
THE CHASE MANHATTAN BANK, a New York banking corporation,
not in its individual capacity, but solely as Indenture
Trustee
By:__________________________________
Authorized Signatory
E-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of Issuer, designated
as its 5.900% Class A-3 Asset Backed Notes (the "Class A-3 Notes" or the
"Notes"), all issued under an Indenture dated as of June 30, 1998 (such
Indenture, as supplemented or amended, the "Indenture"), between Issuer and The
Chase Manhattan Bank, a New York banking corporation, not in its individual
capacity but solely as trustee (the "Indenture Trustee"), which term includes
any successor Indenture Trustee under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of 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-1 Notes, the Class A-2 Notes and the Class A-3 Notes are and
shall be equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture.
Issuer shall pay interest on overdue installments of interest at the Class
A-3 Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of Issuer, Sellers, Servicer, Compass Auto, Company Owner Trustee or Indenture
Trustee on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) Sellers, Servicer,
Compass Auto, Company, Indenture Trustee or Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
Sellers, Servicer, Compass Auto, Company, Indenture Trustee or Owner Trustee in
its individual capacity, any holder of a beneficial interest in Issuer, Sellers,
Servicer, Compass Auto, Company, Owner Trustee or Indenture Trustee or of any
successor or assign of Sellers, Servicer, Compass Auto, Company Indenture
Trustee or Owner Trustee in its individual capacity, except as any such Person
may have expressly agreed (it being understood that Indenture Trustee and Owner
Trustee have no such obligations in their individual capacity) 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.
E-4
<PAGE>
Each Holder and Note Owner, by acceptance of a Note, or, in the case of a
Note Owner, a beneficial interest in the Note, shall (i) be deemed to represent
and warrant that either (a) it is not acquiring the Note with the plan assets of
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 Title I
of ERISA, or a "plan" as defined in Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (each such entity a "Benefit Plan"); or (b) the
acquisition and holding of the Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code; or (ii)
provide a certification to Issuer, Servicer and Indenture Trustee certifying
that it meets certain requirements of Prohibited Transaction Exemption 84-14
that is satisfactory to Issuer and Servicer.
It is the intent of Sellers, Servicer, Compass Auto, Company, the
Noteholders and the Note Owners that, for purposes of Federal and State income
tax and any other tax measured in whole or in part by income, the Notes shall
qualify as indebtedness of 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 Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that they
shall not at any time institute against Company, Compass Auto, or Issuer, or
join in any institution against Company, Compass Auto or 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 Basic Document.
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
(other than Section 5-1401 of the New York General Obligations Law), 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 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 Basic Documents, neither The Bank of New York Trust Company of
Florida, N.A. a national banking association, in its individual capacity, any
owner of a beneficial interest in Issuer, nor any of their respective partners,
beneficiaries,
E-5
<PAGE>
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 indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by Owner Trustee for the sole purposes of
binding the interests of Owner Trustee in the assets of Issuer. The Holder of
this Note by the acceptance hereof agrees that, except as expressly provided in
the Basic 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 that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of Issuer for any and
all liabilities, obligations and undertakings contained in the Indenture or in
this Note.
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<PAGE>
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)
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,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
_________________________
/*/ 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.
E-7
<PAGE>
Exhibit 4.4.7
PREPARED: Kurt Miller
Balch & Bingham
1901 6th Avenue North
Suite 2600
Birmingham, Alabama 35203
(205) 226-3429
================================================================================
COMPASS AUTO RECEIVABLES TRUST 1998-A
AMENDED AND RESTATED
DECLARATION OF TRUST
between
ASSET BACKED SECURITIES CORPORATION,
as Company
COMPASS AUTO RECEIVABLES CORPORATION,
as initial Certificateholder and Settlor
and
THE BANK OF NEW YORK TRUST COMPANY
OF FLORIDA, N.A.
as Owner Trustee
Dated as of June 30, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS........................................................ 1
SECTION 1.1. Capitalized Terms............................................... 1
SECTION 1.2. Other Interpretive Provisions................................... 1
ARTICLE II ORGANIZATION...................................................... 2
SECTION 2.1. Name............................................................ 2
SECTION 2.2. Principal Place of Business..................................... 2
SECTION 2.3. Purposes and Powers............................................. 2
SECTION 2.4. Appointment of Owner Trustee.................................... 3
SECTION 2.5. Initial Capital Contribution of Trust Estate.................... 3
SECTION 2.6. Declaration of Trust............................................ 3
SECTION 2.7. No Liability of the Holders..................................... 3
SECTION 2.8. Title to Owner Trust Estate..................................... 3
SECTION 2.9. Situs of Issuer................................................. 4
SECTION 2.10. Representations and Warranties of Company...................... 4
SECTION 2.11. Federal Income Tax Allocations................................. 5
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS........................... 6
SECTION 3.1. Initial Ownership............................................... 6
SECTION 3.2. The Certificates................................................ 6
SECTION 3.3. Authentication of Certificates.................................. 7
SECTION 3.4. Registration of Transfer and Exchange of Certificates........... 7
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates............... 8
SECTION 3.6. Persons Deemed Certificateholders............................... 8
SECTION 3.7. Access to List of Certificateholders' Names and Addresses....... 8
SECTION 3.8. Maintenance of Office or Agency................................. 9
SECTION 3.9. Appointment of Paying Agent..................................... 9
SECTION 3.10. Definitive Certificates........................................10
SECTION 3.11. Certain Transfer Restrictions..................................10
SECTION 3.12 Legending of Certificates.......................................12
ARTICLE IV VOTING RIGHTS AND ACTIONS BY OWNER TRUSTEE........................12
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters..........12
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters....13
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.........13
SECTION 4.4. Restrictions on Certificateholders' Power.......................13
SECTION 4.5. Majority Control................................................13
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<TABLE>
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ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.........................14
SECTION 5.1. Establishment of Certificate Distribution Account...............14
SECTION 5.2. Application of Funds in Certificate Distribution Account........14
SECTION 5.3. Method of Payment...............................................15
SECTION 5.4. Accounting and Reports to the Noteholders, Certificateholders,
the Internal Revenue Service and Others.......................15
SECTION 5.5. Signature on Returns; Tax Matters Partner.......................15
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.............................16
SECTION 6.1. General Authority...............................................16
SECTION 6.2. General Duties..................................................16
SECTION 6.3. Action upon Instruction.........................................16
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions..................................................17
SECTION 6.5. No Action Except under Specified Documents or Instructions......17
SECTION 6.6. Restrictions....................................................18
ARTICLE VII CONCERNING OWNER TRUSTEE.........................................18
SECTION 7.1. Acceptance of Trusts and Duties.................................18
SECTION 7.2. Furnishing of Documents.........................................20
SECTION 7.3. Representations and Warranties..................................20
SECTION 7.4. Reliance; Advice of Counsel.....................................20
SECTION 7.5. Not Acting in Individual Capacity...............................21
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables........21
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE...................................22
SECTION 8.1. Owner Trustee's Fees and Expenses...............................22
SECTION 8.2. Indemnification.................................................22
SECTION 8.3. Payments to Owner Trustee.......................................23
ARTICLE IX TERMINATION OF TRUST AGREEMENT....................................23
SECTION 9.1. Termination of Trust Agreement..................................23
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.............24
SECTION 10.1. Eligibility Requirements for Owner Trustee.....................24
SECTION 10.2. Resignation or Removal of Owner Trustee........................24
SECTION 10.3. Successor Owner Trustee........................................25
SECTION 10.4. Merger or Consolidation of Owner Trustee.......................26
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee..................26
ARTICLE XI MISCELLANEOUS.....................................................27
SECTION 11.1. Supplements and Amendments.....................................27
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders.....29
SECTION 11.3. Limitations on Rights of Others................................29
</TABLE>
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<PAGE>
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<S> <C>
SECTION 11.4. Notices........................................................30
SECTION 11.5. Severability...................................................30
SECTION 11.6. Separate Counterparts..........................................30
SECTION 11.7. Successors and Assigns.........................................30
SECTION 11.8. No Petition....................................................30
SECTION 11.9. No Recourse....................................................31
SECTION 11.10. Headings......................................................31
SECTION 11.11. GOVERNING LAW.................................................31
SECTION 11.12. Servicer......................................................31
SECTION 11.13. Sale and Servicing Agreement..................................31
</TABLE>
EXHIBITS
Exhibit A Form of Certificate
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<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST, dated as of June 30, 1998 (this
"Agreement" or the "Trust Agreement"), between ASSET BACKED SECURITIES
CORPORATION, a Delaware corporation, as Company, COMPASS AUTO RECEIVABLES
CORPORATION, a Delaware corporation, as the initial Certificateholder and as
Settlor, and THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.A., a national
banking association, as Owner Trustee. This Agreement amends and restates in
its entirety that certain Declaration of Trust of Compass Auto Receivables Trust
1998-A, dated as of June 24, 1998, and recorded at document number 9808/2318 of
the office of the judge of probate of Jefferson County, Alabama (the "Original
Declaration"), provided that nothing in this Agreement is intended to affect, or
shall affect, the continued and uninterrupted existence of the Trust created by
the Original Declaration and all actions heretofore taken by the Owner Trustee
with respect to the Trust are hereby approved, ratified and confirmed by
Settlor.
ARTICLE I DEFINITIONS.
SECTION 1.1. Capitalized Terms. Capitalized terms used in this Agreement
are defined in Appendix X (attached hereto and incorporated herein) to the Sale
and Servicing Agreement, to be dated as of June 30, 1998 (as it may be amended
or supplemented from time to time, the "Sale and Servicing Agreement"), between
the trust established by this Agreement, Asset Backed Securities Corporation, as
Company, Compass Bank, an Alabama state banking corporation, as Servicer, and
THE CHASE MANHATTAN BANK, a New York banking corporation, as Indenture Trustee.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles; (b) terms defined in
Article 9 of the UCC as in effect in the State of Alabama and not otherwise
defined in this Agreement are used as defined in that Article; (c) the words
"hereof," "herein" and "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement; (d)
references to any Article, Section, Schedule, Appendix or Exhibit are references
to Articles, Sections, Schedules, Appendices and Exhibits in or to this
Agreement, and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (e) the
term "including" means "including without limitation"; (f) references to any law
or regulation refer to that law or regulation as amended from time to time and
include any successor law or regulation; (g) references to any Person include
that Person's successors and assigns; and (h) headings are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
<PAGE>
ARTICLE II ORGANIZATION.
SECTION 2.1. Name. The trust created under this Trust Agreement shall be
known as "COMPASS AUTO RECEIVABLES TRUST 1998-A," in which name the Owner
Trustee may conduct the business of such trust, make and execute contracts and
other instruments on behalf of such trust and sue and be sued on behalf of such
trust.
SECTION 2.2. Principal Place of Business. The principal place of
business of Issuer shall be in Jefferson County, Alabama at 15 South 20th
Street, Birmingham, Alabama 35233.
SECTION 2.3. Purposes and Powers. The purpose of Issuer is, and Issuer
shall have the power and authority, to engage in the following activities:
(a) 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;
(b) to acquire the Owner Trust Estate as set forth in the Sale and
Servicing Agreement from Company pursuant to the terms thereof, to make
deposits to and withdrawals from the Trust Accounts and to pay the
organizational, start-up and transactional expenses of Issuer;
(c) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate pursuant to the Indenture and to hold, manage and distribute to the
Certificateholders and Compass Auto pursuant to the terms of the Sale and
Servicing Agreement any portion of the Owner Trust Estate released from the
Lien of, and remitted to Issuer pursuant to, the Indenture;
(d) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(e) 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
(f) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to the
Certificateholders and the Noteholders.
2
<PAGE>
Issuer is hereby authorized to engage in the foregoing activities. 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 Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. Compass Auto hereby confirms
the appointment of the Owner Trustee as trustee of 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.
SECTION 2.5. Initial Capital Contribution of Trust Estate. Compass Auto
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $10. The Owner Trustee hereby acknowledges
receipt in trust from Compass Auto, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of Issuer under the Basic Documents. 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 federal, state and local income
and franchise tax purposes, until the Certificates are held by more than one
person or Issuer is recharacterized as a separate entity, Issuer 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 Issuer is recharacterized as a separate entity, it is
the intention of the parties hereto that, solely for income and franchise tax
purposes, 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 Issuer is recharacterized as a
separate entity, Issuer will not file or cause to be filed annual or other
necessary returns, reports and other forms characterizing Issuer as a
partnership for income and franchise tax purposes. 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 Issuer. The Owner Trustee
shall file this Agreement as provided in the Business Trust Statute.
SECTION 2.7. No Liability of the Holders. No Holder or Owner shall have
any personal liability for any liability or obligation of the Trust.
SECTION 2.8. Title to Owner Trust Estate. Legal title to all the Owner
Trust Estate shall be vested at all times in Issuer as a separate legal entity
except where
3
<PAGE>
applicable law in any jurisdiction requires title to any part of the Owner Trust
Estate 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.
SECTION 2.9. Situs of Issuer. Issuer shall be located and administered
in the State of Florida or Alabama. All bank accounts maintained by the Owner
Trustee on behalf of Issuer shall be located in the State of Florida or the
State of Alabama. Payments shall be received by Issuer only in Florida, New
York or Alabama, and payments shall be made by Issuer only from Florida, New
York or Alabama.
SECTION 2.10. Representations and Warranties of Company. Company hereby
represents and warrants to the Owner Trustee that:
(a) Company is duly organized and validly existing as a Delaware
corporation with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted.
(b) 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 qualifications, licenses and
approvals, except where the failure to have such qualifications, licenses
and approvals would not have a material adverse effect on Company's ability
to perform its obligations under the Basic Documents or its ability to
enforce the Receivables and the other property in the Owner Trust Estate.
(c) Company has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms. Company has full power
and authority to sell and assign the property to be sold and assigned to
and deposited with Issuer and Company has duly authorized such sale and
assignment and deposit to Issuer by all necessary corporate action. The
execution, delivery and performance of this Agreement has been duly
authorized by Company by all necessary corporate action.
(d) This Agreement constitutes a legal, valid, and binding obligation
of Company, enforceable against Company in accordance with its terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other
similar laws and to general equitable principles.
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in
4
<PAGE>
any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of Company, or any material indenture, agreement
or other instrument to which Company is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of Company's knowledge, any order, rule or regulation
applicable to Company of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over Company or its properties.
(f) There are no proceedings or investigations pending or, to the best
of Company's knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Company or its properties: (i) asserting the invalidity
of this Agreement or any other Basic Documents, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement or the other Basic Documents,
(iii) seeking any determination or ruling that might materially and
adversely affect the performance by Company or its obligations under, or
the validity or enforceability of, this Agreement or (iv) seeking to
materially affect the federal income tax attributes, or applicable state
franchise tax or income tax attributes, of the Notes and the Certificates.
SECTION 2.11. Federal Income Tax Allocations. If Certificates are held
by more than one Person or Issuer is recharacterized as a separate entity,
interest payments on the Certificates (or other interests in Issuer are treated
as equity in Issuer for applicable tax purposes ("Equity Interests"), including
interest on amounts previously due on the Certificates or Equity Interests but
not yet distributed) shall be treated as "guaranteed payments" under Section
707(c) of the Code. Net income of 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 and
(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
5
<PAGE>
excess of the issue price of Certificates or Equity Interests over their
principal amount; and
(b) to Compass Auto, 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 Compass Auto (or other holders of
interests in the Reserve Account) to the extent Compass Auto (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. Compass Auto 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 Compass Auto (or other holders of interests in the Reserve Account) 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.
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS.
SECTION 3.1. Initial Ownership. Upon the formation of Issuer by the
contribution of Compass Auto pursuant to this Agreement and until the issuance
of the Certificates, Compass Auto shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued in
denominations of $25,000 and integral multiples of $1,000 in excess thereof;
provided that one Certificate may be issued that includes any residual portion
of the initial Certificate Balance in a denomination other than an integral
multiple of $1,000. The Certificates shall be executed on behalf of 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 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
6
<PAGE>
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 Issuer pursuant to the Sale and Servicing Agreement,
the Owner Trustee shall cause the Certificates in an aggregate principal amount
equal to the initial Certificate Balance to be executed on behalf of Issuer,
authenticated and delivered to or upon the written order of Compass Auto, signed
by its chairman of the board, its president, its chief financial officer, its
chief accounting officer, any vice president, its secretary, any assistant
secretary, its treasurer or any assistant treasurer, without further corporate
action by Compass Auto, in authorized denominations. No Certificate shall
entitle its Holder to any benefit under this Agreement, or 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 or its authentication agent, 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 exchanges of
Certificates as herein provided. The Bank of New York Trust Company of Florida,
N.A. shall be the initial Certificate Registrar.
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 face amount 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 Certificate Registrar duly executed by the
Certificateholder or his attorney duly authorized in writing, with such
signature guaranteed by a member firm of the New York Stock Exchange, a
commercial bank or trust company or an "eligible guarantor institution" with
membership or participation in STAMP or such other "signature guarantee program"
as may be determined by the Certificate Registrar in addition to, or
7
<PAGE>
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 or Certificate
Registrar 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 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 make and the Certificate Registrar shall not be required to
register any transfer or exchange of Certificates for a period of 15 days
preceding any Distribution Date for any payment with respect to the
Certificates.
SECTION 3.5. 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 and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of Issuer shall execute and the Owner Trustee or its
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 denomination. In connection with the issuance of any
new Certificate under this Section 3.5, the Owner Trustee or Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section 3.5 shall constitute conclusive
evidence of an ownership interest in Issuer, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by virtue of
becoming a Certificateholder or Owner 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, Certificate
Registrar or any agent of the Owner Trustee or Certificate Registrar 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 Section 5.2 and for all other purposes whatsoever, and
none of the Owner Trustee, Certificate Registrar or any agent of the Owner
Trustee or Certificate Registrar shall be bound by any notice to the contrary.
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SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Servicer,
Compass Auto, Company or the Indenture Trustee, within 15 days after receipt by
the Owner Trustee of a request therefor from the Servicer, Compass Auto, Company
or the Indenture Trustee in writing, a list, in such form as the Servicer,
Compass Auto, Company or the Indenture Trustee may reasonably require, of the
names and addresses of the Certificateholders 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 25% of the Certificate Balance, apply in writing to the
Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and such application is accompanied by
a copy of the communication that such applicants propose to transmit, then the
Owner Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold Compass Auto,
Certificate Registrar, Indenture Trustee or Owner Trustee accountable by reason
of the disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Owner Trustee shall
maintain in Jacksonville, Florida 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 Basic 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 Compass Auto, Certificateholders and Indenture
Trustee of any change in the location of the Certificate Register or any such
office or agency.
SECTION 3.9. Appointment of Paying Agent. The Paying Agent shall make
distributions to the Certificateholders from the Certificate Distribution
Account or as otherwise specified pursuant to Section 5.2 and shall report the
amounts of such distributions to the Owner Trustee. Any Paying Agent shall have
the revocable power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above. The Owner Trustee
may revoke such power and remove the Paying Agent upon 10 days prior written
notice thereof to Paying Agent (and if Indenture Trustee is not Paying Agent, to
Indenture Trustee) if the Owner Trustee determines in its sole discretion that
the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be the
Indenture Trustee, and any co-paying agent chosen by the Indenture Trustee, and
acceptable to the Owner Trustee. The Paying Agent shall be permitted to resign
upon 30 days' written notice to the Owner Trustee and the Servicer or, if
Compass Auto is no longer the sole Certificateholder, upon 10 days prior written
notice thereof. If the Indenture Trustee shall no longer be the Paying Agent,
the Owner Trustee shall appoint
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a successor to act as the Paying Agent (which shall be a bank or trust company).
The Owner Trustee shall cause such successor Paying Agent or any additional
Paying Agent appointed by the Owner Trustee to execute and deliver to the Owner
Trustee an instrument in which such successor Paying Agent or additional Paying
Agent shall agree with the Owner Trustee that as Paying Agent, such successor
Paying Agent or additional Paying Agent will hold all sums, if any, held by it
for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Indenture Trustee also in its
role as Paying Agent, for so long as the Indenture Trustee shall act as Paying
Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
SECTION 3.10. Definitive Certificates. The Certificates, upon original
issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Definitive Certificates and shall be registered in the
name of Compass Auto Receivables Corporation, with respect to a $22,080,879
Asset Backed Certificate, as the initial registered owner thereof. The Owner
Trustee shall execute and authenticate, or cause to be authenticated, the
Definitive Certificates in accordance with the instructions of the Depositor.
Neither the Certificate Registrar nor Owner Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Owner Trustee and the Paying Agent shall recognize the Holders
of the Definitive Certificates as Certificateholders. The Definitive
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Owner Trustee, as evidenced
by its execution thereof.
SECTION 3.11. Certain Transfer Restrictions. (a) No Certificate or any
interest therein may be sold or transferred (including by pledge or
hypothecation) unless such sale or transfer is (i) pursuant to a valid
registration under the Securities Act and any applicable state securities or
"Blue Sky" laws, (ii) pursuant to Rule 144A or (iii) pursuant to another
exemption from the registration requirements of the Securities Act and subject
to the receipt by Owner Trustee of a certification by the transferee and an
Opinion of Counsel (satisfactory to Issuer and Owner Trustee) to the effect that
the transfer is in compliance with the Securities Act, and, in each case, in
compliance with any applicable state securities or "Blue Sky" laws. Prior to any
sale or transfer of the Certificates or any interest therein described in clause
(ii) above, each prospective purchaser of the Certificates shall be deemed to
have represented and agreed as follows:
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(A) It is a qualified institutional buyer as defined in Rule 144A and
is acquiring the Certificates or any interest therein for its own
institutional account or for the account of a qualified institutional
buyer.
(B) It is aware the sale is being made in reliance on Rule 144A and
it is not acquiring the Certificates or any interest therein with a view
to, or for resale in connection with, a distribution that would constitute
a public offering within the meaning of the Securities Act or a violation
of the Securities Act, and that, if in the future it decides to resell,
pledge or otherwise transfer any Certificates or any interest therein, such
Certificates or any interest therein may be resold, pledged or transferred
only (a) to a person who the seller reasonably believes is a qualified
institutional buyer (as defined in Rule 144A) that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (b) pursuant to another exemption from
registration under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States.
(C) It understands that the Certificates will bear a legend
substantially as set forth in Section 3.12.
(D) It acknowledges that Owner Trustee, Issuer, Compass Auto, and
their affiliates, and others will rely upon the truth and accuracy of the
foregoing acknowledgments, representations and agreements. If it is
acquiring any Certificates or any interest therein for the account of one
or more qualified institutional buyers, it represents that it has sole
investment discretion with respect to each such account and that it has
full power to make the foregoing acknowledgments, representations and
agreements on behalf of each such account.
(E) By acquiring a Certificate, each purchaser and transferee shall
be deemed to represent and warrant that it is not acquiring the Certificate
with the assets 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").
Each purchaser of the Certificates or any interest therein shall be
required to execute or to have executed a customary purchaser representation
letter, in form and in substance satisfactory to Company, Compass Auto and Owner
Trustee, to the effect that such transfer may be made pursuant to an exemption
from registration under the Securities Act and any applicable state securities
laws.
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In addition, such prospective purchaser shall be responsible for providing
additional information or certification, as shall be reasonably requested by
Company, Compass Auto or Owner Trustee, to support the truth and accuracy of the
foregoing acknowledgments, representations and agreements, it being understood
that such additional information is not intended to create additional
restrictions on the transfer of the Certificates or any interest therein.
Neither Issuer nor Owner Trustee is obligated to register the Certificates under
the Securities Act or any state securities laws.
In determining compliance with the transfer restrictions contained in this
Section 3.11, Owner Trustee may rely upon a written opinion of counsel (which
may include in-house counsel of the transferor), the cost of obtaining which
shall be an expense of the Certificateholder to be transferred (or the
transferee thereof).
(b) No Certificate or any interest therein may be sold or transferred
unless such sale or transfer is to either (i) a Person whose certificate of
incorporation or other organizational documents contains provisions
substantially similar to those contained in Articles III, VII and XI of the
Certificate of Incorporation of Compass Auto or (ii) Issuer and Company shall
have received an Opinion of Counsel to the effect that no creditor of any
Certificateholder shall have any right to obtain possession of, or otherwise
exercise legal or equitable remedies with respect to, the property of the Trust
except in accordance with the terms of the Trust Agreement.
SECTION 3.12 Legending of Certificates. Each Certificate shall bear a
legend in substantially the following form:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)
SO LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
(3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE OF A
CERTIFICATION OF THE TRANSFEREE AND AN OPINION OF COUNSEL (SATISFACTORY TO
ISSUER AND THE
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TRUSTEE) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES.
ARTICLE IV VOTING RIGHTS AND ACTIONS BY OWNER TRUSTEE.
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters. With
respect to the following matters, the Owner Trustee shall not take action unless
at least 30 days before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified the Owner Trustee in writing prior to
the 30th day after such notice is given that such Certificateholders have
withheld consent.
(a) the election by Issuer to file an amendment to this Agreement
(unless such amendment is required to be filed under the Business Trust
Statute);
(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 materially adversely affect the interests of the
Certificateholders; 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 adversely affect the
interests of the Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Paying Agent or Certificate Registrar within five
Business Days thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the direction of the
Noteholders or Certificateholders, as applicable, pursuant to Section 8.1 of the
Sale and Servicing Agreement to (a) remove the Servicer under the Sale and
Servicing Agreement, or (b) except as expressly provided in the Basic 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 Certificateholders and the furnishing of
indemnification satisfactory to the Owner Trustee by the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
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bankruptcy relating to Issuer until one year and one day after the Outstanding
Amount of all the Notes has been reduced to zero and without the unanimous prior
approval of all Certificateholders and the delivery to the Owner Trustee by each
such Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that Issuer is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of Issuer or Owner Trustee under this Agreement or any other Basic Document or
would be contrary to Section 2.3 nor shall the Owner Trustee be obligated to
follow any such direction, if given.
SECTION 4.5. Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the Holders of Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by Holders of Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.
SECTION 5.1. Establishment of Certificate Distribution Account. The Owner
Trustee, for the benefit of the Certificateholders, shall establish and maintain
in the name of Issuer an Eligible Deposit Account (the "Certificate Distribution
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. Except as otherwise
provided herein, the Certificate Distribution Account shall be under the sole
dominion and control of the Owner Trustee for the benefit of the
Certificateholders.
SECTION 5.2. Application of Funds in Certificate Distribution Account. (a)
On each Distribution Date, the Owner Trustee shall, or shall cause the Paying
Agent to, based on the information contained in the Servicer's Report delivered
on the related Determination Date pursuant to Section 4.9 of the Sale and
Servicing Agreement, distribute to Certificateholders, to the extent of the
funds available, amounts deposited in the Certificate Distribution Account (or,
if Compass Auto is the only Certificateholder, in the Collection Account)
pursuant to the Sale and Servicing Agreement on such Distribution Date in the
following order of priority:
(i) first, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Interest Distributable Amount;
and
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(ii) second, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Principal Distributable
Amount.
(b) On each Distribution Date after the Certificates shall be owned
by more than one Person, the Owner Trustee shall send, or shall cause to be
sent, to each Certificateholder the statement provided to the Owner Trustee
by the Servicer pursuant to Section 5.5 of the Sale and Servicing Agreement
on such Distribution Date.
(c) If any withholding tax is imposed on the Trust's payment (or
allocations of income) to a Certificateholder, such tax shall reduce the
amount otherwise distributable to the Certificateholder in accordance with
this Section 5.2. The Owner Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to the Certificateholders
sufficient funds for the payment of any tax that is legally owed by Issuer
(but such authorization shall not prevent the Owner 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 Certificateholder
shall be treated as cash distributed to such Certificateholder at the time
it is withheld by Issuer 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-United States
Certificateholder), the Owner Trustee may in its sole discretion withhold
such amounts in accordance with this Section 5.2(c). If an Owner wishes to
apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Certificateholder in making such claim so
long as such Certificateholder agrees to reimburse the Owner Trustee for
any out-of-pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to Section 9.1(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if (a) such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence an amount of not less
than $1,000,000 or (b) such Certificateholder is Compass Auto, or an Affiliate
thereof, or, if not, by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register. Notwithstanding the
foregoing, the final distribution in respect of any Certificate (whether on the
Final Scheduled Distribution Date or otherwise) shall be payable only upon
presentation and surrender of such Certificate at the office or agency
maintained for that purpose by the Owner Trustee pursuant to Section 3.8.
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SECTION 5.4. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Section
2.6, Compass Auto shall: (a) maintain (or cause to be maintained) the books of
Issuer on a calendar year basis on the accrual method of accounting; (b) 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 such tax returns relating to
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 Issuer's
characterization as a partnership for federal income tax purposes, if
applicable; (d) cause such tax returns to be signed in the manner required by
law; and (e) collect or cause to be collected any withholding tax as described
in and in accordance with Section 5.2(c) with respect to income or distributions
to Certificateholders. The Owner Trustee shall cooperate with Compass Auto in
making all elections pursuant to this Section 5.4 as directed in writing by
Compass Auto. 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 5.5. Signature on Returns; Tax Matters Partner. (a) Subject to
Section 2.6, Compass Auto shall sign on behalf of Issuer the tax returns (if
any) of Issuer, unless applicable law requires the Owner Trustee to sign such
documents, in which case such documents shall be signed by the Owner Trustee at
the written direction of Compass Auto.
(b) Subject to Section 2.6, Compass Auto shall be designated the "tax
matters partner" of Issuer pursuant to the Code.
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 Basic Documents to which Issuer is named as
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which Issuer is named as a party and any
amendment thereto, in each case, in such form as Compass Auto shall approve, as
evidenced conclusively by the Owner Trustee's execution thereof, and on behalf
of Issuer at the written direction of Compass Auto, to direct the Indenture
Trustee to authenticate and deliver Class A-1 Notes in the aggregate principal
amount of $127,235,000, Class A-2 Notes in the aggregate principal amount of
$81,700,000 and Class A-3 Notes in the aggregate principal amount of
$170,445,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of Issuer pursuant to the
Basic Documents. The
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Owner Trustee is further authorized from time to time to take such action as the
Servicer recommends or directs in writing with respect to the Basic Documents,
except to the extent that this Agreement expressly requires the consent of
Certificateholders for such action.
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 terms of this Agreement and the other Basic Documents and to administer
Issuer in the interest of the Certificateholders, subject to the Basic Documents
and in accordance with the provisions of this Agreement. Notwithstanding the
foregoing and to the full extent allowable under applicable law, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the Servicer has agreed in
the Sale and Servicing Agreement or Compass Auto has agreed in this Agreement to
perform any act or to discharge any duty of the Owner Trustee or Issuer
hereunder or under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Servicer or Compass Auto to carry out its
obligations under the Sale and Servicing Agreement or this Agreement. Except as
expressly provided in the Basic Documents, the Owner Trustee shall have no
obligation to administer, service or collect the Receivables or to maintain,
monitor or otherwise supervise the administration, servicing or collection of
the Receivables.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV, the
Certificateholders may, by written instruction, direct the Owner Trustee in the
management of Issuer. Such direction may be exercised at any time by written
instruction of the Certificateholders pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined or 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 Basic 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 Basic Document or is unsure as to the application of any
provision of this Agreement or any Basic 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 shall promptly give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted or application of such provision. To the extent the Owner Trustee
acts or refrains
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from acting in good faith in accordance with any written instruction of the
Certificateholders received, 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 days 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, not inconsistent with this Agreement or the Basic Documents, as it
shall deem to be in the best interests of the Certificateholders, 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 Owner Trust Estate, 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 document or written instruction received by the
Owner Trustee pursuant to Section 6.3. No implied duties or obligations shall be
read into this Agreement or any other Basic Document against the Owner Trustee.
The Owner Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Commission filing for Issuer or to record
this Agreement or any other Basic Document. The Owner Trustee nevertheless
agrees that it shall, at its own cost and expense, promptly take all action as
may be necessary to discharge any Liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
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 Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of Issuer set forth in Section 2.3 or (b)
that, to the actual knowledge of a Responsible Officer of the Owner Trustee,
would (i) affect the treatment of the Notes as indebtedness for federal income
or state income or franchise tax purposes, (ii) be deemed to cause a taxable
exchange of the Notes for federal income or state income or franchise tax
purposes or (iii) cause Issuer or any portion thereof to be taxable as an
association or publicly traded partnership taxable as a corporation for federal
income
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or state income or franchise tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section 6.6.
ARTICLE VII CONCERNING 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 Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or gross negligence (or ordinary negligence in the
handling of funds) or (ii) in the case of the inaccuracy of any representation
or warranty contained in Section 7.3 expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by any officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with instructions pursuant
to this Agreement of the Servicer, Compass Auto or any Certificateholder;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee 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 Basic 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) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or amounts
distributable on the Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by Company or Compass Auto or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or
in respect of the validity or sufficiency of the Basic Documents, other
than the certificate of authentication on the Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty or obligation
to any Noteholder or to any
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Certificateholder, other than as expressly provided for herein and in the
Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee, any Paying Agent, the Servicer,
Compass Auto or Custodian under any of the Basic Documents or otherwise,
and the Owner Trustee shall have no obligation or liability to perform any
obligation under this Agreement or any other Basic Document that is
required to be performed by Compass Auto under this Agreement, the
Indenture Trustee under the Indenture or the Servicer or Custodian under
the Sale and Servicing Agreement;
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document, at the request,
order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may 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 Basic Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its gross negligence (or ordinary
negligence in the handling of funds), bad faith or willful misconduct in
the performance of any such act; and
(h) Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be required to take any action in any jurisdiction
other than in the State of Alabama if the taking of such action would: (i)
require the registration with, licensing by or the taking of any other
similar action in respect of, any state or other governmental authority or
agency of any jurisdiction other than the State of Alabama by or with
respect to the Owner Trustee; (ii) result in any fee, tax or other
governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than the State
of Alabama becoming payable by the Owner Trustee; or (iii) subject the
Owner Trustee to personal jurisdiction in any jurisdiction other than the
State of Alabama for causes of action arising from acts unrelated to the
consummation of the transactions by the Owner Trustee contemplated hereby.
The Owner Trustee shall be entitled to obtain advice of counsel (which
advice shall be an expense of Servicer) to determine whether any action
required to be taken pursuant to this Agreement results in the consequences
described in clauses (i), (ii) and (iii) of the preceding sentence. If such
counsel advises the Owner Trustee that such action will result in such
consequences, Servicer shall appoint an additional trustee pursuant to
Section 10.5 to proceed with such action.
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SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders or Indenture Trustee 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 Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner Trustee hereby
represents and warrants to Compass Auto, for the benefit of the
Certificateholders, that:
(a) It is a national banking association duly organized and validly
existing in good standing under the laws of the United States. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all 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) This Agreement constitutes a legal, valid and binding obligation
of the Owner Trustee, enforceable against it in accordance with its
respective terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and
other similar laws affecting enforcement of the rights of creditors of
banks generally and to equitable limitations on the availability of
specific remedies.
(d) 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 law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee 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.
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
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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 any other
Basic Document, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, but the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys selected with reasonable care and (ii) may consult with counsel,
accountants and other skilled persons knowledgeable in the relevant area 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 not contrary to this Agreement or any other Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, The Bank of New York
Trust Company of Florida, N.A. 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
other Basic Document shall look only to the Owner Trust Estate 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 Company and Compass Auto, 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 other
Basic Document, the Certificates (other than the signature and countersignature
of Owner Trustee on the Certificates), the Notes or of any Receivable or related
documents. 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 the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to
Certificateholders 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 Issuer or of any intervening assignment;
the completeness of any Receivable; the performance or enforcement of any
Receivable;
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the compliance by Company, Compass Auto, the Servicer or any Person other than
the Owner Trustee with any warranty or representation made under any Basic
Document or in any related document or the accuracy of any such warranty or
representation or any action of the Indenture Trustee, any Paying Agent or the
Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may deal with Company, Compass Auto, Servicer and Indenture Trustee in banking
transactions with the same rights as it would have if it were not Owner Trustee.
ARTICLE VIII COMPENSATION 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 in writing before the date hereof between the Servicer
and Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Servicer, Compass Auto or Issuer 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.
SECTION 8.2. Indemnification. Compass Auto shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder; provided that Compass Auto shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section 8.2 shall survive the resignation
or termination of the Owner Trustee or the termination of this Agreement. If any
suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any
Indemnified Party in respect of which indemnity may be sought pursuant to this
Section 8.2, such Indemnified Party shall promptly notify Compass Auto in
writing, and Compass Auto upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others Compass Auto may designate in such proceeding
and shall pay the reasonable fees and expenses of such counsel related to such
proceeding. Compass Auto shall not be liable
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for any settlement of any claim or proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, Compass Auto agrees to indemnify any Indemnified Party from and
against any loss or liability by reason of such settlement or judgment. Compass
Auto shall not, without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened proceeding 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 claims that are the subject matter of such proceeding.
SECTION 8.3. Payments to Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
ARTICLE IX TERMINATION OF TRUST AGREEMENT.
SECTION 9.1. Termination of Trust Agreement. (a) The Trust may be
terminated by action of the Owner Trustee or by approval of Certificateholders
representing 100% of the outstanding Certificates, provided that all purposes
and obligations of the Trust shall have been fulfilled, including payment in
full of the Notes and the Certificates. This Agreement (other than Article VIII)
and Issuer shall terminate and be of no further force or effect, upon the final
distribution by the Owner Trustee of all moneys or other property or proceeds of
the Owner Trust Estate in accordance with the terms of the Indenture, the Sale
and Servicing Agreement and Article V. The bankruptcy, liquidation, dissolution,
death or incapacity of any Certificateholder or Owner shall not (x) operate to
terminate this Agreement or Issuer, nor (y) entitle such Certificateholder's or
Owner'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 Issuer or Owner Trust Estate nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in this Section 9.1, none of Company, Compass Auto
nor any Certificateholder shall be entitled to revoke the trust created hereby
or otherwise dissolve Issuer.
(c) Notice of any termination of Issuer, specifying the Distribution Date
upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 9.1(c) of the Sale and Servicing Agreement, stating (i) the
Distribution 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 Paying Agent therein designated, (ii) the amount of any
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such final payment (per $1,000 of Certificate Balance) and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates
at the office of the Paying Agent therein specified. The Owner Trustee shall
give such notice to the Certificate Registrar and the Paying Agent at the
time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates, the Paying Agent shall cause to be distributed
to Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.2.
If all of the Certificateholders shall not surrender their Certificates for
cancellation within six months after the date specified in the above mentioned
written notice, the Owner Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within one year
after the second notice all the Certificates shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets that shall remain subject to this Agreement.
Any funds remaining in Issuer after exhaustion of such remedies shall be
distributed, subject to applicable escheat laws, by the Owner Trustee to Compass
Auto.
(d) Upon the winding up of Issuer and its termination, the Owner Trustee
shall cause the Declaration of Trust to be canceled by filing a certificate of
cancellation in the location for filing provided under 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 or a national banking association
(i) satisfying the requirements, if any, of the Business Trust Statute and
qualified to do business in Alabama, (ii) authorized to exercise corporate trust
powers, (iii) having a combined capital and surplus of at least $10,000,000, and
(iv) subject to supervision or examination by federal or state authorities;
provided that: (i) The Bank of New York Trust Company of Florida, N.A. shall,
and shall be eligible to, serve as Owner Trustee so long as it is owned by The
Bank of New York, a New York banking corporation or (ii) a successor Owner
Trustee shall, and shall be eligible to, serve as Owner Trustee so long as it
satisfies the Rating Agency Condition. 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
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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 the Servicer. Upon receiving such notice of
resignation, the Servicer shall 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. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee; provided that
such right to appoint or to petition for the appointment of any such successor
shall in no event relieve the resigning Owner Trustee from any obligations
otherwise imposed on it under the Basic Documents until such successor has in
fact assumed such appointment.
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 the Servicer, 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 the
Servicer may remove the Owner Trustee. If the Servicer shall remove the Owner
Trustee under the authority of the preceding sentence, the Servicer 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 and one copy to the successor Owner Trustee and payment of all fees owed
to the outgoing Owner Trustee.
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 and the filing of a certificate of amendment to
the Declaration of Trust if required by the Business Trust Statute. The Servicer
shall provide notice of such resignation or removal of the Owner Trustee to 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 the
Servicer and to its predecessor Owner Trustee an instrument accepting such
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
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obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement. The
Servicer 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 10.3, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies. If the Servicer shall fail to mail such notice within 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, without the execution or filing of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, be the successor of the Owner Trustee hereunder;
provided that such corporation shall be eligible pursuant to Section 10.1. 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 Owner Trust Estate or any Financed Vehicle may at the time be located,
the Servicer and 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 to act as co-trustee, jointly with Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to 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 Owner Trustee may
consider necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, the
Owner Trustee alone shall have the power to make such appointment. If any
separate trustee or co-trustee shall become incapable
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of acting, resign or be removed, unless the Owner Trustee meets the legal
requirements of the applicable jurisdiction, a successor co-trustee or separate
trustee shall promptly be appointed in the manner specified in this Section 10.5
to act as the co-trustee or separate trustee. 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 notice of the appointment of
any co-trustee or separate trustee shall 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 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 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 Article X. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the 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.
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
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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 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 the 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 Company, Compass Auto and the Owner Trustee, with prior written
notice to the Rating Agencies, without the consent of any of the Noteholders or
any other Certificateholder:
(i) (A) to cure any ambiguity or defect, (B) to correct or
supplement any provisions in this Agreement or (C) for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions in this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided that any such action
under this clause (C) 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 Agencies, adversely affect in any material
respect the interests of any Noteholder or Certificateholder;
(ii) to add, modify or eliminate such provisions as may be necessary
or advisable in order to enable (a) the transfer to Issuer of all or any
portion of the Receivables to be derecognized under GAAP by Company to
Issuer, (b) Issuer to avoid becoming a member of Compass Auto's
consolidated group under GAAP or (c) Company, Compass Auto or any of their
Affiliates to otherwise comply with or obtain more favorable treatment
under any law or regulation or any accounting rule or principle; it being a
condition to any such amendment that each Rating Agency shall have notified
Company, the Servicer, the Indenture Trustee and the Owner Trustee in
writing that the amendment will not result in a reduction or withdrawal of
the rating of any outstanding Notes or Certificates with respect to which
it is a Rating Agency.
(b) This Agreement may also be amended from time to time by Company,
Compass Auto and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and, to the extent affected
thereby, the consent of the Holders of Certificates evidencing not less than a
majority of the Certificate Balance (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
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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
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided 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 (a) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Notes and the Certificate Balance required to
consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all the outstanding Notes and Holders of all outstanding
Certificates.
(c) 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.
(d) It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section 11.1 to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent, where required, shall approve the substance thereof.
The manner of obtaining such consents (and any other consents of
Certificateholders or Noteholders provided for in this Agreement or in any other
Basic Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Declaration of
Trust, the Owner Trustee shall cause the filing of such amendment in the same
location as the recordation of the Declaration of Trust under the Business Trust
Statute.
(f) Prior to the execution of any amendment to this Agreement or the
Declaration 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 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 Owner Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided
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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 Certificateholders to and in their ownership interest in the Owner Trust
Estate 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 Owner Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, Issuer, Company, the Certificateholders, the Servicer and, to the
extent expressly provided herein, the Indenture Trustee and 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
Owner Trust Estate 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 certified mail, return receipt requested: (i) if to the Trust or the
Owner Trustee, addressed to 15 South 20th Street, Birmingham, Alabama 35233,
Attention: Manager, Structured Finance, and with a copy to the General Counsel
of Compass Bank, and to the Corporate Trust Office; (ii) if to Company,
addressed to Asset Backed Securities Corporation, 11 Madison Avenue, New York,
New York 10010, Attention: Secretary; or (iii) if to Compass Auto, addressed to
Compass Auto Receivables Corporation, 15 South 20th Street, Birmingham, Alabama
35233, Attention: Manager, Structured Finance, and with a copy to the General
Counsel thereof; 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 Certificateholder receives such notice.
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.
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SECTION 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, Company,
Compass Auto, the Owner Trustee and its successors and each Certificateholder
and its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
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 or Certificate Owner, by accepting a Certificate, and the
Indenture Trustee and each Noteholder or Note Owner, by accepting the benefits
of this Agreement, hereby covenants and agrees that they shall not at any time
institute against Compass Auto or Company, or join in any institution against
Compass Auto or Company 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 other
Basic Document.
SECTION 11.9. No Recourse. Each Certificateholder or Certificate Owner
by accepting a Certificate acknowledges that such Certificateholder's or
Certificate Owner's Certificates represent beneficial interests in Issuer only
and do not represent interests in or obligations of Compass Bank, Compass Bank-
Texas, the Servicer, Compass Auto, Company, the Owner Trustee, the Indenture
Trustee or any Affiliate thereof and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated in this
Agreement, the Certificates or the Basic Documents.
SECTION 11.10. 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 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA, 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.
SECTION 11.12. Servicer. The Servicer is authorized to execute on behalf
of Issuer all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of Issuer to prepare, file or deliver pursuant
to the Basic Documents. Upon written request, the Owner Trustee shall execute
and deliver to the Servicer a power of attorney appointing the Servicer as
Issuer's agent and attorney-in-fact to execute all such documents, reports,
filings, instruments, certificates and opinions.
32
<PAGE>
SECTION 11.13. Sale and Servicing Agreement. The Owner Trustee is hereby
authorized and directed to perform the duties and obligations of the Owner
Trustee set forth in Sections 4.4(b), 4.7, 5.1(c) and 8.4 of the Sale and
Servicing Agreement.
33
<PAGE>
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.
THE BANK OF NEW YORK TRUST COMPANY
OF FLORIDA, N.A., a national banking association,
as Owner Trustee
By: /s/ David G. Sampson
-----------------------------------------------
Name: David G. Sampson
---------------------------------------------
Title: Vice President
--------------------------------------------
ASSET BACKED SECURITIES CORPORATION,
as Company
By: /s/ Philip N. Weingord
-----------------------------------------------
Name: Philip N. Weingord
---------------------------------------------
Title: Vice President
--------------------------------------------
COMPASS AUTO RECEIVABLES CORPORATION,
as the initial Certificateholder and as Settlor
By: /s/ Richard O. Hughes
-----------------------------------------------
Name: Richard O. Hughes
---------------------------------------------
Title: Vice President
--------------------------------------------
S-1
<PAGE>
STATE OF ILLINOIS)
COUNTY OF COOK)
I, Monika Castiglioni, a notary public in and for said county in said
state, hereby certify that Richard O. Hughes, whose name as Vice President of
Compass Auto Receivables Corporation, a Delaware corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of said instrument, he, as such officer,
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand this 29th day of June, 1998.
/s/ Monika Castiglioni
------------------------------------
[Notarial Seal] Notary Public
My commission expires: November 29, 1998
STATE OF ILLINOIS)
COUNTY OF COOK)
I, Monika Castiglioni, a notary public in and for said county in said
state, hereby certify that Philip N. Weingord, whose name as Vice President of
Asset Backed Securities Corporation, a Delaware corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of said instrument, he, as such officer,
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand this 29th day of June, 1998.
/s/ Monika Castiglioni
------------------------------------
[Notarial Seal] Notary Public
My commission expires: November 29, 1998
S-2
<PAGE>
STATE OF ILLINOIS)
COUNTY OF COOK)
I, Monika Castiglioni, a notary public in and for said county in said
state, hereby certify that David G. Sampson, whose name as Vice President of The
Bank of New York Trust Company of Florida, N.A., a national banking association,
as owner trustee of the Compass Auto Receivables Trust 1998-A, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of said instrument, he, as such officer,
and with full authority, executed the same voluntarily for and as the act of
said association, acting in its capacity as owner trustee as aforesaid.
Given under my hand this 29th day of June, 1998.
/s/ Monika Castiglioni
---------------------------------------
[Notarial Seal] Notary Public
My commission expires: November 29, 1998
S-3
<PAGE>
EXHIBIT A
NUMBER $____________
R- CUSIP NO. ___________
COMPASS AUTO RECEIVABLES TRUST 1998-A
6.650% ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of Issuer,
as defined below, the property of which includes a pool of Motor Vehicle Loans
sold by Compass Bank, an Alabama state banking corporation ("Compass Bank"),
and Compass Bank, a Texas state bank ("Compass Bank-Texas"), to Compass Auto
Receivables Corporation, a Delaware corporation ("Compass Auto"), and by Compass
Auto to Asset Backed Securities Corporation, a Delaware corporation (the
"Company"), and by Company to Issuer.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE, MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS CERTIFICATE
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE OF
A CERTIFICATION OF THE TRANSFEREE AND AN OPINION OF COUNSEL (SATISFACTORY TO THE
TRUSTEE AND ISSUER) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES.
SECTION 3.11 AND SECTION 3.12 OF THE TRUST AGREEMENT CONTAIN FURTHER
RESTRICTIONS ON THE TRANSFER AND RESALE OF THIS CERTIFICATE AND ANY INTEREST
HEREIN. EACH TRANSFEREE OF THIS CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO
HAVE ACCEPTED THIS CERTIFICATE, SUBJECT TO THE FOREGOING RESTRICTIONS ON
TRANSFERABILITY. IN ADDITION, EACH TRANSFEREE OF THIS CERTIFICATE, BY
ACCEPTANCE HEREOF, IS DEEMED TO
A-1
<PAGE>
HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 3.12.
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 Compass
Bank, Compass Bank-Texas, the Servicer, Compass Auto, Company or any of their
Affiliates, except to the extent described below.)
THIS CERTIFIES THAT ________________________ is the registered owner of a
___________________ DOLLARS nonassessable, fully-paid, beneficial ownership
interest in certain distributions of COMPASS AUTO RECEIVABLES TRUST 1998-A (the
"Issuer") formed by Compass Auto.
A-2
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
THE BANK OF NEW YORK or THE BANK OF NEW YORK
TRUST COMPANY OF TRUST COMPANY OF
FLORIDA, N.A. FLORIDA, N.A.
As Owner Trustee as Owner Trustee
By: _______________________
Authenticating Agent
By: _______________________ By: _______________________
Authorized Signatory Authorized Signatory
Issuer was created pursuant to a Declaration of Trust, dated as of June 24,
1998 (as amended and restated, the "Trust Agreement"), between Company, Compass
Auto and The Bank of New York Trust Company of Florida, N.A., as owner trustee
("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 Appendix X to the Sale
and Servicing Agreement, dated as of June 30, 1998, between Issuer, Asset Backed
Securities Corporation, as Company, Compass Bank, as Servicer, and The Chase
Manhattan Bank, as Indenture Trustee.
This Certificate is one of the duly authorized Certificates designated as
"6.650% Asset Backed Certificates" (the "Certificates"). Also issued under the
Indenture, dated as of June 30, 1998, between Issuer and The Chase Manhattan
Bank as Indenture Trustee, are three classes of Notes designated as "Class A-1
5.659% Asset Backed Notes" in the aggregate principal amount of $127,235,000,
"Class A-2 5.709% Asset Backed Notes" in the aggregate principal amount of
$81,700,000, and "Class A-3 5.900% Asset Backed Notes" in the aggregate
principal amount of $170,445,000 (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 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.
It is the intent of Compass Bank, Compass Bank-Texas, the Servicer,
Company, Compass Auto and the Certificateholders that, for purposes of all
applicable federal and state
A-3
<PAGE>
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
Compass Auto, the Servicer and the Certificateholder that, for purposes of all
applicable federal and state income taxes, Issuer will be treated as a
partnership and the Certificateholders (including Compass Auto) will be treated
as partners in that partnership. Compass Auto 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 and Certificate Owner, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder and Certificate
Owner will not at any time institute against Issuer, Compass Auto or Company, or
join in any institution against Issuer, Compass Auto or Company 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 other Basic Document.
The Certificates do not represent an obligation of, or an interest in,
Compass Bank, Compass Bank-Texas, the Servicer, Compass Auto, Company, the Owner
Trustee or any of their Affiliates, 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 Indenture or the Basic Documents.
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 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 ALABAMA, 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>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Issuer and not in its
individual capacity, has caused this Certificate to be duly executed.
COMPASS AUTO RECEIVABLES TRUST 1998-A
By: THE BANK OF NEW YORK TRUST COMPANY OF
FLORIDA, N.A., a national
banking association, not in its individual capacity,
but solely as Owner Trustee
Dated: By:_____________________________________
A-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or 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 a member firm of the New York Stock Exchange
or a commercial bank or trust company.
A-6
<PAGE>
Exhibit 10.1.4
================================================================================
FIRST TIER RECEIVABLES PURCHASE AGREEMENT
between
COMPASS BANK,
an Alabama state banking corporation,
as Seller,
COMPASS BANK,
a Texas state bank,
as Seller,
and
COMPASS AUTO RECEIVABLES CORPORATION,
as Purchaser
Dated as of June 30, 1998
================================================================================
<PAGE>
FIRST TIER RECEIVABLES PURCHASE AGREEMENT
This FIRST TIER RECEIVABLES PURCHASE AGREEMENT, dated as of June 30,
1998 (this "Agreement"), between COMPASS BANK, an Alabama state banking
corporation, COMPASS BANK, a Texas state bank (each, a "Seller" and,
collectively, "Sellers"), and COMPASS AUTO RECEIVABLES CORPORATION, a
Delaware corporation (the "Purchaser").
WHEREAS, in the regular course of its business, Sellers purchase Motor
Vehicle Contracts secured by new and used automobiles and light trucks from
motor vehicle dealers;
WHEREAS, Purchaser desires to purchase from Sellers a portfolio of
receivables arising in connection with Motor Vehicle Contracts purchased by
Sellers from Dealers; and
WHEREAS, Sellers are willing to sell such receivables to Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms are used in this
Agreement as defined in Appendix X to the Sale and Servicing Agreement,
dated as of the date hereof, between Compass Auto Receivables Trust 1998-A,
as Issuer, Asset Backed Securities Corporation, as Depositor, Compass Bank,
as Servicer and The Chase Manhattan Bank, as Indenture Trustee.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the relevant
jurisdiction and not otherwise defined in this Agreement are used as
defined in that Article; (c) the words "hereof," "herein" and "hereunder"
and words of similar import refer to this Agreement as a whole and not to
any particular provision of this Agreement; (d) references to any Article,
Section, Schedule, Appendix or Exhibit are references to Articles,
Sections, Schedules,
<PAGE>
Appendices and Exhibits in or to this Agreement and references to any
paragraph, subsection, clause or other subdivision within any Section or
definition refer to such paragraph, subsection, clause or other subdivision
of such Section or definition; (e) the term "including" means "including
without limitation"; (f) except as otherwise expressly provided herein,
references to any law or regulation refer to that law or regulation as
amended from time to time and include any successor law or regulation; (g)
references to any Person include that Person's successors and assigns; and
(h) headings are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables.
Effective as of the Closing Date and immediately prior to the
transactions pursuant to the Second Tier Receivables Purchase Agreement,
the Sale and Servicing Agreement and the Indenture, each Seller does hereby
sell, transfer, assign, set over and otherwise convey to Purchaser, without
recourse (subject to the obligations herein) (collectively, the "Seller
Assets"), all of Seller's right, title and interest in and to:
(a) the Receivables and (i) all monies received thereon and
allocable to principal on and after the Cutoff Date and (ii) all
monies received thereon and allocable to interest on and after July 1,
1998;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, to the extent permitted by
law, any accessions thereto;
(c) any proceeds with respect to the Receivables from claims on
any Insurance Policies covering Financed Vehicles or the Obligors;
(d) any recourse against Dealers with respect to the Receivables
under the Dealer Agreements; and
(e) any and all proceeds of the foregoing.
The sale, transfer, assignment, setting over and conveyance made
hereunder shall not constitute and is not intended to result in an
assumption by Purchaser of any obligation of Sellers to the Obligors, the
Dealers or any other Person in connection
2
<PAGE>
with the Receivables and the other assets and properties conveyed hereunder
or any agreement, document or instrument related thereto.
SECTION 2.2. Receivables Purchase Price. In consideration for the
Seller Assets, Purchaser shall, on the Closing Date, pay to Compass Bank
$194,446,480.27 and to Compass Bank-Texas $182,387,783.78 in same day
funds, and shall receive a capital contribution of $12,384,000 from Compass
Bank and $11,616,000 from Compass Bank-Texas.
SECTION 2.3. True Sales. (a) Each of Sellers and Compass Auto intend
the transfer of the Sellers Assets to constitute true sales by Sellers to
Compass Auto providing Compass Auto 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
Compass Auto to Sellers.
(b) If (but only to the extent) that the transfer of the Sellers
Assets hereunder is characterized by a court or other Governmental
Authority as a loan rather than a sale, Sellers shall be deemed hereunder
to have granted to Compass Auto a security interest in all of Sellers'
right, title and interest in and to the Sellers Assets . Such security
interest shall secure all of Sellers' obligations (monetary or otherwise)
under this Agreement and the other Basic 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. Compass Auto shall have, with respect
to the property described in this Section 2.3, and in addition to all the
other rights and remedies available to Compass Auto under this Agreement
and applicable law, all the rights and remedies of a secured 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 Sellers.
Each Seller hereby makes the following representations and warranties
upon which Purchaser may rely. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Receivables to Purchaser.
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as an Alabama state banking
corporation or a Texas state bank, as applicable, in good standing
under the laws of the
3
<PAGE>
jurisdiction of its organization, with the power and authority to own
its properties and to conduct its business as such properties are
presently owned and such business is presently conducted and had at
all relevant times, and shall have, power, authority and legal right
to acquire, own and sell the Seller Assets pursuant to Article II.
(b) Due Qualification. Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the origination and the servicing of the Receivables)
requires qualifications.
(c) Power and Authority. Seller has the power, authority and
legal right to execute and deliver this Agreement and to carry out its
terms and to sell and assign the Seller Assets; and the execution,
delivery and performance of this Agreement has been duly authorized by
Seller by all necessary corporate action.
(d) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, other than the
filing of UCC financing statements.
(e) Valid Sale; Binding Obligation. Seller intends this
Agreement to effect a valid sale, transfer and assignment of the
Receivables and the other properties and rights included in the Seller
Assets conveyed by Seller to Purchaser hereunder, enforceable against
creditors of and purchasers from Seller; and this Agreement
constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject, as
to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other
similar laws affecting enforcement of the rights of creditors
generally and to equitable limitations on the availability of specific
remedies.
(f) No Violation. The execution, delivery and performance by
Seller of this Agreement and the consummation of the transactions
contemplated hereby shall not conflict with, result in any material
breach of any of the terms and provisions of, constitute (with or
without notice or lapse of time) a material default under or result in
the creation or imposition of any Lien upon any of its material
properties pursuant to the terms of, (i) the articles of organization
or bylaws of Seller, (ii) any material indenture,
4
<PAGE>
contract, lease, mortgage, deed of trust or other instrument or
agreement to which Seller is a party or by which Seller is bound, or
(iii) any law, order, rule or regulation applicable to Seller of any
federal or state regulatory body, any court, administrative agency, or
other governmental instrumentality having jurisdiction over Seller.
(g) No Proceedings. There are no proceedings or investigations
pending or, to Seller's knowledge threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties: (i) asserting the invalidity of this Agreement; (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement; (iii) seeking any determination or
ruling that might materially and adversely affect the performance by
Seller of its obligations under, or the validity or enforceability of,
this Agreement or the transactions contemplated herein.
(h) Chief Executive Office. The chief executive office of Seller
is located at the address set forth in Section 5.6.
(i) No Untrue Statement. None of the statements of Seller in the
Prospectus Supplement (excluding any reference to or information
contained in the Prospectus or any information deemed incorporated by
reference in the Prospectus Supplement from the Prospectus or the
Registration Statement) 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 as to Each Receivable.
Each Seller hereby makes the following representations and warranties
as to each Receivable conveyed by it to Purchaser hereunder on which
Purchaser is relying in acquiring the Receivables. Unless otherwise
indicated, such representations and warranties shall speak as of the
Closing Date, but shall survive the sale, transfer and assignment of the
Receivables to Purchaser hereunder, from Purchaser to Company under the
Second Tier Receivables Purchase Agreement and from Company to Issuer under
the Sale and Servicing Agreement, and the pledge thereof to Indenture
Trustee pursuant to the Indenture.
(a) Characteristics of Receivables. The Receivable has been
properly executed by the parties thereto and (i) has been originated
by a Dealer in the ordinary course of such Dealer's business and has
been purchased by a Seller, in either case in the ordinary course of
such Seller's
5
<PAGE>
business and in accordance with such Seller's underwriting standards
to finance the retail sale by a Dealer of the related Financed
Vehicle, (ii) is secured by a valid, subsisting, binding and
enforceable first priority security interest in favor of the Seller in
the Financed Vehicle (subject to administrative delays and clerical
errors on the part of the applicable government agency and to any
statutory or other lien arising by operation of law after the Closing
Date that is prior to such security interest), which security interest
is assignable together with such Receivable, and has been so assigned
to Purchaser, and subsequently assigned by Purchaser to the Issuer,
(iii) are fixed rate simple interest Motor Vehicle Contracts that
provide for level monthly payments over their respective remaining
terms (except for the last payment that may be different from the
level payments), (iv) provides for interest at the Contract Rate
specified in the Schedule of Receivables, (v) was originated in the
United States and (vi) constitutes "chattel paper" as defined in the
UCC. The Receivables consist of 35,744 Motor Vehicle Contracts
having, as of the Cutoff Date: (i) an average remaining Principal
Balance of $11,231.56; (ii) an aggregate original Principal Balance of
$564,308,624.88; (iii) an average original Principal Balance of
$15,787.51; (iv) a weighted average Contract Rate of 9.84%; (v) a
Contract Rate range of 8.00 to 19.50%; (vi) a weighted average
original term of 57.78 months; and (vii) a weighted average remaining
term of 42.27 months.
(b) Individual Characteristics. The Receivables have the
following individual characteristics as of the Cutoff Date: (i) each
Receivable is secured by a Motor Vehicle; (ii) each Receivable being
sold by Seller to Purchaser hereunder has a Contract Rate of at least
8% and no more than 20%; (iii) each Receivable had a remaining term,
as of the Cutoff Date, of not less than six months and not more than
60 months; (iv) each Receivable had an original term of not less than
12 months and not more than 84 months; (v) each Receivable has a
remaining Principal Balance of not less than $500.00 and not more than
$50,000.00; (vi) no Receivable was more than 30 days past due as of
the Cutoff Date; (vii) no Financed Vehicle had been repossessed
without reinstatement as of the Cutoff Date; (viii) have not been
identified in the computer files of any Seller as relating to Obligors
who were in bankruptcy proceedings as of the Cutoff Date; (ix) no
Receivable is subject to a force placed Physical Damage Insurance
Policy on the related Financed Vehicle; and (x) the Dealer of the
Financed Vehicle has no participation in, or other right to receive,
any proceeds of the Receivable. The Receivables were selected using
selection procedures that were not intended by Seller to be adverse to
the Purchaser or to the Noteholders.
(c) Financed Vehicles. Approximately 34.85% of the aggregate
principal balance of the Receivables, as of the Cutoff Date, were
secured by
6
<PAGE>
new Financed Vehicles and approximately 65.15% of the aggregate
principal balance of the Receivables as of the Cutoff Date, were
secured by used Financed Vehicles.
(d) Schedule of Receivables. The information with respect to each
Receivable set forth in the Schedule of Receivables is true and
correct in all material respects as of the close of business on the
Cutoff Date.
(e) Compliance with Law. The Receivable complied at the time it
was originated or made, and complies as of the date hereof, in all
material respects with all requirements of applicable federal, state
and local laws, and regulations thereunder, including, to the extent
applicable, usury laws, the Federal Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss
Warranty Act, the Fair Debt Collection Practices Act, Federal Reserve
Board Regulations B and Z and any other consumer credit, consumer
protection, equal opportunity and disclosure laws.
(f) Binding Obligation. The Receivable constitutes the legal,
valid and binding payment obligation of the Obligor, enforceable in
all material respects by the holder thereof in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally; and the Receivable is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury.
(g) Receivables in Force. As of the Cutoff Date, no Receivable
has been satisfied, subordinated or rescinded, nor has any Financed
Vehicle been released from the Lien granted by the related Receivable
in whole or in part unless another vehicle has been substituted as
collateral securing the Receivable without any other modification to
such Receivable.
(h) No Liens. Seller has not received notice of any Liens or
claims, or of any 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.
(i) No Default. Except for payment delinquencies continuing for a
period of not more than 30 days as of the Cutoff Date, no default,
breach, violation or event permitting acceleration under the terms of
the Receivable exists and no continuing condition that with notice or
lapse of time, or both, would constitute a default, breach, violation
or event permitting acceleration
7
<PAGE>
under the terms of the Receivable has arisen. As of the Cutoff Date,
no provision of a Receivable has been waived except as reflected in
the Receivable File relating to such Receivable.
(j) Insurance. The Receivable requires the Obligor to insure the
Financed Vehicle under a Physical Damage Insurance Policy, pay the
premiums for such insurance and keep such insurance in full force and
effect. Seller, in accordance with its customary procedures has
determined that the Obligor, at the time the Receivable was
originated, obtained a Physical Damage Insurance Policy.
(k) Good Title. No Receivable has been sold, transferred,
assigned, or pledged by Seller to any Person other than Purchaser.
Immediately prior to the transfer and assignment herein contemplated,
Seller 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 Purchaser and immediately upon the transfer and
assignment of the Receivable to Purchaser, Purchaser shall have good
and marketable title to the Receivable, free and clear of any Lien.
No Receivable has been originated in, or as of the Cutoff Date is
subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable or this Agreement is
unlawful, void or voidable.
(l) One Original. There is only one original executed copy of
each Receivable.
(m) Location of Receivable Files. The Receivable Files are kept
at one or more of the locations listed in Schedule B to the Sale and
Servicing Agreement.
(n) No Government Obligor. The Obligor on the Receivable is not
the United States of America or any state thereof or any local
government, or any agency, department, political subdivision or
instrumentality of the United States of America or any state thereof
or any local government.
(o) Marking Records. By the Closing Date, Seller shall have
caused the portion of Seller's electronic master record of Motor
Vehicle relating to the Receivables to be marked to show that the
Receivable is owned by Issuer in accordance with the terms of this
Agreement.
(p) Database File. The information included with respect to each
Receivable in the database file delivered pursuant to Section 3.3 of
the Sale and Servicing Agreement is accurate and complete in all
material respects.
8
<PAGE>
SECTION 3.3. Repurchase upon Breach. The applicable Seller,
Purchaser or assignee, transferee or designee of Purchaser, as the case may
be, shall inform the other party to this Agreement promptly, in writing,
upon the discovery of any breach or failure to be true of the
representations or warranties made by such Seller in Section 3.2; provided
that the failure to give such notice shall not affect any obligation of
such Seller. If the breach or failure shall not have been cured by the
last day of the Collection Period in which the 60th day (or if such Seller
elects, the 30th day) occurs after the date on which such Seller becomes
aware of, or receives written notice from Purchaser of, such breach or
failure, and such breach or failure materially and adversely affects the
interests of Issuer and the Noteholders, the applicable Seller shall
repurchase each such Receivable from Purchaser as of such last day of such
Collection Period at a purchase price equal to the Purchase Amount for such
Receivable as of such last day of such Collection Period. In consideration
of the purchase of a Receivable hereunder, the applicable Seller shall
(unless otherwise directed by Purchaser in writing) deposit the Purchase
Amount of such Receivable, no later than the close of business on the next
Deposit Date, into the Collection Account. The sole remedy of Purchaser
with respect to a breach or failure to be true of the warranties made by a
Seller pursuant to Section 3.2 shall be to require such Seller to
repurchase Receivables pursuant to this Section.
ARTICLE IV
COVENANTS OF SELLERS
Each Seller covenants and agrees with Purchaser as follows:
SECTION 4.1. Protection of Title to Seller Assets. (a) Seller
shall execute and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect
the interest of Purchaser, Owner Trustee and Indenture Trustee in the
Receivables and the proceeds thereof. Seller shall deliver (or cause to be
delivered) to Purchaser file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
(b) Seller shall not change its name, identity or corporate structure
in any manner that could make any financing statement or continuation
statement filed in accordance with Section 4.1 seriously misleading within
the meaning of (S) 9-402(7) of the UCC, unless it shall have given
Purchaser, Owner Trustee and Indenture Trustee written notice thereof
within 30 days after any such change and filed appropriate amendments to
all previously filed financing statements or continuation statements within
60 days after any such change.
9
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(c) Seller shall give Purchaser, Owner Trustee and Indenture Trustee
written notice of any relocation of its principal executive office within
30 days after any such relocation if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment or new
financing statement within 60 days after any such relocation.
(d) Promptly after taking the actions described in Section 4.1(b),
(c) or Section 4.4, the applicable Seller shall deliver to Indenture
Trustee and Owner Trustee an Opinion of Counsel either (A) stating that, in
the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary to preserve and
protect the interest of Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest.
SECTION 4.2. Liability of Sellers; Indemnities. Each Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by such Seller under this Agreement.
(a) Each Seller shall indemnify, defend and hold harmless
Purchaser, Issuer, Owner Trustee and Indenture Trustee and their
respective officers, directors, employees and agents from and against
any taxes that may at any time be asserted against any such Person
with respect to, and on the date of, the sale of the Receivables by it
to Purchaser, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes
(but not including any taxes asserted with respect to federal or other
income taxes arising out of this Agreement and the other Basic
Documents) and costs and expenses in defending against the same.
(b) Each Seller shall indemnify, defend and hold harmless
Purchaser, Issuer, Owner Trustee, Indenture Trustee, and their
respective officers, directors, employees and agents from and against
any and all costs, expenses, losses, claims, damages and liabilities
to the extent arising out of, or imposed upon such Person through or
as a result of, (i) such Seller's willful misfeasance, bad faith or
gross negligence in the performance of its duties under this
Agreement, and (ii) the failure of any Receivable conveyed by it to
Purchaser hereunder, or the sale of the related Financed Vehicle, to
comply with all requirements of applicable law.
Indemnification under this Section 4.2 shall survive the termination of
this Agreement and shall include reasonable fees and expenses of counsel
and other
10
<PAGE>
expenses of litigation. If a Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to such Seller.
SECTION 4.3. Cooperation of Sellers. Sellers covenant to Company
that Sellers shall cooperate with Company and the firm of independent
certified public accountants retained with respect to the issuance of the
Notes in making available all information and taking all steps reasonably
necessary to permit the accountants' letters required hereunder to be
delivered within the times set for delivery herein.
SECTION 4.4. Merger or Consolidation. Each Seller shall keep in
full effect its existence, rights and franchises as a corporation and shall
obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Receivables and to perform
its duties under this Agreement. Any Person into which a Seller may be
merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Seller shall be a party, or any
Person succeeding to the business of such Seller, in all events shall be
the successor of such Seller under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. Such Seller shall
send notice of any such merger or consolidation to Indenture Trustee and
the Rating Agencies.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Obligations of Sellers. The obligations of each Seller
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 5.2. Reassignment of Purchased Receivables. With respect to
all Receivables repurchased by a Seller pursuant to this Agreement,
Purchaser shall assign, without recourse, representation or warranty, to
such Seller all of Purchaser's right, title and interest in and to such
Receivables, and all security and documents relating thereto.
SECTION 5.3. Subsequent Transfer to Company, Issuer and Indenture
Trustee. Each Seller acknowledges that:
11
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(a) (i) Purchaser shall, pursuant to the Second Tier Receivables
Purchase Agreement, sell the Seller Assets to Company and assign its
rights under this Agreement to Company, and (ii) Company shall,
pursuant to the Sale and Servicing Agreement, sell the Seller Assets
and assign its rights under the Second Tier Receivables Purchase
Agreement and all obligations of Sellers and all rights of Compass
Auto hereunder to Issuer, and that the representations and warranties
contained in this Agreement and the rights of Purchaser under Section
3.3 are intended to benefit Company, Issuer, Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholders. Seller
hereby consents to such sales and assignments.
(b) Issuer shall, pursuant to the Indenture, pledge the
Receivables and its rights under the Sale and Servicing Agreement to
the Indenture Trustee for the benefit of the Noteholders. The
representations and warranties contained in this Agreement and the
rights of Purchaser under this Agreement, including under Section 3.3,
are intended to benefit the Indenture Trustee and the Noteholders.
Seller hereby consents to such pledge.
SECTION 5.4. Amendment. (a) This Agreement may be amended by
Sellers and the Purchaser, without the consent of any of the Noteholders or
the Certificateholders, (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 of the
provisions in this Agreement provided that any such action under this
clause (iii) shall not, as evidenced by an Opinion of Counsel delivered to
Owner Trustee, Indenture Trustee and the Rating Agencies, adversely affect
in any material respect the interests of any Noteholder or Company.
(b) This Agreement may also be amended from time to time by Sellers
and Purchaser, with the consent of the Holders of Notes evidencing not less
than a majority of the Outstanding Amount of the Notes (which consent of
any Holder of a Note given pursuant to this Section 5.4(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 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, that the Rating Agency Condition shall have been
satisfied with respect to 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, the Class A-1 Interest Rate, the Class A-2 Interest
Rate or the Class A-3 Interest Rate or (ii) reduce the aforesaid
12
<PAGE>
percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all the Notes then
outstanding.
(c) Prior to the execution of any such amendment or consent under
Section 5.4(a) or (b), Purchaser shall furnish prior written notification
of such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent
under Section 5.4(b), Indenture Trustee shall furnish a copy of such
amendment or consent to each Noteholder and the Owner Trustee (who will
forward a copy to each Certificateholder).
(e) It shall not be necessary for the consent of Noteholders
pursuant to Section 5.4(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 entitled, upon request, to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Section 5.4 and that all conditions precedent in this
Section 5.4 to the execution and delivery of such amendment has been
satisfied subject to such reasonable requirements as the Indenture Trustee
may prescribe.
SECTION 5.5. No Waiver, Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Purchaser, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
SECTION 5.6. Notices. All demands, notices and communications
pursuant to this Agreement to any party shall be in writing, personally
delivered, sent by overnight courier or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given upon
receipt: (a) in the case of Compass Bank, to Compass Bank, 15 South 20th
Street, Birmingham, Alabama 35233, Attention: Manager, Structured Finance,
and with a copy to the General Counsel thereof, (b) in the case of Compass
Bank-Texas, 24 Greenway Plaza, Houston, Texas 77046, Attention: Manager,
Structured Finance, and with a copy to the General Counsel thereof, and (c)
in the case of Purchaser, to Compass Auto Receivables Corporation, 15 South
20th Street, Birmingham, Alabama 35233, Attention: Manager, Structured
Finance, and with a copy to the General Counsel thereof.
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SECTION 5.7. 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
create or render unenforceable such provision in any other jurisdiction.
SECTION 5.8. 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 5.9. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.4, and Section 2.1 of the
Second Tier Receivables Purchase Agreement, Section 2.1 of the Sale and
Servicing Agreement and in the Granting Clause of the Indenture, this
Agreement may not be assigned by Sellers or Compass Auto without the prior
written consent of Owner Trustee and Indenture Trustee and unless the
Rating Agency Condition shall have been satisfied.
SECTION 5.10. Costs and Expenses. Sellers shall pay all expenses
incident to the performance of its obligations under this Agreement and
Purchaser agrees to pay expenses incident to the performance of its
obligations under this Agreement and all expenses in connection with the
perfection as against third parties of Purchaser's right, title and
interest in and to the Receivables.
SECTION 5.11. Representations to Sellers. The respective
agreements, representations, warranties and other statements by Sellers and
Purchaser set forth in or made pursuant to this Agreement shall remain in
full force and effect and shall survive the Closing Date.
SECTION 5.12. Governing Law. THIS AGREEMENT 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 5.13. Counterparts. This Agreement may be executed in two
or more counterparts and by different parties on separate counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same instrument.
14
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[SIGNATURE PAGES FOLLOW]
15
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this First Tier
Receivables Purchase Agreement to be executed by their respective officers
thereunto duly authorized as of the date and year first above written.
COMPASS BANK, an Alabama state banking corporation,
as Seller
/s/ Garrett R. Hegel
By:__________________________________
Name: Garrett R. Hegel
Title: Chief Financial Officer
COMPASS BANK, a Texas state bank, as Seller
/s/ Garrett R. Hegel
By:__________________________________
Name: Garrett R. Hegel
Title: Executive Vice President and Treasurer
COMPASS AUTO RECEIVABLES CORPORATION,
as Purchaser
/s/ Richard O. Hughes
By:__________________________________
Name: Richard O. Hughes
Title: Vice President
S-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS........................................................... 1
SECTION 1.1. Definitions............................................. 1
SECTION 1.2. Other Interpretive Provisions........................... 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES...................................... 2
SECTION 2.1. Purchase and Sale of Receivables........................ 2
SECTION 2.2. Receivables Purchase Price.............................. 3
SECTION 2.3. True Sales.............................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................................ 3
SECTION 3.1. Representations and Warranties of Sellers............... 3
SECTION 3.2. Representations and Warranties as to Each Receivable... 5
SECTION 3.3. Repurchase upon Breach.................................. 9
ARTICLE IV
COVENANTS OF SELLERS.................................................. 9
SECTION 4.1. Protection of Title to Seller Assets.................... 9
SECTION 4.2. Liability of Sellers; Indemnities....................... 10
SECTION 4.3. Cooperation of Sellers.................................. 11
SECTION 4.4. Merger or Consolidation................................. 11
ARTICLE V
MISCELLANEOUS PROVISIONS.............................................. 11
SECTION 5.1. Obligations of Sellers.................................. 11
SECTION 5.2. Reassignment of Purchased Receivables................... 11
SECTION 5.3. Subsequent Transfer to Company, Issuer and
Indenture Trustee....................................... 11
SECTION 5.4. Amendment............................................... 12
SECTION 5.5. No Waiver, Cumulative Remedies.......................... 13
</TABLE>
i
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<TABLE>
<CAPTION>
<S> <C>
SECTION 5.6. Notices................................................. 13
SECTION 5.7. Severability............................................ 14
SECTION 5.8. Headings................................................ 14
SECTION 5.9. Assignment.............................................. 14
SECTION 5.10. Costs and Expenses...................................... 14
SECTION 5.11. Representations to Sellers.............................. 14
SECTION 5.12. Governing Law........................................... 14
SECTION 5.13. Counterparts............................................ 14
</TABLE>
ii
<PAGE>
Exhibit 10.1.5
================================================================================
SECOND TIER RECEIVABLES PURCHASE AGREEMENT
between
COMPASS AUTO RECEIVABLES CORPORATION,
ASSET BACKED SECURITIES CORPORATION,
COMPASS BANK,
an Alabama state banking corporation
and
COMPASS BANK,
a Texas state bank
Dated as of June 24, 1998
================================================================================
<PAGE>
SECOND TIER RECEIVABLES PURCHASE AGREEMENT
This SECOND TIER RECEIVABLES PURCHASE AGREEMENT, dated as of June 24,
1998 (this "Agreement"), between COMPASS AUTO RECEIVABLES CORPORATION, a
Delaware corporation ("Compass Auto"), ASSET BACKED SECURITIES CORPORATION,
a Delaware corporation (the "Company"), and, solely for purposes of
Sections 4.2 and 4.3, COMPASS BANK, an Alabama state banking corporation
("Compass Bank"), and COMPASS BANK, a Texas state bank ("Compass Bank -
Texas" and, together with Compass Bank, the "Sellers").
WHEREAS, Company desires to purchase from Compass Auto a portfolio of
receivables in connection with Motor Vehicle Contracts purchased by Compass
Auto; and
WHEREAS, Compass Auto is willing to sell such portfolio to Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms are used in this
Agreement as defined in Appendix X to the Sale and Servicing Agreement,
dated as of June 30, 1998, between Compass Auto Receivables Trust 1998-A,
as Issuer, Company, as Depositor, Compass Bank, as Servicer and The Chase
Manhattan Bank, as Indenture Trustee.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the relevant
jurisdiction and not otherwise defined in this Agreement are used as
defined in that Article; (c) the words "hereof," "herein" and "hereunder"
and words of similar import refer to this Agreement as a whole and not to
any particular provision of this Agreement; (d) references to any Article,
Section, Schedule, Appendix or Exhibit are references to Articles,
Sections, Schedules, Appendices and Exhibits in or to this Agreement and
references to any paragraph,
<PAGE>
subsection, clause or other subdivision within any Section or definition
refer to such paragraph, subsection, clause or other subdivision of such
Section or definition; (e) the term "including" means "including without
limitation"; (f) except as otherwise expressly provided herein, references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (g) references to
any Person include that Person's successors and assigns; and (h) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables.
Subject to the conditions precedent set forth in Section 2.4,
effective as of the Closing Date and immediately prior to the transactions
pursuant to the Sale and Servicing Agreement and the Indenture, Compass
Auto does hereby sell, transfer, assign, set over and otherwise convey to
Company, without recourse (subject to the obligations herein)
(collectively, the "Compass Auto Assets"), all of Compass Auto's right,
title and interest in and to:
(a) the Receivables and (i) all monies received thereon and
allocable to principal on and after the Cutoff Date and (ii) all
monies received thereon and allocable to interest on and after July 1,
1998;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, to the extent permitted by
law, any accessions thereto;
(c) any proceeds with respect to the Receivables from claims on
any Insurance Policies covering Financed Vehicles or the Obligors;
(d) any recourse against Dealers with respect to the Receivables
under Dealer Agreements;
(e) the First Tier Receivables Purchase Agreement, including the
right of Compass Auto to cause a Seller to repurchase Receivables
thereunder; and
(f) any and all proceeds of the foregoing.
2
<PAGE>
The sale, transfer, assignment, setting over and conveyance made
hereunder shall not constitute and is not intended to result in an
assumption by Company of any obligation of Sellers to the Obligors, the
Dealers or any other Person in connection with the Receivables and the
other assets and properties conveyed hereunder or any agreement, document
or instrument related thereto.
SECTION 2.2. Closing. The closing for the purchase and sale of the
Compass Auto Assets shall take place at the offices of Mayer, Brown &
Platt, Chicago, Illinois, at 10:00 a.m., Chicago time, on June 30, 1998 or
such other place and time as the parties shall agree (the "Closing Date").
SECTION 2.3. Purchase Price. In consideration for the Compass Auto
Assets, Company shall, on the Closing Date, (a) pay to or upon the order of
Compass Auto, in immediately available funds, an amount (the "Purchase
Price") equal to $377,837,916.25, and (b) cause Issuer to issue $22,080,879
aggregate Certificate Balance of Certificates to Compass Auto.
SECTION 2.4. Conditions of Company's Obligations. The obligations
of Company to purchase the Compass Auto Assets will be subject to the
satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Compass Auto Assets, such conditions shall be
deemed satisfied or waived.
(a) Each of the obligations of Compass Auto and Sellers required
to be performed by them on or prior to the Closing Date pursuant to
the terms of this Agreement and the First Tier Receivables Purchase
Agreement shall have been duly performed and complied with, and all of
the representation and warranties of Compass Auto and Sellers under
this Agreement and the First Tier Receivables Purchase Agreement shall
be true and correct in all material respects as of the Closing Date,
and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement or the First
Tier Receivables Purchase Agreement, and Company shall have received
certificates to the effect of the foregoing signed by an authorized
officer of each of Compass Auto and Sellers.
(b) Company shall have received letters in form and substance
reasonably acceptable to Company and its counsel, prepared by KPMG
Peat Marwick LLP, independent certified public accountants, dated as
of the date of the Prospectus Supplement and as of the Closing Date
(i) regarding the numerical information contained in the Prospectus
Supplement and (ii) relating to certain agreed upon procedures as
specified by Company.
3
<PAGE>
(c) Company shall have received duly executed and delivered
copies of the following additional closing documents, in form and
substance reasonably satisfactory to Company and its counsel:
(i) the Schedule of Receivables;
(ii) the Basic Documents and the Underwriting Agreement,
dated as of June 24, 1998, between Company and CSFB, and all
documents required thereunder, in each case duly executed and
delivered by each of the parties thereto other than Company;
(iii) an officer's certificate of an officer of each of
Compass Auto and Sellers, dated as of the Closing Date, as to the
incumbency of officers and the due authorization of the
transactions contemplated by the Basic Documents, with
resolutions of their boards of directors and a copy of their
charter and by-laws attached thereto;
(iv) opinions of counsel for Sellers and Compass Auto as to
the matters, and in form and substance, reasonably acceptable to
Company (it being agreed that such opinions shall expressly
provide that Owner Trustee, Indenture Trustee, the Underwriters
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 Class A-1 Notes of "A-1+" by
Standard & Poor's and "P-1" by Moody's, and the Class A-2 Notes
and the Class A-3 Notes of "AAA" by Standard & Poor's and "Aaa"
by Moody's;
(v) a letter from each of Moody's and Standard & Poor's
that it has assigned a rating of "P-1" and "A-1+," respectively,
to the Class A-1 Notes and ratings of "Aaa" and "AAA,"
respectively, to the Class A-2 Notes and the Class A-3 Notes;
(vi) opinions of counsel for Owner Trustee and Indenture
Trustee, in form and substance reasonably acceptable to Company
(it being agreed that such opinions shall expressly provide that
Compass Auto, Sellers, the Underwriters and the Rating Agencies
shall be entitled to rely on such opinions); and
(vii) opinions of counsel for Issuer, in form and in
substance reasonably acceptable to Company (it being agreed that
such opinions shall expressly provide that Owner Trustee,
Indenture
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Trustee, the Underwriters and the Rating Agencies shall be
entitled to rely on such opinions).
(d) No Termination Event shall have occurred.
(e) All proceedings in connection with the transactions
contemplated by this Agreement and the other Basic Documents and all
documents incident hereto and thereto shall be reasonably satisfactory
in form and substance to Company and its counsel.
(f) Compass Auto and Sellers shall have furnished Company with
such other certificates of its officers or others and such other
documents or opinions as Company or its counsel may reasonably
request.
(g) All other terms and conditions of this Agreement shall have
been complied with in all material respects.
SECTION 2.5. True Sales. (a) Each of Compass Auto and Company
intend the transfer of the Compass Auto Assets to constitute a true sale by
Compass Auto to Company providing 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 Company to Compass Auto.
(b) If (but only to the extent) that the transfer of the Compass Auto
Assets hereunder is characterized by a court or other Governmental
Authority as a loan rather than a sale, Compass Auto shall be deemed
hereunder to have granted to Company a security interest in all of Compass
Auto's right, title and interest in and to the Compass Auto Assets. Such
security interest shall secure all of Compass Auto's obligations (monetary
or otherwise) under this Agreement and the other Basic 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. Company shall
have, with respect to the property described in this Section 2.5, and in
addition to all the other rights and remedies available to Company under
this Agreement and applicable law, all the rights and remedies of a secured
party under any applicable UCC, and this Agreement shall constitute a
security agreement under applicable law.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Compass Auto.
Compass Auto hereby makes the following representations and warranties
upon which Company may rely. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Receivables to Company.
(a) Organization and Good Standing. Compass Auto has been duly
organized and is validly existing as a Delaware corporation in good
standing under the laws of the State of Delaware, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted and had at all relevant times, and shall have, power,
authority and legal right to acquire, own and sell the Compass Auto
Assets pursuant to Article II.
(b) Power and Authority. Compass Auto has the power, authority
and legal right to execute and deliver this Agreement and to carry out
its terms and to sell and assign the Compass Auto Assets; and the
execution, delivery and performance of this Agreement has been duly
authorized by Seller by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, other than the
filing of UCC financing statements.
(d) Valid Sale; Binding Obligation. Compass Auto intends this
Agreement to effect a valid sale, transfer and assignment of the
Receivables and the other properties and rights included in the
Compass Auto Assets conveyed by Compass Auto to Company hereunder,
enforceable against creditors of and purchasers from Compass Auto; and
this Agreement constitutes a legal, valid and binding obligation of
Compass Auto, enforceable against Compass Auto in accordance with its
terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation
and other similar laws affecting enforcement of the rights of
creditors generally and to equitable limitations on the availability
of specific remedies.
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(e) No Violation. The execution, delivery and performance by
Compass Auto of this Agreement and the consummation of the
transactions contemplated hereby shall not conflict with, result in
any material breach of any of the terms and provisions of, constitute
(with or without notice or lapse of time) a material default under or
result in the creation or imposition of any Lien upon any of its
material properties pursuant to the terms of, (i) the certificate of
incorporation or bylaws of Compass Auto, (ii) any material indenture,
contract, lease, mortgage, deed of trust or other instrument or
agreement to which Compass Auto is a party or by which Compass Auto is
bound, or (iii) any law, order, rule or regulation applicable to
Compass Auto of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Compass Auto.
(f) No Proceedings. There are no proceedings or investigations
pending or, to Compass Auto's knowledge threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Compass Auto or
its properties: (i) asserting the invalidity of this Agreement; (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement; (iii) seeking any determination or
ruling that might materially and adversely affect the performance by
Compass Auto of its obligations under, or the validity or
enforceability of, this Agreement or the transactions contemplated
herein.
(g) Chief Executive Office. The chief executive office of
Compass Auto is located at the address set forth in Section 5.7.
(h) No Untrue Statement. None of the statements of Compass Auto
in the Prospectus Supplement (excluding any reference to or
information contained in the Prospectus or any information deemed
incorporated by reference in the Prospectus Supplement from the
Prospectus or the Registration Statement) 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 as to Each Receivable.
Compass Auto hereby makes the following representations and warranties
as to each Receivable conveyed by it to Company hereunder on which Company
is relying in acquiring the Receivables. Unless otherwise indicated, such
representations and warranties shall speak as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables to
Company hereunder and from
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Company to Issuer under the Sale and Servicing Agreement, and the pledge
thereof to Indenture Trustee pursuant to the Indenture.
(a) Lien in Force. Compass Auto has not taken any action that
would have the effect of releasing the related Financed Vehicle from
the Lien granted pursuant to the Motor Vehicle Contracts in whole or
in part.
(b) No Liens. Compass Auto has not received notice of any Liens
or claims, or of any 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. No Receivable has been sold, transferred,
assigned, or pledged by Compass Auto to any Person other than Company.
Immediately prior to the transfer and assignment herein contemplated,
Compass Auto 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 Company and immediately upon the transfer and
assignment of the Receivable to Company, Company shall have good and
marketable title to the Receivable, free and clear of any Lien.
(d) No Assignment. As of the Closing Date, Compass Auto 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
Receivable, that is senior to, or equal with that of Company.
SECTION 3.3. Repurchase upon Breach. Compass Auto, Company or any
assignee, transferee or designee of Company, as the case may be, shall
inform the other party to this Agreement promptly, in writing, upon the
discovery of any breach or failure to be true of the representations or
warranties made by Compass Auto in Section 3.2; provided that the failure
to give such notice shall not affect any obligation of Compass Auto. If
the breach or failure shall not have been cured by the last day of the
Collection Period in which the 60th day (or if Compass Auto elects, the
30th day) occurs after the date on which Compass Auto becomes aware of, or
receives written notice from Company of, such breach or failure, and such
breach or failure materially and adversely affects the interests of Issuer
and the Noteholders, Compass Auto shall repurchase each such Receivable
from Company as of such last day of such Collection Period at a purchase
price equal to the Purchase Amount for such Receivable as of such last day
of such Collection Period. In consideration of the purchase of a
Receivable hereunder, Compass Auto shall (unless otherwise directed by
Company in writing) deposit the Purchase Amount of such Receivable, no
later than the close of business on the next Deposit Date, into the
Collection Account. The sole remedy of Company with respect to a breach or
failure to be true
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of the warranties made by Compass Auto pursuant to Section 3.2 shall be to
require Compass Auto to repurchase Receivables pursuant to this Section.
SECTION 3.4. Representation and Warranty of Company. Company
hereby represents and warrants to Compass Auto and the Underwriters that
Company has filed or shall timely file the Prospectus and Prospectus
Supplement with the Commission in accordance with Rule 424(b) under the
Securities Act.
ARTICLE IV
COVENANTS OF COMPASS AUTO
Compass Auto covenants and agrees with Company as follows:
SECTION 4.1. Protection of Title to Compass Auto Assets. (a)
Compass Auto shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and
in such places as may be required by law fully to preserve, maintain and
protect the interest of Company, Owner Trustee and Indenture Trustee in the
Receivables and the proceeds thereof. Compass Auto shall deliver (or cause
to be delivered) to Company file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Compass Auto shall not change its name, identity or corporate
structure in any manner that could make any financing statement or
continuation statement filed in accordance with Section 4.1 seriously
misleading within the meaning of (S) 9-402(7) of the UCC, unless it shall
have given Company, Owner Trustee and Indenture Trustee written notice
thereof within 30 days after any such change and filed appropriate
amendments to all previously filed financing statements or continuation
statements within 60 days after any such change.
(c) Compass Auto shall give Company, Owner Trustee and Indenture
Trustee written notice of any relocation of its principal executive office
within 30 days after any such relocation if, as a result of such
relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any
such amendment or new financing statement within 60 days after any such
relocation.
(d) Promptly after taking the actions described in Section 4.1(b), (c)
or Section 4.5, Compass Auto shall deliver to Indenture Trustee and Owner
Trustee an Opinion of Counsel either (A) stating that, in the opinion of
such counsel, all
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financing statements and continuation statements have been executed and
filed that are necessary to preserve and protect the interest of Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
SECTION 4.2. Costs. In connection with the transactions
contemplated under this Agreement and the other Basic Documents, Compass
Auto shall, or shall cause Sellers to, 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 Underwriters 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 June 25, 1998); (d)
expenses incurred in connection with printing (or otherwise reproducing)
and delivering this Agreement, the other Basic 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; and (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 2.4.
SECTION 4.3. Indemnification. (a)(i) Compass Auto and Sellers
agree, jointly and severally, to indemnify and hold harmless Company, each
of its directors, each of its officers who have signed the Registration
Statement, each Person who controls Company within the meaning of Section
15 of the Securities Act, each Underwriter and each Underwriter's
respective officers and directors and each Person, if any, who controls
such Underwriter within the meaning of the Securities Act and the Exchange
Act (each, an "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
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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 approved in writing by
Sellers, or the omission or the alleged omission to state therein a
material 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
Sellers, 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 last
paragraph of the first page of the Prospectus Supplement, (B) in the second
sentence of the third to last paragraph and in the second to last paragraph
on page S-2 of the Prospectus Supplement, (C) under the heading "Company"
in "Summary of Terms," (D) in the last sentence under the heading "Use of
Proceeds" in the Prospectus Supplement and (E) under the heading
"Underwriting" in the Prospectus Supplement (the "Company Information"), or
the Prospectus or the Registration Statement 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 Compass Auto or Sellers may otherwise have.
(ii) Compass Auto and Sellers agree, jointly and severally, to
indemnify and hold Company harmless against any and all losses, claims,
damages or liabilities that Company may sustain related to the failure of
Compass Auto or Sellers to perform in all material respects their duties
under this Agreement. Sellers shall immediately notify Company if a claim
is made by a third party with respect to this Agreement, and Sellers 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 Company in
respect of such claim.
(b) Company agrees to indemnify and hold harmless Compass Auto and
Sellers, each of their directors and officers and each Person who controls
Compass Auto or either Seller 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 Compass Auto and Sellers or any such Person
may become subject under the Securities Act, the Exchange Act or otherwise,
and shall reimburse Compass Auto and Sellers 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, 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
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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 Company may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
4.3 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 4.3, 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 defense
thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 4.3 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.
(d) If the indemnification provided for in this Section 4.3 is
unavailable or insufficient to hold harmless any Company Indemnified Party
under subsection (a) above or Compass Auto and Sellers, each of their
directors and officers and each Person who controls Compass Auto or either
Seller or any such Person, within the meaning of the Securities Act and the
Exchange Act, under subsection (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, as applicable, (i) in such proportion as is
appropriate to reflect the relative benefits received by Company on the one
hand and Compass Auto and Sellers on the other from the offering of the
offered Notes or (ii) if the
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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
Company on the one hand and Compass Auto and Sellers 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 Compass Auto and Sellers 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 Sellers or Compass Auto bear to the
total underwriting discounts and commissions received by the Underwriters.
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 Compass Auto and
Sellers 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 party 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), except with respect
to liabilities of Company resulting directly from material misstatements or
material omissions of information contained in the Registration Statement
or the Prospectus, 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 Underwriters and distributed to the public were offered
to the public exceeds the amount of any damages which Company has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person quality 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.
SECTION 4.4. Cooperation of Compass Auto. Compass Auto covenants to
Company that Compass Auto shall cooperate with Company and the firm of
independent certified public accountants retained with respect to the
issuance of the Notes in making available all information and taking all
steps reasonably necessary to permit the accountants' letters required
hereunder to be delivered within the times set for delivery herein.
SECTION 4.5. Merger or Consolidation. Compass Auto shall keep in
full effect its existence, rights and franchises as a corporation and shall
obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Receivables and to perform
its duties under this Agreement. Any Person into which
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Compass Auto may be merged or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which Compass Auto shall be
a party, or any Person succeeding to the business of Compass Auto, in all
events shall be the successor of Compass Auto under this Agreement without
the execution or filing of any paper or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding.
Compass Auto shall send written notice of any such merger or consolidation
to Indenture Trustee and the Rating Agencies.
SECTION 4.6. Reserve Account. Compass Auto shall establish with and
maintain in the name of Indenture Trustee, as agent for Issuer, and the
Noteholders, the Reserve Account. On the Closing Date, Compass Auto shall
deposit or cause to be deposited in the Reserve Account an amount equal to
the Reserve Account Initial Deposit. Compass Auto agrees that (i) the
Reserve Account shall be under the sole custody and control of Indenture
Trustee and (ii) that the terms of the Sale and Servicing Agreement shall
govern the establishment and maintenance of the Reserve Account and
deposits and withdrawals therefrom.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Obligations of Compass Auto. The obligations of
Compass Auto under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable.
SECTION 5.2. Reassignment of Purchased Receivables. With respect
to all Receivables repurchased by Compass Auto pursuant to this Agreement,
Company shall assign, without recourse, representation or warranty, to
Compass Auto all of Company's right, title and interest in and to such
Receivables, and all security and documents relating thereto.
SECTION 5.3. Subsequent Transfer to Issuer and Indenture Trustee.
Each Seller acknowledges that:
(a) Company shall, pursuant to the Sale and Servicing Agreement,
sell the Compass Auto Assets and assign its rights under the Second
Tier Receivables Purchase Agreement to Issuer, and that the
representations and warranties contained in this Agreement and the
rights of Company under Section 3.3 are intended to benefit Issuer,
Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders. Compass Auto hereby consents to such sale and
assignment.
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(b) Issuer shall, pursuant to the Indenture, pledge the
Receivables and its rights under the Sale and Servicing Agreement to
the Indenture Trustee for the benefit of the Noteholders. The
representations and warranties contained in this Agreement and the
rights of Company under this Agreement, including under Section 3.3,
are intended to benefit the Indenture Trustee and the Noteholders.
Compass Auto hereby consents to such pledge.
SECTION 5.4. Amendment. (a) This Agreement may be amended by
Compass Auto and Company, without the consent of any of the Noteholders or
the Certificateholders, (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 of the
provisions in this Agreement, provided that any such action under this
clause (iii) shall not, as evidenced by an Opinion of Counsel delivered to
Owner Trustee, Indenture Trustee and the Rating Agencies, adversely affect
in any material respect the interests of the Company or any Noteholder.
(b) This Agreement may also be amended from time to time by Compass
Auto and Company, with the consent of the Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes (which consent
of any Holder of a Note given pursuant to this Section 5.4(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 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, that the Rating Agency Condition shall have been
satisfied with respect to 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, the Class A-1 Interest Rate, the Class A-2 Interest
Rate or the Class A-3 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 the Notes then outstanding.
(c) Prior to the execution of any such amendment or consent under
Section 5.4(a) or (b), Company shall furnish prior written notification of
such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent
under Section 5.4(b), Indenture Trustee shall furnish a copy of such
amendment or consent to each Noteholder and the Owner Trustee (who will
forward a copy thereof to the Certificateholders).
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(e) It shall not be necessary for the consent of Noteholders pursuant
to Section 5.4(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
entitled, upon request, to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Section 5.4 and that all conditions precedent in this Section 5.4 to
the execution and delivery of such amendment has been satisfied subject to
such reasonable requirements as Indenture Trustee may prescribe.
SECTION 5.5. No Waiver, Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of Company, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
SECTION 5.6. Third-Party Beneficiaries. The parties further agree
that: (a) pursuant to the Granting Clause of the Indenture, the Indenture
Trustee on behalf of the Noteholders is an intended third-party beneficiary
of this Agreement; and (b) the Underwriters and each of their directors,
officers and each Person who controls the Underwriters or any such Person
within the meaning of the Securities Act and the Exchange Act (each, an
"Underwriter Entity") is an intended third-party beneficiary of this
Agreement to the extent necessary to obtain the benefit of the enforcement
of the obligations and covenants of Compass Auto and Sellers with respect
to each Underwriter Entity under Section 4.3 of this Agreement.
SECTION 5.7. Notices. All demands, notices and communications
pursuant to this Agreement to any party shall be in writing, personally
delivered, sent by overnight courier or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given upon
receipt: (a) in the case of Compass Auto, to Compass Auto Receivables
Corporation, 15 South 20th Street, Birmingham, Alabama 35233, Attention:
Manager, Structured Finance, and with a copy to the General Counsel
thereof; (b) in the case of Company, to Asset Backed Securities
Corporation, 11 Madison Avenue, New York, New York 10010, Attention:
Secretary, (c) in the case of Compass Bank, 15 South 20th Street,
Birmingham, Alabama 35233, Attention: Manager, Structured Finance, and with
a copy to the General Counsel thereof; and (d) in the case of Compass Bank-
Texas, 24 Greenway Plaza, Houston, Texas 77046, Attention: Manager,
Structured Finance, and with a copy to the General Counsel thereof.
16
<PAGE>
SECTION 5.8. Termination of Obligations. Company may terminate its
obligations hereunder by notice to Compass Auto at any time before delivery
of and payment of the purchase price for the Receivables if: (a) any of
the conditions set forth in Section 2.4 is not satisfied when and as
provided therein; (b) there shall have been an Insolvency Event relating to
Sellers or Compass Auto; (c) a Seller or Compass Auto shall have entered
into a sale or other disposition agreement with respect to the sale or
other disposition of all or substantially all the assets and properties of
such Seller or Compass Auto; or (d) a Termination Event shall have
occurred. The termination of either party's obligations hereunder shall
not terminate such party's rights or obligations under Section 4.2 or 4.3
or its right to exercise any remedy available to it at law or in equity.
SECTION 5.9. 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
create or render unenforceable such provision in any other jurisdiction.
SECTION 5.10. 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 5.11. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.5 hereof, Section 2.1 of
the Sale and Servicing Agreement and in the Granting Clause of the
Indenture, this Agreement may not be assigned by Company or Compass Auto
without the prior written consent of Owner Trustee and Indenture Trustee
and unless the Rating Agency Condition shall have been satisfied.
SECTION 5.12. Representations to Compass Auto. The respective
agreements, representations, warranties and other statements by Compass
Auto and Company set forth in or made pursuant to this Agreement shall
remain in full force and effect and shall survive the Closing Date.
SECTION 5.13. Governing Law. THIS AGREEMENT 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.
17
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SECTION 5.14. Counterparts. This Agreement may be executed in two
or more counterparts and by different parties on separate counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
18
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Second Tier
Receivables Purchase Agreement to be executed by their respective officers
thereunto duly authorized as of the date and year first above written.
COMPASS AUTO RECEIVABLES CORPORATION
/s/ Richard O. Hughes
By:_______________________________________
Name: Richard O. Hughes
Title: Vice President
ASSET BACKED SECURITIES CORPORATION
/s/ Philip N. Weingord
By:_______________________________________
Name: Philip N. Weingord
Title: Vice President
SOLELY FOR THE PURPOSES SET FORTH
IN SECTIONS 4.2 AND 4.3:
COMPASS BANK,
an Alabama state banking corporation
/s/ Garrett R. Hegel
By:______________________________
Name: Garrett R. Hegel
Title: Chief Financial Officer
COMPASS BANK, a Texas state bank
/s/ Garrett R. Hegel
By:______________________________
Name: Garrett R. Hegel
Title: Executive Vice President and Treasurer
S-1
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS........................................................... 1
SECTION 1.1. Definitions............................................. 1
SECTION 1.2. Other Interpretive Provisions........................... 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES...................................... 2
SECTION 2.1. Purchase and Sale of Receivables........................ 2
SECTION 2.2. Closing................................................. 3
SECTION 2.3. Purchase Price.......................................... 3
SECTION 2.4. Conditions of Company's Obligations..................... 3
SECTION 2.5. True Sales.............................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................................ 6
SECTION 3.1. Representations and Warranties of Compass Auto.......... 6
SECTION 3.2. Representations and Warranties as to Each Receivable.... 7
SECTION 3.3. Repurchase upon Breach.................................. 8
SECTION 3.4. Representation and Warranty of Company.................. 9
ARTICLE IV
COVENANTS OF COMPASS AUTO............................................. 9
SECTION 4.1. Protection of Title to Compass Auto Assets.............. 9
SECTION 4.2. Costs................................................... 10
SECTION 4.3. Indemnification......................................... 10
SECTION 4.4. Cooperation of Compass Auto............................. 13
SECTION 4.5. Merger or Consolidation................................. 13
SECTION 4.6. Reserve Account......................................... 14
ARTICLE V
MISCELLANEOUS PROVISIONS.............................................. 14
SECTION 5.1. Obligations of Compass Auto............................. 14
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
SECTION 5.2. Reassignment of Purchased Receivables................... 14
SECTION 5.3. Subsequent Transfer to Issuer and Indenture Trustee..... 14
SECTION 5.4. Amendment............................................... 15
SECTION 5.5. No Waiver, Cumulative Remedies.......................... 16
SECTION 5.6. Third-Party Beneficiaries............................... 16
SECTION 5.7. Notices................................................. 16
SECTION 5.8. Termination of Obligations.............................. 17
SECTION 5.9. Severability............................................ 17
SECTION 5.10. Headings................................................ 17
SECTION 5.11. Assignment.............................................. 17
SECTION 5.12. Representations to Compass Auto......................... 17
SECTION 5.13. Governing Law........................................... 17
SECTION 5.14. Counterparts............................................ 18
</TABLE>
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<PAGE>
Exhibit 10.2.2
SALE AND SERVICING AGREEMENT
between
COMPASS AUTO RECEIVABLES TRUST 1998-A,
as Issuer
ASSET BACKED SECURITIES CORPORATION,
as Company
COMPASS BANK,
an Alabama state banking corporation,
as Servicer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
Dated as of June 30, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I. DEFINITIONS........................................................1
SECTION 1.1. Definitions......................................................1
SECTION 1.2. Other Interpretive Provisions....................................1
ARTICLE II. CONVEYANCE OF RECEIVABLES.........................................2
SECTION 2.1. Conveyance of Receivables........................................2
SECTION 2.2. True Sales.......................................................3
ARTICLE III. THE RECEIVABLES..................................................3
SECTION 3.1. Representations and Warranties as to Each Receivable.............3
SECTION 3.2. Repurchase upon Breach...........................................4
SECTION 3.3. Custodian of Receivable Files....................................4
ARTICLE IV. ADMINISTRATION AND SERVICING OF RECEIVABLES.......................8
SECTION 4.1. Duties of Servicer...............................................8
SECTION 4.2. Collection of Receivable Payments................................9
SECTION 4.3. Realization upon Receivables....................................10
SECTION 4.4. Physical Damage Insurance.......................................10
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles..........11
SECTION 4.6. Covenants of Servicer...........................................12
SECTION 4.7. Purchase by Servicer upon Breach................................12
SECTION 4.8. Servicing Fee...................................................13
SECTION 4.9. Servicer's Report...............................................13
SECTION 4.10. Annual Statement as to Compliance; Notice of Default...........13
SECTION 4.11. Annual Independent Certified Public Accountants' Report........14
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables..................................................14
SECTION 4.13. Reports to the Commission......................................15
SECTION 4.14. Reports to the Rating Agencies.................................15
SECTION 4.15. Servicer Expenses..............................................15
ARTICLE V. DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS................................15
SECTION 5.1. Establishment of Trust Accounts.................................15
SECTION 5.2. Collections.....................................................18
SECTION 5.3. Additional Deposits.............................................18
SECTION 5.4. Distributions...................................................18
SECTION 5.5. Statements to Certificateholders and Noteholders................20
SECTION 5.6. Net Deposits....................................................22
SECTION 5.7. Reserve Account.................................................22
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VI. COMPANY..........................................................25
SECTION 6.1. Representations of Company......................................25
SECTION 6.2. Continued Existence.............................................27
SECTION 6.3. Liability of Company; Indemnities...............................27
SECTION 6.4. Merger or Consolidation of, or Assumption of the Obligations
of, Company...................................................28
SECTION 6.5. Limitation on Liability of Company and Others...................28
SECTION 6.6. Company May Own Certificates or Notes...........................28
ARTICLE VII. SERVICER........................................................29
SECTION 7.1. Representations of Servicer.....................................29
SECTION 7.2. Indemnities of Servicer.........................................30
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer..................................................32
SECTION 7.4. Limitation on Liability of Servicer and Others..................32
SECTION 7.5. Compass Bank Not To Resign as Servicer..........................33
SECTION 7.6. Existence.......................................................33
SECTION 7.7. Servicer May Own Notes or Certificates..........................33
ARTICLE VIII. SERVICER TERMINATION EVENTS....................................34
SECTION 8.1. Servicer Termination Event......................................34
SECTION 8.2. Appointment of Successor........................................35
SECTION 8.3. Payment of Servicing Fee........................................36
SECTION 8.4. Notification to Noteholders and Certificateholders..............37
SECTION 8.5. Waiver of Past Defaults.........................................37
ARTICLE IX. TERMINATION......................................................37
SECTION 9.1. Optional Purchase of All Receivables; Termination Notice........37
ARTICLE X. MISCELLANEOUS PROVISIONS..........................................38
SECTION 10.1. Amendment......................................................38
SECTION 10.2. Protection of Title to Trust Property..........................39
SECTION 10.3. Notices........................................................41
SECTION 10.4. Assignment.....................................................41
SECTION 10.5. Limitations on Rights of Others................................41
SECTION 10.6. Severability...................................................41
SECTION 10.7. Separate Counterparts..........................................42
SECTION 10.8. Headings.......................................................42
SECTION 10.9. Governing Law..................................................42
SECTION 10.10. Assignment to Indenture Trustee...............................42
SECTION 10.11. Nonpetition Covenant..........................................42
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee.....................................................43
SECTION 10.13. Further Assurances............................................43
</TABLE>
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<S> <C>
SECTION 10.14. No Waiver; Cumulative Remedies................................43
</TABLE>
SCHEDULES
Schedule A -- Schedule of Receivables
Schedule B -- Location of Receivables Files
EXHIBITS
Exhibit A -- Form of Servicer's Report and Monthly Noteholder and
Certificateholder Statement
APPENDIX
Appendix X -- Definitions
iii
<PAGE>
SALE AND SERVICING AGREEMENT, dated as of June 30, 1998 (this
"Agreement"), between COMPASS AUTO RECEIVABLES TRUST 1998-A, an Alabama
business trust ("Issuer"), ASSET BACKED SECURITIES CORPORATION, a Delaware
corporation ("Company"), COMPASS BANK, an Alabama state banking
corporation, (in its capacity as servicer, "Servicer"), and THE CHASE
MANHATTAN BANK, a New York banking corporation (in its capacity as
indenture trustee, "Indenture Trustee").
WHEREAS, Issuer desires to purchase from Company a portfolio of
receivables arising in connection with Motor Vehicle Contracts purchased by
Compass Auto and sold to Company under the Purchase Agreements;
WHEREAS, Company is willing to sell such receivables to Issuer and
assign its rights (but none of its obligations) under the Second Tier
Receivables Purchase Agreement to Issuer; and
WHEREAS, Servicer is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS.
SECTION 1.1. Definitions. Capitalized terms are used in this
Agreement as defined in Appendix X to this Agreement.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the relevant
jurisdiction and not otherwise defined in this Agreement are used as
defined in that Article; (c) the words "hereof," "herein" and "hereunder"
and words of similar import refer to this Agreement as a whole and not to
any particular provision of this Agreement; (d) references to any Article,
Section, Schedule, Appendix or Exhibit are references to Articles,
Sections, Schedules, Appendices and Exhibits in or to this Agreement and
references to any paragraph, subsection, clause or other subdivision within
any Section or definition refer to such paragraph, subsection, clause or
other subdivision of such Section or definition; (e) the term "including"
means "including without limitation"; (f) except as otherwise expressly
provided herein, references to any law or regulation refer to that law or
regulation as amended from time to time and include any successor law or
regulation; (g) references to any Person include that Person's successors
and assigns;
<PAGE>
and (h) headings are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof.
ARTICLE II. CONVEYANCE OF RECEIVABLES.
SECTION 2.1. Conveyance of Receivables. In consideration of Issuer's
payment of $377,837,916.25 and the issuance of $22,080,879 principal amount
of Certificates at the direction of Compass Auto, which direction Company
hereby acknowledges and agrees to, Company does hereby sell, transfer,
assign, set over and otherwise convey to Issuer, without recourse, subject
to the obligations herein (collectively, the "Trust Property") all of
Company's right, title and interest in and to:
(a) the Receivables, and (i) all monies received thereon and allocable
to principal on and after the Cutoff Date and (ii) all monies received
thereon and allocable to interest on and after the July 1, 1998;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, to the extent permitted by law,
any accessions thereto;
(c) any proceeds with respect to the Receivables from claims on any
Insurance Policies covering Financed Vehicles or the Obligors;
(d) any recourse against Dealers with respect to the Receivables under
the Dealer Agreements;
(e) all funds on deposit from time to time in the Certificate
Distribution Account and the Trust Accounts, and in all investments and
proceeds thereof (but excluding all investment income thereon);
(f) the Second Tier Purchase Agreement, including the right of Company
to cause Compass Auto to repurchase Receivables thereunder, and the First
Tier Receivables Purchase Agreement, including the right of Compass Auto to
cause a Seller to repurchase Receivables thereunder; and
(g) any and all proceeds of the foregoing.
The sale, transfer, assignment, setting over and conveyance made
hereunder shall not constitute and is not intended to result in an
assumption by Issuer of any obligation of either Seller to the Obligors,
the Dealers or any other Person in connection with the Receivables and the
other assets and properties conveyed hereunder or any agreement, document
or instrument related thereto.
2
<PAGE>
SECTION 2.2. True Sales. (a) Each of Company and Issuer intend the
transfer of the Trust Property to constitute true sales by Company to
Issuer providing Issuer 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 Issuer to Company.
(b) If (but only to the extent) that the transfer of the Trust
Property hereunder is characterized by a court or other Governmental
Authority as a loan rather than a sale, Company shall be deemed hereunder
to have granted to Issuer a security interest in all of Company's right,
title and interest in and to the Trust Property . Such security interest
shall secure all of Company's obligations (monetary or otherwise) under
this Agreement and the other Basic 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. Issuer shall have, with respect to
the property described in this Section 2.2, and in addition to all the
other rights and remedies available to Issuer under this Agreement and
applicable law, all the rights and remedies of a secured party under any
applicable UCC, and this Agreement shall constitute a security agreement
under applicable law.
ARTICLE III. THE RECEIVABLES.
SECTION 3.1. Representations and Warranties as to Each Receivable.
Company hereby makes the following representations and warranties as to
each Receivable conveyed by it to Issuer hereunder on which Issuer shall
rely in acquiring the Receivables. Unless otherwise indicated, such
representations and warranties shall speak as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables to
Issuer and the pledge thereof to Indenture Trustee pursuant to the
Indenture.
(a) Lien in Force. Company has not taken any action which would have
the effect of releasing the related Financed Vehicle from the Lien granted
pursuant to the Motor Vehicle Contract in whole or in part.
(b) No Liens. 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 Company that the transfer and
assignment herein contemplated constitutes a sale of the Receivables from
Company to Issuer and that the beneficial interest in and title to the
Receivables not be part of Company's estate in the event of the filing of a
bankruptcy petition by or against Company under any bankruptcy law. No
Receivable has been sold, transferred, assigned, or pledged by Company to
any Person other than Issuer. Immediately prior
3
<PAGE>
to the transfer and assignment herein contemplated, 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 Issuer and
immediately upon the transfer and assignment of the Receivable to Issuer,
Issuer shall have good and marketable title to the Receivable, free and
clear of any Lien; and Issuer's interest in the Receivable resulting from
the transfer has been perfected under the UCC.
(d) No Assignment. As of the Closing Date, 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 Issuer.
SECTION 3.2. Repurchase upon Breach. Company, Servicer, Indenture
Trustee or Owner Trustee, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery (or,
with respect to the Indenture Trustee or Owner Trustee, upon actual
knowledge of a Responsible Officer) of any breach or failure to be true of
the representations or warranties made by Compass Auto pursuant to Section
3.3 of the Second Tier Receivables Purchase Agreement; or a Seller pursuant
to Section 3.3 of the First Tier Receivables Purchase Agreement; provided
that the failure to give such notice shall not affect any obligation of
Compass Auto or either Seller, under the applicable Purchase Agreement.
SECTION 3.3. Custodian of Receivable Files. (a) Custody. To assure
uniform quality in servicing the Receivables and to reduce administrative
costs, Issuer, upon the execution and delivery of this Agreement, revocably
appoints Custodian, as agent, and Custodian accepts such appointment, to
act as agent on behalf of Issuer to maintain custody of the following
documents or instruments, which are hereby constructively delivered to
Issuer with respect to each Receivable (collectively, a "Receivable File"):
(i) fully executed original of the Receivable;
(ii) any documents customarily delivered to or held by
Sellers or Servicer evidencing the existence of any Physical Damage
Insurance Policies;
(iii) the original credit application, fully executed by the
Obligor;
(iv) the original certificate of title or application
therefor, or such other documents as the applicable Seller, as
appropriate, keeps on file, in accordance with its customary
procedures, evidencing the security interest of such Seller in the
Financed Vehicle; and
4
<PAGE>
(v) any and all other documents or electronic records that
Company, either Seller or Servicer, as the case may be, keeps on file,
in accordance with its customary procedures, relating to the
Receivable, any Insurance Policies, the Obligor or the Financed
Vehicle.
(b) Safekeeping. Servicer, in its capacity as Custodian, shall hold
the Receivable Files as agent on behalf of Issuer and maintain such
accurate and complete accounts, records and computer systems pertaining to
each Receivable as shall enable Servicer and Issuer to comply with the
terms and provisions of this Agreement applicable to them. In performing
its duties as Custodian hereunder, Custodian shall act with reasonable
care, exercising the degree of skill, attention and care that Custodian
exercises with respect to receivable files relating to other similar motor
vehicle contracts owned and/or serviced by Custodian and that is consistent
with industry standards. In accordance with its customary practice with
respect to its retail installment sale contracts, Custodian shall conduct,
or cause to be conducted, periodic audits of the Receivable Files held by
it under this Agreement, and of the related accounts, records, and computer
systems, and shall maintain the Receivable Files in such a manner as shall
enable Indenture Trustee and Owner Trustee to verify, if either of them so
elects, the accuracy of the record keeping of Custodian. Custodian shall
promptly report in writing to Indenture Trustee and Owner Trustee any
failure on its part to hold the Receivable Files and maintain its accounts,
records and computer systems as herein provided, and promptly take
appropriate action to remedy any such failure. Custodian hereby
acknowledges receipt of the Receivable File for each Receivable listed on
the Schedule of Receivables. Nothing herein shall be deemed to require
Issuer, Owner Trustee or Indenture Trustee to verify the accuracy of the
record keeping of the Custodian.
(c) Maintenance of and Access to Records. Custodian shall maintain
each Receivable File at the location specified in Schedule B to this
Agreement, or at such other office of Custodian within the United States
(or, in the case of any successor Custodian, within the State in which its
principal place of business is located) as shall be specified to Issuer and
Indenture Trustee by 30 days' prior written notice. At the reasonable
direction of the Owner Trustee or Indenture Trustee, Custodian shall make
available to Owner Trustee, Indenture Trustee and their respective agents
(or, when requested in writing by Owner Trustee or Indenture Trustee, their
respective attorneys or auditors) the Receivable Files and the related
accounts, records and computer systems maintained by Custodian at such
times during the normal business hours of Custodian for purposes of
inspecting, auditing or making copies of abstracts of the same.
(d) Release of Documents. Upon written instructions from Indenture
Trustee (or, if no Notes are then Outstanding, Owner Trustee), Custodian
shall release any document in the Receivable Files to Indenture Trustee or
Owner Trustee or its respective agent or designee, as the case may be, at
such place or places as
5
<PAGE>
Indenture Trustee or Owner Trustee may designate, as soon thereafter as is
practicable. Any document so released shall be handled by Indenture Trustee
or Owner Trustee with due care and returned to Custodian for safekeeping as
soon as Indenture Trustee or Owner Trustee or its respective agent or
designee, as the case may be, shall have no further need therefor.
(e) Title to Receivables. Custodian agrees that, in respect of any
Receivable File held by Custodian hereunder, Custodian shall not at any
time have or in any way attempt to assert any interest in such Receivable
File or the related Receivable, other than solely for the purpose of
collecting or enforcing the Receivable for the benefit of Issuer and that
the entire equitable interest in such Receivable and the related Receivable
File shall at all times be vested in Issuer.
(f) Instructions; Authority to Act. Custodian shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by a Responsible Officer of
Indenture Trustee or Owner Trustee, as applicable. A certified copy of
excerpts of certain resolutions of the Board of Directors of Indenture
Trustee or Owner Trustee, as applicable, shall constitute conclusive
evidence of the authority of any such Responsible Officer to act and shall
be considered in full force and effect until receipt by Custodian of
written notice to the contrary given by Indenture Trustee or Owner Trustee,
as applicable.
(g) Custodian's Indemnification. Custodian shall indemnify and hold
harmless Issuer, Owner Trustee and Indenture Trustee, and each of their
respective officers, directors, employees and agents and the Holders from
and against any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind whatsoever that may be
imposed on, incurred or asserted against Issuer, Owner Trustee, Indenture
Trustee or the Holders as the result of any act or omission of Custodian
relating to the maintenance and custody of the Receivable Files; provided
that Custodian shall not be liable hereunder to the Owner Trustee or
Indenture Trustee to the extent that such liabilities, obligations, losses,
compensatory damages, payments, costs or expenses result from the willful
misfeasance, bad faith or gross negligence of Owner Trustee or Indenture
Trustee, as the case may be. Indemnification under this subsection (g)
shall include reasonable fees and expenses of counsel and expenses of
litigation and shall survive termination of this Agreement and the
resignation or removal of Owner Trustee or Indenture Trustee, as the case
may be. If Custodian shall have made any indemnity payments to Owner
Trustee or Indenture Trustee pursuant to this Section and Owner Trustee or
Indenture Trustee thereafter shall collect any of such amounts from Persons
other than Custodian, Owner Trustee or Indenture Trustee, as the case may
be, shall, as soon as practicable following such receipt thereof, repay
such amounts to Custodian, without interest.
6
<PAGE>
(h) Effective Period and Termination. Servicer's appointment as
Custodian shall become effective as of the Cutoff Date and shall continue
in full force and effect until terminated pursuant to this subsection (h).
If Servicer shall resign as Servicer in accordance with Section 7.5 or if
all of the rights and obligations of Servicer shall have been terminated
under Section 8.1, the appointment of Servicer as Custodian hereunder shall
be terminated by Owner Trustee or Indenture Trustee or by the Holders of
Notes evidencing more than 50% of the aggregate Outstanding Amount of the
Notes (or, if no Notes are then Outstanding, the Holders of Certificates
representing more than 50% of the Adjusted Certificate Balance), in each
case in the same manner as Owner Trustee or Indenture Trustee or such
Holders may terminate the rights and obligations of Servicer under Section
8.1. The Indenture Trustee, at the direction of Holders of Notes evidencing
more than 50% of the aggregate Outstanding Amount of the Notes, or, if no
Notes are then Outstanding, the Owner Trustee at the direction of Holders
of Certificates evidencing more than 50% of the Adjusted Certificate
Balance, shall terminate Servicer's appointment as Custodian hereunder at
any time with cause, or with 30 days' prior written notice without cause.
As soon as practicable after any termination of such appointment Servicer
shall deliver, or cause to be delivered, the Receivable Files to Indenture
Trustee or Owner Trustee, as applicable, or its respective agent or
designee at such place or places as Indenture Trustee or Owner Trustee, as
applicable, may reasonably designate. Notwithstanding any termination of
Servicer as Custodian hereunder (other than in connection with a
termination resulting from the termination of Servicer, as such, pursuant
to Section 8.1), from and after the date of such termination, and for so
long as Servicer is acting as such pursuant to this Agreement, Indenture
Trustee (or Owner Trustee, if no Notes are outstanding) shall provide, or
cause the successor Custodian to provide, access to the Receivable Files to
Servicer, at such times as Servicer shall reasonably request, for the
purpose of carrying out its duties and responsibilities with respect to the
servicing of the Receivables hereunder.
(i) Delegation. Custodian may, at any time without notice or consent,
delegate any or all of its duties under the Basic Documents to any
Affiliate of Servicer; provided that no such delegation shall relieve
Custodian of its responsibility with respect to such duties and Custodian
shall remain obligated and liable to Issuer, Indenture Trustee and the
Holders for its duties hereunder as if Custodian alone were performing such
duties.
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ARTICLE IV. ADMINISTRATION AND SERVICING OF RECEIVABLES.
SECTION 4.1. Duties of Servicer. (a) Servicer is hereby authorized
to act as agent for Issuer and in such capacity shall manage, service,
administer, make collections on the Receivables (other than Purchased
Receivables), perform all duties of Issuer (including Issuer's duty to pay
certain expenses incurred under the Indenture but excluding Issuer's
obligation to make payments of principal and interest on the Notes) other
than those specifically assigned to Owner Trustee under the Trust Agreement
and perform the other actions required by Servicer under this Agreement,
with reasonable care. Without limiting the standard set forth in the
preceding sentence, Servicer shall use a degree of skill, attention and
care that is not less than Servicer exercises with respect to comparable
motor vehicle contracts that it services for itself or others and that is
consistent with prudent industry standards. Servicer's duties shall include
the collection and posting of all payments, responding to inquiries by
Obligors on the Receivables, or by federal, state or local governmental
authorities, investigating delinquencies, sending payment coupons or
monthly invoices to Obligors, reporting required tax information to
Obligors, accounting for Collections, furnishing monthly and annual
statements to Owner Trustee and Indenture Trustee with respect to
distributions, providing collection and repossession services in the event
of Obligor default and performing the other duties specified herein.
In accordance with its customary servicing procedures, Servicer shall
also administer and enforce all rights and responsibilities of the holder
of the Receivables provided for in the Physical Damage Insurance Policies
as provided in Section 4.4 and the Dealer Agreements. Without limiting the
generality of the foregoing, Servicer is hereby authorized and empowered by
Issuer to execute and deliver, on behalf of itself, Indenture Trustee,
Issuer, Owner Trustee and the Holders, 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 or to
the Financed Vehicles, all in accordance with this Agreement; provided that
notwithstanding the foregoing, 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 in
connection with a de minimis deficiency that Servicer would not attempt to
collect in accordance with its customary procedures. If Servicer shall
commence a legal proceeding to enforce a Receivable, Issuer shall thereupon
be deemed to have automatically assigned such Receivable to Servicer, which
assignment shall be solely for purposes of collection. If, however, in any
enforcement suit or legal proceeding, it is held that Servicer may not
enforce a Receivable on the grounds that it is not a real party in interest
or a Person entitled to enforce such Receivable, Owner Trustee, on behalf
of Issuer, at Servicer's expense, or either Seller, Compass Auto or
Company, at Servicer's expense, shall take such steps as Servicer deems
necessary to enforce the Receivable, including bringing suit
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in Issuer's name or the name of Owner Trustee or Indenture Trustee.
Servicer shall provide Indenture Trustee with written notice of any waiver
of any unpaid balance under any Receivable (other than in connection with
de minimus deficiencies) which waiver shall only be effected if permitted
pursuant to this Section 4.1(a), and the commencement of any legal
proceeding to enforce a Receivable.
(b) Servicer may, at any time without notice (except that Servicer
shall give written notice to each Rating Agency and Indenture Trustee of
any delegation outside the ordinary course of business of the substantial
portion of its servicing business) or consent, delegate (i) any or all
duties under this Agreement to any Person more than 50% of the voting
securities of which are owned, directly or indirectly, by Compass
Bancshares, Inc., a Delaware corporation, so long as Compass Bank or its
successor or assigns acts as Servicer, or (ii) specific duties to sub-
contractors who are in the business of performing such duties; provided
that no such delegation shall relieve Servicer of its responsibility with
respect to such duties and Servicer shall remain obligated and liable to
Issuer, the Holders and Indenture Trustee for servicing and administering
the Receivables in accordance with this Agreement as if Servicer alone were
performing such duties.
SECTION 4.2. Collection of Receivable Payments. (a) 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 otherwise act with respect to the Receivables, the Physical Damage
Insurance Policies, the Dealer Agreements and related property in such a
manner as shall, in the reasonable judgment of Servicer, maximize the
amount to be received by Issuer with respect thereto, in accordance with
the standard of care required by Section 4.1. Servicer shall be entitled to
amend or modify any Receivable in accordance with its customary procedures
if Servicer believes in good faith that such amendment or modification is
in Issuer's best interests; provided that Servicer may not, (i) extend a
Receivable beyond April 30, 2004, (ii) reduce the amount of the scheduled
payments under a Receivable, or (iii) reduce the Principal Balance or
Contract Rate of any Receivable. If Servicer fails to comply with the
provisions of the preceding sentence, Servicer shall be required to
purchase the Receivable or Receivables affected thereby, for the Purchase
Amount, in the manner specified in Section 4.7 as of the last day of the
Collection Period in which such failure occurs. Servicer may, in its
discretion (in accordance with its customary standards, policies and
procedures), waive any prepayment charge, late payment charge, extension
fee or any other fee that may be collected in the ordinary course of
servicing a Receivable.
(b) If, in the course of collecting payments under the Receivables,
Servicer determines to set off any obligation of Servicer to an Obligor
against an amount payable by the Obligor with respect to such Receivable,
Servicer shall deposit the amount so set off in the Collection Account, no
later than the close of business on the Deposit Date for the Collection
Period in which the set-off occurs.
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All references herein to payments or Liquidation Proceeds collected by
Servicer shall include amounts set-off by Servicer.
SECTION 4.3. Realization upon Receivables. On behalf of Issuer,
Servicer shall charge off a Receivable as a Defaulted Receivable in
accordance with its customary standards but in no event later than 120 days
after such Receivable shall have become delinquent (other than with respect
to Receivables that became Defaulted Receivables as a result of the related
Financed Vehicle being repossessed) and shall use reasonable efforts to
repossess and liquidate the Financed Vehicle securing any Defaulted
Receivable as soon as feasible after such Receivable becomes a Defaulted
Receivable, in accordance with the standard of care required by Section
4.1. In taking such action, Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of Motor Vehicle Contracts, and as are otherwise consistent with
the standard of care required under Section 4.1, which shall include
exercising any rights under the Dealer Agreements and selling the Financed
Vehicle at public or private sale. Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds or pursuing any
deficiency claim against the related Obligor, but only out of the cash
proceeds of such Financed Vehicle or any deficiency obtained from the
Obligor. The foregoing shall be subject to the provision that, in any case
in which a Financed Vehicle shall have suffered damage, Servicer shall not
expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such
repair and/or repossession will increase the Liquidation Proceeds of the
related Receivable by an amount equal to or greater than the amount of such
expenses.
If Servicer elects to commence a legal proceeding to enforce a Dealer
Agreement, the act of commencement shall be deemed to be an automatic
assignment from Issuer to Servicer of the rights under such Dealer
Agreement. If, however, in any enforcement suit or legal proceeding, it is
held that Servicer may not enforce a Dealer Agreement on the grounds that
it is not a real party in interest or a Person entitled to enforce the
Dealer Agreement, Owner Trustee, on behalf of Issuer, at Servicer's
expense, or either Seller, Compass Auto or Company, at Servicer's expense,
shall take such steps as Servicer deems necessary to enforce the Dealer
Agreement, including bringing suit in Issuer's name or the name of Owner
Trustee or Indenture Trustee.
SECTION 4.4. Physical Damage Insurance. (a) The Receivables require
that each Financed Vehicle be insured under a Physical Damage Insurance
Policy. It is understood that Servicer will not "force-place" any Physical
Damage Insurance Policy on any Financed Vehicle. To the extent applicable,
Servicer shall not take any action which would result in noncoverage under
any of the insurance policies referred to in this Section 4.4(a) which, but
for the actions of Servicer, would have
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been covered thereunder. Servicer, on behalf of the Indenture Trustee shall
take such reasonable action as shall be necessary to permit recovery under
any of the foregoing insurance policies. Any amounts collected by Servicer
under any of the foregoing insurance policies, shall be deposited in the
Collection Account pursuant to Section 5.2.
(b) Servicer may sue to enforce or collect upon the Physical Damage
Insurance Policies, in its own name, if possible, or as agent for Issuer.
If Servicer elects to commence a legal proceeding to enforce a Physical
Damage Insurance Policy, the act of commencement shall be deemed to be an
automatic assignment of the rights of Issuer under such Physical Damage
Insurance Policy to Servicer for purposes of collection only. If, however,
in any enforcement suit or legal proceeding it is held that Servicer may
not enforce a Physical Damage Insurance Policy on the grounds that it is
not a real party in interest or a holder entitled to enforce the Physical
Damage Insurance Policy, Owner Trustee, on behalf of Issuer, at Servicer's
expense, or either Seller, Compass Auto or Company, at Servicer's expense,
shall take such steps as Servicer deems necessary to enforce such Physical
Damage Insurance Policy, including bringing suit in Issuer's name or the
name of Owner Trustee or Indenture Trustee. Servicer shall make all claims
and enforce its rights under any lender's single interest insurance policy
(to the extent such claims or rights relate to Receivables) for the benefit
of the Issuer and shall treat as Collections all related proceeds of such
policies.
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.
Servicer, in accordance with the standard of care required under Section
4.1, shall take such reasonable steps as are necessary to maintain
perfection of the security interest created by each Receivable in the
related Financed Vehicle for the benefit of Issuer and the Indenture
Trustee. Issuer hereby authorizes Servicer, and Servicer hereby agrees, to
take such reasonable steps as are necessary to re-perfect such security
interest on behalf of Issuer if Servicer receives notice of the relocation
of a Financed Vehicle. If there has been a Servicer Termination Event,
Sellers and Servicer, at Servicer's expense, shall promptly and duly
execute and deliver such documents and instruments, and take such other
reasonable actions as may be necessary, as evidenced by an Opinion of
Counsel delivered to Issuer, Owner Trustee and Indenture Trustee to perfect
Issuer's and Indenture Trustee's interest in the Trust Property against all
other Persons, including the delivery of the Receivables and the Receivable
Files to Indenture Trustee (or Owner Trustee if no Notes are then
Outstanding) or its agent or designee, the endorsement and delivery of the
Physical Damage Insurance Policies or the notification of the insurers
thereunder, the execution of transfer instruments, and the endorsement to
Indenture Trustee (or Owner Trustee if no Notes are then Outstanding) and
the delivery of the certificates of title to the Financed Vehicles to the
appropriate department or departments of motor vehicles (or other
appropriate governmental agency).
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SECTION 4.6. Covenants of Servicer. Servicer makes the following
covenants on which Issuer relies in acquiring the Receivables:
(a) Security Interest to Remain in Force. Servicer shall not release
any Financed Vehicle from the security interest granted by the related
Receivable in whole or in part, except upon payment in full of the
Receivable or as otherwise contemplated herein.
(b) No Impairment. Servicer shall not impair in any material respect
the rights of the Issuer or the Holders in the Receivables, the Dealer
Agreements or the Physical Damage Insurance Policies or, subject to clause
(c), otherwise amend or alter the terms thereof if, as a result of such
amendment or alteration, the interests of Issuer and the Holders hereunder
would be materially and adversely affected.
(c) Amendments. Servicer shall not amend or otherwise modify any
Receivable (including the grant of any extension thereunder), except in
accordance with Section 4.2.
SECTION 4.7. Purchase by Servicer upon Breach. Company, Servicer,
Indenture Trustee or Owner Trustee, as the case may be, shall inform the
other parties promptly, in writing, upon the discovery (or, in the case of
the Indenture Trustee or Owner Trustee, upon actual knowledge of a
Responsible Officer) of any breach by Servicer of its covenants under
Section 4.5 or 4.6; provided that the failure to give such notice shall not
affect any obligation of Servicer. Unless the breach shall have been cured
by the last day of the Collection Period which includes the 60th day (or
the 30th day, if Servicer so elects) after the date on which Servicer
becomes aware of, or receives written notice of, such breach, and such
breach materially and adversely affects the interests of Issuer and the
Holders in any Receivable, Servicer shall purchase such Receivable from
Issuer as of the last day of the Collection Period at a purchase price
equal to the Purchase Amount for such Receivable as of the last day of such
Collection Period; provided that in the case of a breach of the covenant
contained in Section 4.6(c), Servicer shall be obligated to purchase the
affected Receivable or Receivables on the Deposit Date immediately
succeeding the Collection Period during which Servicer becomes aware of, or
receives written notice of, such breach. In consideration of the purchase
of a Receivable hereunder, Servicer shall remit the Purchase Amount of such
Receivable in the manner specified in Section 5.3. The sole remedy of
Issuer, Owner Trustee, Indenture Trustee or the Holders against Servicer
with respect to a breach pursuant to Section 4.5 or 4.6 shall be to require
Servicer to repurchase Receivables pursuant to this Section.
SECTION 4.8. Servicing Fee. The servicing fee for each Distribution
Date shall equal the product of (i) one-twelfth, (ii) the Servicing Fee
Rate and (iii) the Pool Balance as of the opening of business on the first
day of the related Collection Period (the "Servicing Fee"). Servicer shall
also be entitled to retain any late fees,
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extension fees, prepayment charges, non-sufficient funds charges and other
administrative fees or similar charges allowed by applicable law with
respect to Receivables collected (from whatever source) on the Receivables
and, if Servicer is not Compass Bank, shall be paid any interest earned on
deposits in the Trust Accounts and the Certificate Distribution Account
(the "Supplemental Servicing Fee"). It is understood and agreed that the
Total Distribution Amount shall not include any amounts retained by
Servicer which constitute Supplemental Servicing Fees. The Servicing Fee in
respect of a Collection Period (together with any portion of the Servicing
Fee that remains unpaid from prior Distribution Dates), if the Rating
Agency Condition is satisfied, may be paid at the beginning of the
Collection Period in which such Distribution Date occurs out of Collections
for the related Collection Period.
SECTION 4.9. Servicer's Report. (a) On each Determination Date,
Servicer shall deliver to Owner Trustee, Indenture Trustee, each Paying
Agent and Company, with a copy to the Rating Agencies, a Servicer's Report
substantially in the form of Exhibit A, containing all information
necessary to make the transfers and distributions pursuant to Sections 5.3,
5.4 and 5.7 for the Collection Period preceding the date of such Servicer's
Report together with all information necessary for the Owner Trustee to
send statements to Certificateholders pursuant to Section 5.5 and Indenture
Trustee to send copies of statements received by the Indenture Trustee to
Noteholders pursuant to the Indenture and Section 5.5 of this Agreement.
Receivables to be purchased by Servicer or to be repurchased by Sellers
shall be identified by Servicer by account number with respect to such
Receivable (as specified in the Schedule of Receivables set forth as
Schedule A).
(b) Servicer shall provide Indenture Trustee with a database file for
the Receivables at or prior to the Closing Date (but with information as of
the close of business on the Cutoff Date).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
(a) Servicer shall deliver to Owner Trustee, Indenture Trustee, Company and
each Rating Agency, on or before April 30 of each year, beginning on April
30, 1999, an Officer's Certificate, dated as of the preceding December 31,
stating that (i) a review of the activities of Servicer during the
preceding 12-month period (or, in the case of the first such report, during
the period from the Closing Date to December 31, 1998) and of its
performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, Servicer has fulfilled all its obligations in all material respects
under this Agreement throughout such period or, if there exists any uncured
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 and the report referred to in Section 4.11 may be obtained
by any Certificateholder by a request in writing to Owner Trustee addressed
to the Corporate Trust Office or by any Noteholder by a request
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in writing to Indenture Trustee addressed to the Corporate Trust Office.
Upon the written request of Owner Trustee, Indenture Trustee will promptly
furnish Owner Trustee a list of Noteholders as of the date specified by
Owner Trustee.
(b) Servicer shall deliver to Owner Trustee, Indenture Trustee and the
Rating Agencies, promptly after having obtained knowledge thereof, but in
no event later than five Business Days thereafter, written notice in an
Officer's Certificate of any event which constitutes, or with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 8.1.
SECTION 4.11. Annual Independent Certified Public Accountants'
Report. Servicer shall cause KPMG Peat Marwick LLP or another firm of
nationally recognized independent certified public accountants (the
"Independent Accountants"), who may also render other services to Servicer,
to deliver to Servicer, on or before April 30 of each year, beginning on
April 30, 1999, with respect to the twelve months ended the immediately
preceding December 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 Servicer, to the effect that such firm
has audited the books and records of Servicer and issued its report thereon
and that: (1) such audit 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; and (2) the firm is independent of Servicer
within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants. Servicer shall also cause the
Independent Accountants to deliver to Servicer on such dates a letter to
the effect that certain agreed upon procedures were performed relating to
three randomly selected Servicer's Reports, and, except as disclosed in
such report, no errors or exceptions were found in the Servicer's Report(s)
based on the performance of such agreed upon procedures. Servicer shall
deliver a copy of the Accountants' Report and the letter referred to in the
preceding sentence, within 15 days of receipt, to the Company, the Owner
Trustee, the Indenture Trustee and the Rating Agencies.
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables. Servicer shall provide to the Certificateholders,
Noteholders, Bank Regulatory Authorities and the supervisory agents and
examiners of Bank Regulatory Authorities access to the Receivable Files in
such cases where the Certificateholders, Noteholders or Bank Regulatory
Authorities shall be required by applicable statutes or regulations to
review such documentation as demonstrated by evidence satisfactory to
Servicer in its reasonable judgment. Access shall be afforded without
charge, but only upon reasonable request and during the normal business
hours at the respective offices of Servicer. Nothing in this Section shall
affect the obligation of Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of
Servicer to provide access to
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information as a result of such obligation shall not constitute a breach of
this Section. Any Holder, by its acceptance of a Certificate or Note, as
applicable, shall be deemed to have agreed to keep any information obtained
by it pursuant to this Section confidential and not to use such information
for any other purpose, except as required by applicable law.
SECTION 4.13. Reports to the Commission. Servicer shall, on behalf
of the Issuer, 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. Company shall, at
Servicer's expense, cooperate in any reasonable request made by Servicer in
connection with such filings. Servicer shall deliver to Indenture Trustee
and Company copies of all reports filed with the Commission.
SECTION 4.14. Reports to the Rating Agencies. Servicer shall deliver
to each Rating Agency a copy of all reports or notices furnished or
delivered pursuant to this Article and a copy of any amendments,
supplements or modifications to this Agreement and any other information
reasonably requested by such Rating Agency to monitor this transaction.
SECTION 4.15. Servicer Expenses. Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of the Owner Trustee, Indenture Trustee,
independent accountants, taxes imposed on Servicer and expenses incurred in
connection with distributions and reports to Certificateholders and
Noteholders.
SECTION 4.16. Indenture Trustee Notification to Company. 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 4.13.
ARTICLE V. DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS
TO CERTIFICATEHOLDERS AND NOTEHOLDERS.
SECTION 5.1. Establishment of Trust Accounts. (a) Servicer shall
cause to be established with Indenture Trustee:
(i) For the benefit of the Noteholders and the
Certificateholders, in the name of Indenture Trustee, an Eligible
Deposit Account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders; and
(ii) For the benefit of the Noteholders, in the name of
Indenture Trustee, an Eligible Deposit Account (the "Note Distribution
Account"),
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bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively the "Trust Accounts") shall
be invested by Indenture Trustee with respect to the Trust Accounts (or any
custodian with respect to funds on deposit in any such account) in Eligible
Investments selected in writing by Servicer (pursuant to standing
instructions or otherwise); provided that it is understood and agreed that
neither Servicer, Indenture Trustee nor Owner Trustee shall be liable for
any loss arising from such investment in Eligible Investments. All such
Eligible Investments shall be held by or on behalf of Indenture Trustee for
the benefit of the Noteholders and the Certificateholders; provided that on
each Distribution Date all interest and other investment income (net of
losses and investment expenses) on funds on deposit in the Trust Accounts
shall be distributed to Compass Auto or, if Compass Bank is not Servicer,
to Servicer in accordance with Section 4.8, and shall not be available to
pay the distributions provided for in Section 5.4 and shall not otherwise
be subject to any claims or rights of Holders. Except as permitted in
writing by the Rating Agencies, funds on deposit in the Trust Accounts
shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Deposit Date
preceding each Distribution Date. No Eligible Investment shall be sold or
otherwise disposed of prior to its scheduled maturity unless a default
occurs with respect to such Eligible Investment and Servicer directs
Indenture Trustee in writing to dispose of such Eligible Investment. Funds
deposited in a Trust Account on a Deposit Date that precedes a Distribution
Date upon the maturity of any Eligible Investments are not required to be
(but are permitted to be) invested overnight.
(c) Indenture Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (excluding investment income thereon) and all such funds,
investments and proceeds shall be part of the Owner Trust Estate. Except as
otherwise provided herein, the Trust Accounts shall be under the sole
dominion and control of Indenture Trustee for the benefit of the
Noteholders and the Certificateholders, as applicable; provided, that
Indenture Trustee shall not be charged with any obligation for the benefit
of the Certificateholders except as provided by the terms of this
Agreement. If, at any time, any of the Trust Accounts or the Certificate
Distribution Account ceases to be an Eligible Deposit Account, Indenture
Trustee (or Servicer on its behalf) or Owner Trustee, as applicable, shall
within 10 Business Days (or such longer period as to which each Rating
Agency may consent) establish a new Trust Account or Certificate
Distribution Account, as applicable, as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Trust Account or
new Certificate Distribution Account, as applicable. In connection with the
foregoing, Servicer agrees that, if any of the Trust Accounts are not
accounts with Indenture
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Trustee, Servicer shall notify Indenture Trustee in writing promptly upon
any of such Trust Accounts ceasing to be an Eligible Deposit Account.
(d) With respect to the Trust Account Property, Indenture Trustee
agrees, by its acceptance hereof, that:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts and,
except as otherwise provided herein, each such Eligible Deposit
Account shall be subject to the exclusive custody and control of
Indenture Trustee with respect to the Trust Accounts, and, except as
otherwise provided in the Basic Documents, Indenture Trustee shall
have sole signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical
Property shall be delivered to Indenture Trustee, in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by Indenture Trustee, or a
financial intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for Indenture Trustee;
(iii) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by
Indenture Trustee pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in
such paragraph; and
(iv) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (iii) above shall be delivered to Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by Indenture Trustee pending maturity or
disposition, through continued registration of Indenture Trustee's (or
its nominee's) ownership of such security.
Effective upon Delivery of any Trust Account Property, Issuer 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.
SECTION 5.2. Collections. (a) Servicer shall remit within two
Business Days of receipt thereof (or, with respect to principal payments
received up to two Business Days prior to the Closing Date, on the Closing
Date) to the Collection Account all payments by or on behalf of the
Obligors with respect to the Receivables (other than any amounts
constituting Supplemental Servicing Fees) and all Liquidation Proceeds,
both as collected during a Collection Period. Notwithstanding
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the foregoing, if Compass Bank is the Servicer and (i) shall have the
Required Rating or (ii) Indenture Trustee otherwise shall have received
written notice from each of the Rating Agencies that the then outstanding
rating on the Notes or the Certificates would not be lowered or withdrawn
as a result, Servicer may deposit all amounts referred to above for any
Collection Period into the Collection Account not later than the close of
business on the Deposit Date with respect to such Collection Period;
provided that (i) if a Servicer Termination Event has occurred and is
continuing, (ii) Servicer has been terminated as such pursuant to Section
8.1 or (iii) Servicer ceases to have the Required Rating, Servicer shall
deposit such amounts (including any amounts then being held by Servicer)
into the Collection Account as provided in the preceding sentence. For
purposes of this Article V, the phrase "payments by or on behalf of the
Obligors" shall mean payments made with respect to the Receivables by
Persons other than Servicer, Company or either Seller.
(b) With respect to each Receivable (other than a Purchased
Receivable), collections and payments by or on behalf of the Obligor (other
than any amounts constituting Supplemental Servicing Fees) for each
Collection Period shall be applied to interest and principal in accordance
with the Simple Interest Method, as applied by Servicer. Any excess shall
be applied to prepay the Receivable. All Liquidation Proceeds shall be
applied to the related Receivable in accordance with Servicer's customary
servicing procedures.
SECTION 5.3. Additional Deposits. Servicer, Compass Auto or a Seller
shall deposit or cause to be deposited into the Collection Account the
aggregate Purchase Amounts with respect to Purchased Receivables and
Servicer shall deposit therein all amounts, if any, to be paid under
Section 9.1. All such deposits shall be made not later than the Deposit
Date following the end of the related Collection Period.
SECTION 5.4. Distributions. (a) On each Determination Date, Servicer
shall calculate all amounts required to determine the amounts to be
deposited on the related Distribution Date into the Collection Account from
the Reserve Account and into the Note Distribution Account and the
Certificate Distribution Account (or, if Compass Auto is the only
Certificateholder, the Compass Account) from the Collection Account.
(b) On or before each Distribution Date, Servicer shall instruct
Indenture Trustee in writing (based on the information contained in the
Servicer's Report delivered on the related Determination Date pursuant to
Section 4.9) to, and the Indenture Trustee shall, withdraw from the Reserve
Account and deposit in the Collection Account (or, with respect to any
portion of the Reserve Account Transfer Amount payable to Noteholders, the
Note Distribution Account) the Reserve Account Transfer Amount for such
Distribution Date.
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(c) Subject to the last paragraph of this Section 5.4(c), on each
Distribution Date, Servicer shall instruct Indenture Trustee in writing
(based on the information contained in the Servicer's Report delivered on
the related Determination Date pursuant to Section 4.9) to, and Indenture
Trustee shall, make the following deposits and distributions from the
Collection Account for deposit in the applicable account by 11:00 a.m. (New
York time), to the extent of the Total Distribution Amount, in the
following order of priority:
(i) on each Distribution Date after the first Distribution
Date, to Servicer, from the Total Distribution Amount, the Servicing
Fee for the related Collection Period and all accrued and unpaid
Servicing Fees for prior Collection Periods;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) on each Distribution Date after the first Distribution
Date, to Owner Trustee for deposit into the Certificate Distribution
Account (or, if Compass Auto is the only Certificateholder, directly
to the Compass Account), from the Total Distribution Amount remaining
after the application of clause (i) and clause (ii), the
Certificateholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through clause (iii), the Noteholders' Principal Distributable Amount;
(v) on the first Distribution Date, to Servicer, from the
Total Distribution Amount remaining after the application of clauses
(i) through (iv), the Servicing Fee;
(vi) to the Reserve Account, from the Total Distribution
Amount remaining after the application of clauses (i) through (v),
until the amount on deposit in the Reserve Account equals the
Specified Reserve Account Balance;
(vii) on the first Distribution Date, to Owner Trustee for
deposit into the Certificate Distribution Account (or, if Compass Auto
is the only Certificateholder, directly to the Compass Account), from
the Total Distribution Amount remaining after the application of
clauses (ii), (iv), (v) and (vi), the Certificateholders' Interest
Distributable Amount;
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(viii) to Owner Trustee for deposit in the Certificate
Distribution Account (or, if Compass Auto is the only
Certificateholder, directly to the Compass Account), from the Total
Distribution Amount remaining after the application of clauses (i)
through (vii), the Certificateholders' Principal Distributable Amount;
and
(ix) to Compass Auto, any amounts remaining.
If the Total Distribution Amount is insufficient to make payments
pursuant to clauses (i), (ii), or (iv) above, funds withdrawn from the
Reserve Account pursuant to Section 5.4(b) shall be allocated in the same
priority in clauses (i), (ii) and (iv) as set forth above.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default that has resulted in an acceleration of
the Notes, the Total Distribution Amount remaining after the application of
clause (i) and (ii) above shall be deposited into the Note Distribution
Account to the extent necessary to reduce the principal amount of the Notes
to zero in accordance with and in the priority set forth in Section 5.4 of
the Indenture, and the Certificateholders shall not receive any
distributions until the principal amount and accrued interest on the Notes
have been paid in full. If the Collection Account is maintained with an
institution other than Indenture Trustee, Indenture Trustee shall instruct
and cause such institution to make all deposits and distributions pursuant
to this Section 5.4(c) on the related Deposit Date.
(d) Indenture Trustee shall continue to perform its duties under this
Agreement after the Outstanding Amount of the Notes has been reduced to
zero and the Indenture has been discharged in accordance with its terms.
The protections, immunities and standard of care afforded the Indenture
Trustee under the Indenture shall apply to the performance of its duties
hereunder. The initial Paying Agent with respect to the Notes shall be the
Indenture Trustee.
SECTION 5.5. Statements to Certificateholders and Noteholders. On
each Determination Date, Servicer shall provide to Indenture Trustee (with
a copy to each Rating Agency) written instructions for Indenture Trustee to
forward to each Noteholder of record, to each Paying Agent, if any, and to
Owner Trustee, for Owner Trustee to forward to each Certificateholder of
record, a statement substantially in and the form of Exhibit A setting
forth at least the following information as to the Notes and the
Certificates to the extent applicable:
(a) the amount of such distribution allocable to principal of each
class of Notes and to the Adjusted Certificate Balance of the Certificates;
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(b) the amount of such distribution allocable to interest on or with
respect to each class of Notes and to the Certificates;
(c) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(d) the aggregate outstanding principal balance of each class of the
Notes, the Note Pool Factor for each such class, the Adjusted Certificate
Balance and the Certificate Pool Factor, after giving effect to payments
allocated to principal reported under clause (a) above and the Writeoff
Amounts allocated to the Certificates reported under clause (i) below;
(e) the amount of the Servicing Fee paid to Servicer with respect to
the related Collection Period and with respect to previously accrued and
unpaid Servicing Fees;
(f) the amount of the aggregate Realized Losses, if any, for such
Collection Period;
(g) the Reserve Account Transfer Amount, if any, for such Distribution
Date, the Specified Reserve Account Balance for such Distribution Date, the
amount distributed to Compass Auto from the Reserve Account on such
Distribution Date, and the balance of the Reserve Account (if any) on such
Distribution Date, after giving effect to changes therein on such
Distribution Date;
(h) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall, if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding statement;
(i) the Writeoff Amount (if any) for such Distribution Date;
(j) the aggregate Purchase Amounts paid by either Seller, Compass Auto
or Servicer with respect to the related Collection Period;
(k) the Principal Balance of Receivables which are 30-59 days
delinquent, 60-89 days delinquent and 90 or more days delinquent; and
(l) the Average Delinquency Ratio and the Cumulative Net Loss Ratio
for such Distribution Date.
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Each amount set forth pursuant to paragraph (a), (b), (d) or (h) above
shall be expressed as a dollar amount per $1,000 of the initial principal
balance of the Notes (or class thereof) or the initial Certificate Balance,
as applicable.
SECTION 5.6. Net Deposits. As an administrative convenience, unless
Servicer is required to remit Collections within two Business Days of
receipt thereof, Servicer shall be permitted to make the deposit of
Collections and Purchase Amounts for or with respect to the Collection
Period net of distributions to be made to Servicer with respect to the
Collection Period. Servicer, however, shall account to Owner Trustee,
Indenture Trustee, the Noteholders and the Certificateholders as if all
deposits, distributions and transfers were made individually.
SECTION 5.7. Reserve Account. (a) Pursuant to the Second Tier
Receivables Purchase Agreement, Compass Auto shall establish with and
maintain in the name of the Indenture Trustee, as agent for Issuer and the
Noteholders, an Eligible Deposit Account for the benefit of all Noteholders
(the "Reserve Account"). The Reserve Account shall be initially established
and maintained with the Indenture Trustee (the "Securities Intermediary").
On the Closing Date, Compass Auto shall deposit or cause to be deposited in
the Reserve Account an amount equal to the Reserve Account Initial Deposit.
(b) Indenture Trustee shall, at the written direction of Servicer,
direct the Securities Intermediary to invest funds on deposit in the
Reserve Account in Eligible Investments selected by Servicer and confirmed
in writing by Servicer to Indenture Trustee; provided that none of
Indenture Trustee, Securities Intermediary, Servicer or Issuer shall be
liable for any loss arising from such investment in Eligible Investments
(except to the extent such Person is the obligor on such Eligible
Investment). Funds on deposit in the Reserve Account shall be invested in
Eligible Investments as directed in writing by Servicer that will mature so
that all such funds will be available at the close of business on each
Deposit Date. Funds deposited in the Reserve Account on a Deposit Date
upon the maturity of any Eligible Investments are not required to be (but
may be) invested overnight.
(c) The Securities Intermediary hereby expressly agrees with Indenture
Trustee that: (i) the Securities Intermediary shall treat Indenture
Trustee as entitled to exercise the rights comprising the investments or
financial assets credited to the Reserve Account; (ii) the investments or
financial assets credited to the Reserve Account shall not be registered in
the name of, payable to the order of or specially indorsed to Indenture
Trustee; and (iii) the Securities Intermediary shall not agree to comply
with entitlement orders originated by any Person with respect to the
investments or financial assets held in the Reserve Account other than
Indenture Trustee.
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(d) The Reserve Account shall be under the sole custody and control of
Indenture Trustee. If, at any time, the Reserve Account ceases to be an
Eligible Deposit Account, Indenture Trustee shall within 10 Business Days
(or such longer period, not to exceed 30 calendar days, as to which each
Rating Agency may consent) establish a new Reserve Account as an Eligible
Deposit Account and shall transfer or cause to be transferred any cash
and/or any investments that are in the existing account which is no longer
an Eligible Deposit Account to such new Reserve Account.
(e) Servicer shall instruct Indenture Trustee in writing (based on the
information contained in the Servicer's Report delivered on the related
Determination Date pursuant to Section 4.9) to, and Indenture Trustee
shall, make a distribution to Compass Auto from the Reserve Account to the
extent of any Reserve Account Excess for such Distribution Date, for
deposit in Account No.: 062001186, Attn: Sue Brewis, of Compass Auto
maintained at Compass Bank, Birmingham, Alabama, or such other account as
may be so designated in writing by Compass Auto to Servicer and delivered
to Indenture Trustee, by 12:00 p.m. (New York time), in an amount equal to
such Reserve Account Excess Amount.
(f) Upon any distribution to Compass Auto of amounts from the Reserve
Account, the Holders shall not have any rights in, or claims to, such
amounts. Amounts distributed to Compass Auto from the Reserve Account in
accordance with this Section shall not be available under any circumstances
to Issuer, Owner Trustee, Indenture Trustee, Company or any Holders and
Compass Auto shall not in any event thereafter be required to refund any
such distributed amounts.
(g) With respect to the Reserve Account, Compass Auto, Issuer and
Indenture Trustee agree that the Reserve Account Initial Deposit and all
other funds and Reserve Account Property shall be delivered to Indenture
Trustee for credit to the Reserve Account. In addition:
(i) any Reserve Account Property that constitutes Physical
Property shall be delivered to Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by Indenture Trustee or a
financial intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for Indenture Trustee;
(ii) any Reserve Account Property that is a book entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by
Indenture Trustee pending maturity or disposition, through continued
book entry registration of such Reserve Account Property as described
in such paragraph; and
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(iii) any Reserve Account Property that is an
"uncertificated security" under Article 8 of the UCC and that is not
governed by clause (ii) above shall be delivered to Indenture Trustee
in accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by Indenture Trustee pending maturity or
disposition, through continued registration of Indenture Trustee's (or
its nominee's) ownership of such security.
Effective upon the crediting of any Reserve Account Property to the Reserve
Account, Indenture Trustee shall be deemed to have represented that it has
purchased such Reserve Account Property for value, in good faith and
without notice of any adverse claim thereto.
(h) Servicer agrees to take or cause to be taken such further actions,
to execute, deliver and file or cause to be executed, delivered and filed
such further documents and instruments (including any UCC financing
statements or this Agreement) as may be determined to be necessary, in an
Opinion of Counsel to Issuer delivered to Owner Trustee and Indenture
Trustee, in order to perfect the interests created by this Section 5.7 and
otherwise fully to effectuate the purposes, terms and conditions of this
Section 5.7. Issuer and Servicer shall:
(1) promptly execute, deliver and file any financing statements,
amendments, continuation statements, assignments, certificates and
other documents with respect to such interests and perform all such
other acts as may be necessary in order to perfect or to maintain the
perfection of Indenture Trustee's security interest; and
(2) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of the
following: (1) any change in their respective names or any trade
names, (2) any change in the location of their respective chief
executive offices or principal places of business and (3) any merger
or consolidation or other change in their respective identities or
corporate structures; and shall promptly notify Owner Trustee and
Indenture Trustee of any such filings.
(i) Investment earnings attributable to the Reserve Account Property
and proceeds therefrom shall be held by Indenture Trustee for the benefit
of Compass Auto or, if Compass Bank is not Servicer, for Servicer in
accordance with Section 4.8. Investment earnings attributable to the
Reserve Account Property shall not be available to pay the distributions
provided for in Section 5.4 and shall not otherwise be subject to any
claims or rights of the Holders or Servicer (except to the extent provided
in Section 4.8). Indenture Trustee shall cause all investment earnings
attributable to the Reserve Account to be distributed on each Distribution
Date to
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Compass Auto or, if Compass Bank is not Servicer, to Servicer in accordance
with Section 4.8.
(j) Compass Auto may at any time, without consent of Holders, sell,
transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account if: (i) the Rating Agencies confirm
in writing that such action will not result in a reduction or withdrawal of
the rating of any class of Notes, a copy of which notice shall be delivered
to the Indenture Trustee; (ii) Compass Auto provides to Owner Trustee and
Indenture Trustee an Opinion of Counsel from independent counsel that such
action will not cause Issuer to be classified as an association (or
publicly traded partnership) taxable as a corporation for federal income
tax purposes; and (iii) such transferee or assignee agrees in writing to
take positions for federal income tax purposes consistent with the federal
income tax positions agreed to be taken by Compass Auto.
ARTICLE VI. COMPANY.
SECTION 6.1. Representations of Company. Company makes the following
representations on which Issuer is deemed to have relied in acquiring the
Receivables and the other properties and rights included in the Owner Trust
Estate. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to Issuer and the
pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Company has been duly organized
and is validly existing as a Delaware corporation in good standing under
the laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are presently
owned and such business is presently conducted and had at all relevant
times, and has, full power, authority and legal right to acquire, own and
sell the Receivables and the other properties and rights included in the
Owner Trust Estate assigned to Issuer pursuant to Article II.
(b) Power and Authority. Company has the power, authority and legal
right to execute and deliver this Agreement and the Basic Documents to
which it is a party and to carry out their respective terms and to sell and
assign the property to be sold and assigned to and deposited with Issuer as
the Owner Trust Estate; and the execution, delivery and performance of this
Agreement and the Basic Documents to which it is a party have been duly
authorized by Company by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent, license
or other order or action of, or filing or registration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement or the Basic Documents
to which it is a party or the
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consummation of the transactions contemplated hereby or thereby, other than
(i) as may be required under the blue sky or securities laws of any State
or the Securities Act of 1933, as amended, and (ii) the filing of UCC
financing statements.
(d) Valid Sale; Binding Obligation. Company intends this Agreement to
effect a valid sale, transfer, and assignment of the Receivables and the
other properties and rights included in the Owner Trust Estate conveyed by
Company to Issuer hereunder, enforceable against creditors of and
purchasers from Company; and each of this Agreement and the Basic Documents
to which it is a party constitutes a legal, valid and binding obligation of
Company, enforceable against Company in accordance with its respective
terms, subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other
similar laws affecting enforcement of the rights of creditors generally and
to equitable limitations on the availability of specific remedies.
(e) No Violation. The execution, delivery and performance by Company
of this Agreement and the Basic Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, result in any material breach of any of the terms and
provisions of, constitute (with or without notice or lapse of time) a
material default under or result in the creation or imposition of any Lien
upon any of its material properties pursuant to the terms of, (i) the
certificate of incorporation or bylaws of Company, (ii) any material
indenture, contract, lease, mortgage, deed of trust or other instrument or
agreement to which Company is a party or by which Company is bound, or
(iii) any law, order, rule or regulation applicable to Company of any
federal or state regulatory body, any court, administrative agency, or
other governmental instrumentality having jurisdiction over Company.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Company, threatened, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over Company or its properties: (i)
asserting the invalidity of this Agreement, any other Basic Document, the
Notes or the Certificates, (ii) seeking to prevent the issuance of the
Notes or Certificates or the consummation of any of the transactions
contemplated by this Agreement or any other Basic Document, (iii) seeking
any determination or ruling that might materially and adversely affect the
performance by Company of its obligations under, or the validity or
enforceability of, this Agreement, any other Basic Document, the Notes or
the Certificates, to the extent applicable, or (iv) that may materially and
adversely affect the federal or state income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
(g) Chief Executive Office. The chief executive office of Company is
11 Madison Avenue, New York, New York 10010.
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SECTION 6.2. Continued Existence. During the term of this Agreement,
subject to Section 6.4, Company shall keep in full force and effect its
existence, rights and franchises as a corporation organized 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 Agreement, the
other Basic Documents and each other instrument or agreement necessary or
appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
SECTION 6.3. Liability of Company; Indemnities. (a) Company shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by Company under this Agreement.
(b) Company shall indemnify, defend and hold harmless Issuer, Owner
Trustee and Indenture Trustee and their respective officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent arising out of, or imposed
upon such Person through or as a result of (i) Company's willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement, or by reason of reckless disregard of its obligations
and duties under this Agreement and (ii) Company's violation of Federal or
state securities laws in connection with the offering and sale of the Notes
and the Certificates or in connection with any application relating to the
Notes or Certificates under any state securities laws.
Indemnification under this Section shall survive the resignation or
removal of Owner Trustee or Indenture Trustee and the termination of this
Agreement, the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If Company shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to Company, without interest.
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Company. Any Person (a) into which Company may be merged or
consolidated, (b) which may result from any merger or consolidation to
which Company shall be a party or (c) which may succeed to the properties
and assets of Company substantially as a whole, shall be the successor to
Company without the execution or filing of any document or any further act
by any of the parties to this Agreement; provided that Company hereby
covenants that it shall not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Company, if
other than Asset Backed Securities Corporation, executes an agreement of
assumption to perform every obligation of Company under this Agreement, a
copy of which shall be delivered to the Indenture Trustee; (ii) immediately
after giving effect to such transaction, no representation or warranty
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made pursuant to Section 3.1 or 6.1 shall have been breached; (iii) Company
shall have delivered to Owner Trustee and Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this
Section and that all conditions precedent, if any, provided for in this
Section relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction; (iv) such transaction shall not result in a material adverse
federal or state tax consequence to Issuer, the Noteholders or the
Certificateholders; and (v) unless Asset Backed Securities Corporation is
the surviving entity, Company shall have delivered to Owner Trustee and
Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of Owner Trustee and
Indenture Trustee, respectively, in the Receivables and reciting the
details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interests.
SECTION 6.5. Limitation on Liability of Company and Others. Company
and any director or officer or employee or agent of 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 any Basic Document (provided that such reliance shall not
limit in any way Company's obligations under Section 6.3). Company shall
not be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 6.6. Company May Own Certificates or Notes. Company and any
Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would
have if it were not Company or an Affiliate thereof, except as expressly
provided herein or in any Basic Document. Except as set forth herein or in
the other Basic Documents, Notes and Certificates so owned by or pledged to
Company or any such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement and the other Basic Documents,
without preference, priority or distinction as among all of the Notes and
Certificates.
ARTICLE VII. SERVICER.
SECTION 7.1. Representations of Servicer. Servicer makes the
following representations on which Issuer is deemed to have relied in
acquiring the Receivables and the other properties and rights included in
the Owner Trust Estate. The representations speak as of the execution and
delivery of the Agreement and shall
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survive the sale, transfer and assignment of the Receivables to Issuer and
the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Servicer has been duly organized
and is validly existing as an Alabama state banking corporation in good
standing under the laws of Alabama, with the power and authority to own its
properties and to conduct its business as such properties are presently
owned and such business is presently conducted, and had at all relevant
times, and shall have, power, authority and legal right to service the
Receivables and the other properties and rights included in the Owner Trust
Estate.
(b) Due Qualification. 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 such qualifications.
(c) Power and Authority. Servicer has the power, authority and legal
right to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their respective terms; and the
execution, delivery and performance of this Agreement and the other Basic
Documents to which it is a party have been duly authorized by Servicer by
all necessary corporate action.
(d) No Consent Required. No approval, authorization, consent, license
or other order or action of, or filing or registration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement, the other Basic
Documents to which it is a party or the consummation of the transactions
contemplated hereby or thereby, other than (i) as may be required under the
blue sky or securities laws of any State or the Securities Act of 1933, as
amended, and (ii) the filing of UCC financing statements.
(e) Binding Obligation. Each of this Agreement and the Basic Documents
to which it is a party constitutes a legal, valid and binding obligation of
Servicer, enforceable against Servicer in accordance with its respective
terms, subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other
similar laws affecting enforcement of the rights of creditors of banks
generally and to equitable limitations on the availability of specific
remedies.
(f) No Violation. The execution, delivery and performance by Servicer
of this Agreement and the Basic Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, result in any material breach of any of the terms and
provisions of, constitute (with or without notice or lapse of time) a
material default under, or result in the
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creation or disposition of any Lien upon any of its material properties
pursuant to the terms of, (i) the articles of organization or bylaws of
Servicer, (ii) any material indenture, contract, lease, mortgage, deed of
trust or other instrument or agreement to which Servicer is a party or by
which Servicer is bound, or (iii) any law, order, rule or regulation
applicable to Servicer of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Servicer.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal or other governmental
instrumentality having jurisdiction over Servicer or its properties: (i)
asserting the invalidity of this Agreement, any other Basic Document, the
Notes or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any other Basic Document, (iii) seeking
any determination or ruling that might materially and adversely affect the
performance by Servicer of its obligations under, or the validity or
enforceability of, this Agreement, any other Basic Document, the Notes or
the Certificates, to the extent applicable, or (iv) that may materially and
adversely affect the federal or state income, excise, franchise or similar
tax attributes of the Certificates.
SECTION 7.2. Indemnities of Servicer. (a) Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by Servicer under this Agreement.
(b) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, Company, and their respective officers,
directors, employees and agents from any and all costs, expenses, losses,
claims, damages and liabilities (including reasonable attorneys' fees and
expenses) to the extent arising out of, or imposed upon any such Person
through, the gross negligence, willful misfeasance or bad faith of Servicer
in the performance of its obligations and duties under this Agreement or in
the performance of the obligations and duties of any subservicer under any
subservicing agreement.
(c) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee and their respective officers, directors,
employees and agents from and against any taxes that may at any time be
asserted against any such Person with respect to the transactions
contemplated in this Agreement or in the other Basic Documents, including
any sales, gross receipts, general corporation, tangible or intangible
personal property, franchise, privilege, or license taxes, or any taxes of
any kind which may be asserted (but not including any federal or other
income taxes arising out of transactions contemplated by this Agreement and
the other Basic Documents) against Issuer, and costs and expenses in
defending against the same.
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(d) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, Company, and their respective officers,
directors, employees and agents from and against any and all costs,
expenses, losses, claims, damages and liabilities (including reasonable
attorneys' fees and expenses) to the extent arising out of or imposed upon
any such Person as a result of any compensation payable to any subcustodian
or subservicer (including any fees payable in connection with the release
of any Receivable File from the custody of such subservicer or in
connection with the termination of the servicing activities of such
subservicer with respect to any Receivable) whether pursuant to the terms
of any subservicing agreement or otherwise.
(e) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, Company, and their respective directors,
officers, employees and agents from and against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, arising out of or
resulting from the use, ownership or operation of any Financed Vehicle.
(f) Servicer shall indemnify, defend and hold harmless Indenture
Trustee, Owner Trustee or their respective officers, directors, employees
and agents from any and all costs, expenses, losses, claims, damages and
liabilities (including reasonable attorneys' fees and expenses) to the
extent arising out of the transactions contemplated by the Indenture and
this Sale and Servicing Agreement unless such costs, expenses, losses,
claims, damages and liabilities are due to the gross negligence, willful
misfeasance or bad faith of the Indenture Trustee or Owner Trustee,
respectively.
Indemnification under this Section shall survive the resignation or removal
of Owner Trustee or Indenture Trustee and the termination of this
Agreement, the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If Servicer shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to Servicer, without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to
which Servicer shall be a party, (c) which may succeed to the properties
and assets of Servicer, substantially as a whole, or (d) 50% of the voting
stock of which is owned directly or indirectly by Compass Bancshares, Inc.,
may become the successor to Servicer; provided that, unless Compass Bank is
the surviving party to such transaction, Servicer hereby covenants that it
shall not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving
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Servicer if other than Compass Bank, executes an agreement of assumption to
perform every obligation of Servicer under this Agreement; (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 7.1 shall have been breached and no Servicer
Termination Event, and no event that, after notice or lapse of time, or
both, would become a Servicer Termination Event shall have occurred and be
continuing; (iii) Servicer shall have delivered to Owner Trustee and
Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if
any, provided for in this Section relating to such transaction have been
complied with, and that the Rating Agency Condition shall have been
satisfied with respect to such transaction; (iv) such transaction will not
result in a material adverse Federal or state tax consequence to Issuer,
the Noteholders or the Certificateholders; and (v) unless Servicer is the
surviving entity, Company shall have delivered to Owner Trustee and
Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of Owner Trustee and
Indenture Trustee, respectively, in the Receivables and reciting the
details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interests.
SECTION 7.4. Limitation on Liability of Servicer and Others. Neither
Servicer nor any of its directors, officers, employees or agents shall be
under any liability to Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any action taken or for
refraining from the taking of any action by Servicer or any subservicer
pursuant to this Agreement or for errors in judgment; provided that this
provision shall not protect Servicer or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties under this Agreement. Servicer
or any subservicer and any of their respective directors, officers,
employees or agents may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement.
Except as provided in this Agreement, Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense
or liability; provided that Servicer, may (but shall not be required to)
undertake any reasonable action that it may deem necessary or desirable in
respect of the Basic Documents to protect the interests of the
Certificateholders and the Noteholders under this Agreement and the other
Basic Documents. In such event, the legal expense and costs of such action
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and any liability resulting therefrom shall be expenses, costs and
liabilities of Servicer.
SECTION 7.5. Compass Bank Not To Resign as Servicer. Subject to the
provisions of Section 7.3, Compass Bank hereby agrees not to resign from
the obligations and duties hereby imposed on it as Servicer under this
Agreement except upon determination that the performance of its duties
hereunder shall no longer be permissible under applicable law or if such
resignation is required by regulatory authorities. Notice of any such
determination permitting the resignation of Compass Bank as Servicer shall
be communicated in writing to Owner Trustee and Indenture Trustee at the
earliest practicable time and any such determination shall be evidenced by
an Opinion of Counsel to such effect delivered to Owner Trustee and
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the earlier of Indenture Trustee
or a Successor Servicer having assumed the responsibilities and obligations
of the resigning Servicer in accordance with Section 8.2 or the date upon
which any regulatory authority requires such resignation; it being
understood that upon such assumption, Indenture Trustee or Successor
Servicer, as applicable, shall be entitled to the Servicing Fee and the
Supplemental Servicing Fee.
SECTION 7.6. Existence. Subject to the provisions of Section 7.3,
during the term of this Agreement, Compass Bank shall keep in full force
and effect its existence, rights and franchises as an Alabama state banking
corporation under the laws of the jurisdiction of its organization and
shall maintain its qualification to do business as a foreign corporation,
in each jurisdiction necessary to perform its duties under this Agreement.
SECTION 7.7. Servicer May Own Notes or Certificates. The Servicer,
and any Affiliate of the Servicer, may, in its individual or any other
capacity, become the owner or pledgee of Notes or Certificates with the
same rights as it would have if it were not the Servicer or an Affiliate
thereof, except as expressly provided herein or in any Basic Document.
Except as set forth herein or in the other Basic Documents, Notes and
Certificates so owned by or pledged to Servicer or any such Affiliate shall
have an equal and proportionate benefit under the provisions of this
Agreement and the other Basic Documents, without preference, priority or
distinction as among all of the Notes and Certificates.
ARTICLE VIII. SERVICER TERMINATION EVENTS.
SECTION 8.1. Servicer Termination Event. If any one of the following
events (a "Servicer Termination Event") shall occur and be continuing:
(a) any failure by Servicer to deliver to Indenture Trustee or Owner
Trustee for deposit in any of the Trust Accounts, the Certificate
Distribution Account
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or the Compass Account any required payment or to direct Indenture Trustee
or Owner Trustee to make any required distributions therefrom that shall
continue unremedied for a period of five Business Days after discovery of
such failure by an Authorized Officer of Servicer or written notice of such
failure shall have been given (A) to Servicer by Owner Trustee or Indenture
Trustee or (B) to Servicer, Owner Trustee and Indenture Trustee by the
Holders of Notes evidencing not less than 25% of the Outstanding Amount of
the Notes or, if the Notes have been paid in full, Holders of Certificates
evidencing not less than 25% of the Adjusted Certificate Balance, as
applicable; or
(b) failure on the part of Servicer duly to observe or to perform in
any material respect any other covenants or agreements of Servicer, as
applicable, set forth in this Agreement or any other Basic Document to
which it is a party, which failure shall (i) materially and adversely
affect the rights of either the Certificateholders or Noteholders and (ii)
continue unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given (A) to Servicer by Owner Trustee or Indenture Trustee or (B) to
Servicer, Owner Trustee and Indenture Trustee by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes or, if
the Notes have been paid in full, Holders of Certificates evidencing not
less than 25% of the Adjusted Certificate Balance, as applicable; or
(c) an Insolvency Event occurs with respect to Servicer or any of its
respective successors;
then, and in each and every case, so long as any Servicer Termination Event
shall not have been remedied, either Indenture Trustee, or the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if no Notes are then Outstanding, either the Owner Trustee or the
Holders of Certificates evidencing not less than 25% of the Adjusted
Certificate Balance), by notice then given in writing to Servicer (and to
Owner Trustee or Indenture Trustee, as applicable, if given by the Holders)
may terminate all the rights and obligations (other than the obligations
set forth in Section 7.2) of Servicer under this Agreement. On or after the
receipt by Servicer of such written notice, all authority and power of
Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Receivables or otherwise, shall, without further
action, pass to and be vested in Indenture Trustee or such Successor
Servicer as may be appointed under Section 8.2; and, without limitation,
Indenture Trustee and Owner Trustee are hereby authorized and empowered to
execute and deliver, on behalf of the predecessor Servicer at such
predecessor's expense, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer
shall cooperate with the Successor Servicer, Indenture
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Trustee and Owner Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this
Agreement, including the transfer to the Successor Servicer for
administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received by it
with respect to a Receivable. Servicer shall promptly transfer its
electronic records relating to the Receivables to the Successor Servicer in
such electronic form as the Successor Servicer may reasonably request and
shall promptly transfer to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing of the
Receivables in the manner and at such times as the Successor Servicer shall
reasonably request. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Receivable Files to the
Successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of a Servicer
Termination Event, Indenture Trustee shall give notice thereof to the
Rating Agencies.
SECTION 8.2. Appointment of Successor. (a) Upon Servicer's receipt
of notice of termination, pursuant to Section 8.1 or Servicer's resignation
(if and to the extent permitted in accordance with the terms of this
Agreement), the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement, in the case of termination,
only until the date specified in such termination notice or, if no such
date is specified in a notice of termination, until receipt of such notice
and, in the case of resignation, until the earlier of (i) the date 45 days
from the delivery to Owner Trustee and Indenture Trustee of written notice
of such resignation (or written confirmation of such notice) in accordance
with the terms of this Agreement and (ii) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified
in the notice of resignation and accompanying Opinion of Counsel. In the
event of Servicer's termination or resignation hereunder, Issuer shall
appoint a Successor Servicer, and the Successor Servicer shall accept its
appointment by a written assumption in form acceptable to Owner Trustee and
Indenture Trustee. If a Successor Servicer has not been appointed at the
time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section, Indenture Trustee without further action
shall automatically be appointed and Successor Servicer, and Indenture
Trustee shall be entitled to the Servicing Fee and Supplemental Servicing
Fee. Notwithstanding the above, Indenture Trustee shall, if it shall be
unwilling or unable so to act, appoint or petition a court of competent
jurisdiction to appoint, any established institution, having a net worth of
not less than $100,000,000 and whose regular business shall include the
servicing of motor vehicle receivables, as the successor to Servicer under
this Agreement; provided, that the appointment of any such Successor
Servicer shall satisfy the Rating Agency Condition.
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(b) Upon appointment, the Successor Servicer (including Indenture
Trustee acting as Successor Servicer) shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating
thereto placed on the predecessor Servicer and shall be entitled to the
Servicing Fee and Supplemental Servicing Fee and all the rights granted to
the predecessor Servicer by the terms and provisions of this Agreement. No
Successor Servicer shall be liable for any acts or omissions of any
predecessor Servicer.
(c) A transfer of servicing hereunder shall not affect the rights and
duties of the parties hereunder (including the obligations and indemnities
of Company pursuant to Sections 4.3, 6.1 and 6.3 or, with respect to
obligations and indemnities arising prior to, or concurrently with, a
transfer of servicing hereunder, the predecessor Servicer pursuant to
Section 4.7, 7.1 or 7.2) other than those relating to the management,
administration, servicing, custody or collection of the Receivables and the
other rights and properties included in the Owner Trust Estate. The
Successor Servicer shall, upon its appointment pursuant to Section 8.2 and
as part of its duties and responsibilities under this Agreement, promptly
take all action it deems necessary or appropriate so that the predecessor
Servicer (in whatever capacity) is paid or reimbursed all amounts it is
entitled to receive under this Agreement on each Distribution Date
subsequent to the date on which it is terminated as Servicer hereunder.
Without limiting the generality of the foregoing, the predecessor Servicer
shall be entitled to receive all accrued and unpaid Servicing Fees through
and including the effective date of the termination of the predecessor
Servicer.
SECTION 8.3. Payment of Servicing Fee. If Servicer shall be
replaced, the predecessor Servicer shall be entitled to receive any accrued
and unpaid Servicing Fees through the date of the Successor Servicer's
acceptance hereunder and any Supplemental Servicing Fees accrued and unpaid
or received prior to such date, in each case in accordance with Section
4.8.
SECTION 8.4. Notification to Noteholders and Certificateholders.
Upon any termination of, or appointment of a successor to, Servicer
pursuant to this Article VIII, Owner Trustee shall give prompt written
notice thereof to Certificateholders and Indenture Trustee shall give
prompt written notice thereof to Noteholders and Rating Agencies.
SECTION 8.5. Waiver of Past Defaults. The Holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes
(or the Holders of Certificates evidencing not less than a majority of the
Adjusted Certificate Balance, as applicable, in the case of any default
which does not adversely affect Indenture Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, as the case may be,
waive in writing by notice to Indenture Trustee and Servicer any default by
Servicer in the performance of its obligations hereunder and its
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consequences, except a default in making any required deposits to any of
the Trust Accounts in accordance with this Agreement. 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 thereto.
ARTICLE IX. TERMINATION.
SECTION 9.1. Optional Purchase of All Receivables; Termination
Notice. (a) On the last day of any Collection Period preceding a
Determination Date as of which the then outstanding Pool Balance is 5% or
less of the Original Pool Balance, Servicer shall have the option to
purchase the Owner Trust Estate, other than the Trust Accounts and the
Certificate Distribution Account, and any funds or investments therein. To
exercise such option, Servicer shall notify Indenture Trustee in writing in
accordance with Section 10.2 of the Indenture, and deposit pursuant to
Section 5.4 into the Collection Account an amount which, when added to the
amounts on deposit in the Collection Account for such Distribution Date,
equals the sum of (i) the unpaid principal amount of the then outstanding
Class A-3 Notes, plus accrued and unpaid interest thereon, plus (ii) the
Adjusted Certificate Balance plus accrued and unpaid interest thereon. The
Class A-3 Notes and the Certificates shall be redeemed concurrently
therewith.
(b) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder.
(c) Notice of any termination of Issuer shall be given by Servicer to
Owner Trustee, Indenture Trustee and the Rating Agencies as soon as
practicable after Servicer has received notice thereof.
ARTICLE X. MISCELLANEOUS PROVISIONS.
SECTION 10.1. Amendment. (a) This Agreement may be amended by
Company, Servicer, Issuer and Indenture Trustee (which consent may not be
unreasonably withheld), but without the consent of any of the Noteholders
or the Certificateholders: (i) to cure any ambiguity, (ii) to correct or
supplement any provisions in this Agreement, or (iii) for the purpose of
adding any provisions to, or changing in any manner or eliminating any of
the provisions of, this Agreement; provided that such action in this clause
(iii) shall not, as evidenced by an Opinion of Counsel delivered to Owner
Trustee and Indenture Trustee, adversely affect in any material respect the
interests of the Company or any Noteholder.
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(b) This Agreement may also be amended from time to time by Company,
Servicer, Issuer and Indenture Trustee, with the consent of the Holders of
Notes evidencing not less than a majority of the Outstanding Amount of the
Notes and the consent of the Holders of Certificates evidencing not less
than a majority of the Adjusted Certificate Balance for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided 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
or distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (ii) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Adjusted
Certificate Balance, the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all the outstanding
Notes and the Holders of all the outstanding Certificates of each class
affected thereby.
(c) Prior to the execution of any such amendment or consent, Servicer
shall furnish written notification of the substance of such amendment or
consent to each Rating Agency. Promptly after the execution of any such
amendment or consent, Servicer shall furnish written notification of the
substance of such amendment or consent to each Noteholder and
Certificateholder.
(d) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
(e) Prior to the execution of any amendment to this Agreement, Owner
Trustee and Indenture Trustee shall be entitled to receive and conclusively
rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Section and that all
conditions precedent in this Section to the execution and delivery of such
amendment have been satisfied and the Opinion of Counsel referred to in
Section 10.2(i) has been delivered. Owner Trustee and Indenture Trustee
may, but shall not be obligated to, enter into any such amendment which
affects Owner Trustee's or Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust Property. (a) Company
shall execute each financing statement and continuation statement prepared
by Servicer in accordance with this Section 10.2 and Servicer shall cause
to be prepared for execution by Company and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of Issuer and the
interests of Indenture Trustee in the Receivables and the proceeds thereof.
Servicer shall deliver (or cause to be delivered) to Owner Trustee
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and Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
(b) Neither Company nor Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of (S) 9-402(7)
of the UCC, unless it shall have given Owner Trustee and Indenture Trustee
written notice thereof within 30 days after such change and filed
appropriate amendments to all previously filed financing statements or
continuation statements within 60 days after any such change.
(c) Each of Company and Servicer shall give Owner Trustee and
Indenture Trustee written notice of any relocation of its principal
executive office within 30 days after any such relocation if, as a result
of such relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any
such amendment or new financing statement within 60 days after any such
relocation. Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the
United States of America.
(d) 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 into the Collection
Account in respect of such Receivable.
(e) Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate that such Receivable is owned by Issuer.
Indication of Issuer's and Indenture Trustee's interest in a Receivable
shall be deleted from or modified on Servicer's computer systems when, and
only when, the related Receivable shall have been paid in full or
repurchased by a Seller or purchased by Servicer.
(f) If at any time a Seller or Servicer shall propose to sell, grant a
security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee,
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 shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been sold
and is owned by Issuer and has been pledged to Indenture Trustee.
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(g) Servicer shall permit Indenture Trustee, Owner Trustee and their
respective agents at any time during the Servicer's normal business hours
to inspect, audit and make copies at no charge of and abstracts from
Servicer's records regarding any Receivable.
(h) Upon request at any time Owner Trustee or Indenture Trustee shall
have reasonable grounds to believe that such request is necessary in
connection with the performance of its duties under this Agreement or any
of the Basic Documents, Servicer shall furnish to Owner Trustee or to
Indenture Trustee, within 30 Business Days, a list of all Receivables (by
contract number and name of Obligor) then owned by Issuer, together with a
reconciliation of such list to the Schedule of Receivables and to each of
Servicer's Reports furnished before such request indicating removal of
Receivables from Issuer.
(i) Servicer shall deliver to Owner Trustee and Indenture Trustee,
promptly after the execution and delivery of this Agreement and of each
amendment thereto, an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of Issuer and Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating that,
in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
(j) Company shall, to the extent required by applicable law, cause the
Notes to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
sections.
SECTION 10.3. Notices. All demands, notices and communications upon
or to Company, Servicer, Owner Trustee, Indenture Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered,
sent by overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt: (a) in
the case of Company, to Asset Backed Securities Corporation, 11 Madison
Avenue, New York, New York 10010, Attention: Secretary; (b) in the case of
Servicer, to Compass Bank, 15 South 20th Street, Birmingham, Alabama 35233,
Attention: Manager, Structured Finance, with a copy to the General Counsel
thereof; (c) in the case of Issuer or Owner Trustee, at the Corporate Trust
Office; (d) in the case of Indenture Trustee, at the Corporate Trust
Office; (e) in the case of Moody's, to Moody's Investors Service, Inc., 99
Church Street, New York, New York 10004, Attention of Asset Backed
Securities Group; and (f) in the case of Standard & Poor's, to Standard &
Poor's, 26 Broadway (15th Floor), New York, New York 10004, Attention of
Asset Backed Surveillance Department. Any notice required or permitted to
be mailed to a Noteholder or Certificateholder shall be given by first
class mail, postage prepaid, at the address of
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such Person as shown in the Note Register or the Certificate Register, as
applicable. 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 or Certificateholder shall receive such notice.
SECTION 10.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 3.3, 4.1, 6.4 and 7.3 and
as provided in the provisions of this Agreement concerning the resignation
of Servicer, this Agreement may not be assigned by Company or Servicer
without the prior written consent of Owner Trustee, Indenture Trustee, and
unless the Rating Agency Condition shall have been satisfied.
SECTION 10.5. Limitations on Rights of Others. The provisions of
this Agreement are solely for the benefit of Company, Servicer, Issuer,
Owner Trustee, Indenture Trustee and for the benefit of the
Certificateholders and the Noteholders, as third-party beneficiaries, 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 Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 10.6. 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
create or render unenforceable such provision in any other jurisdiction.
SECTION 10.7. 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 10.8. 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 10.9. Governing Law. THIS AGREEMENT 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), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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SECTION 10.10. Assignment to Indenture Trustee. Company hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of
a security interest by Issuer to Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and
interest of Issuer in, to and under the Receivables and/or the assignment
of any or all of Issuer's rights and obligations hereunder to Indenture
Trustee.
SECTION 10.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement:
(a) Servicer and Company shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to
Issuer, acquiesce, petition or otherwise invoke or cause Issuer to invoke
the process of any court or government authority for the purpose of
commencing or sustaining a case against Issuer, under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of
Issuer or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of Issuer.
(b) Issuer shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to Company, acquiesce,
petition or otherwise invoke or cause Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against Company, under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of Issuer or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of Company.
SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by The Bank of New York
Trust Company of Florida, N.A., not in its individual capacity but solely
in its capacity as Owner Trustee of Issuer and in no event shall The Bank
of New York Trust Company of Florida, N.A., in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have
any liability for the representations, warranties, covenants, agreements or
other obligations of Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of Issuer. For all purposes of
this Agreement, in the performance of its duties or obligations hereunder
or in the performance of any duties or obligations of Issuer hereunder,
Owner Trustee shall be subject to, and entitled to the benefits of, the
terms and provisions of Articles VI, VII and VIII of the Trust Agreement.
42
<PAGE>
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Chase Manhattan Bank not in its
individual capacity but solely as Indenture Trustee and in no event shall
The Chase Manhattan Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of Issuer or any
other party hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of Issuer.
SECTION 10.13. Further Assurances. Company and Servicer agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by Owner Trustee or
Indenture Trustee more fully to effect the purposes of this Agreement,
including the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of
the UCC of any applicable jurisdiction.
SECTION 10.14. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Owner Trustee,
Indenture Trustee, the Noteholders or the Certificateholders, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges therein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
43
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers
as of the day and year first above written.
COMPASS AUTO RECEIVABLES TRUST
1998-A
By: THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A., a national banking
association, not in its individual capacity,
but solely as Owner Trustee
By: /s/ David G. Sampson
--------------------------------------
Name: David G. Sampson
Title: Vice President
ASSET BACKED SECURITIES
CORPORATION, Company
By: /s/ Philip N. Weingord
--------------------------------------
Name: Philip N. Weingord
Title: Vice President
COMPASS BANK, an Alabama state
banking corporation
By: /s/ Garrett R. Hegel
--------------------------------------
Name: Garrett R. Hegel
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK,
a New York banking corporation, not in its
individual capacity but solely as Indenture
Trustee
By: /s/ Jo Ann Manieri
--------------------------------------
Name: Jo Ann Manieri
Title: Trust Officer
S-1
<PAGE>
SCHEDULE A
Schedule of Receivables
-----------------------
Delivered on Disk to Indenture Trustee and Owner Trustee
Schedule A-1
<PAGE>
SCHEDULE B
Location of Receivables Files
-----------------------------
The Receivables sold by each Seller to Company and sold by Company to
Issuer are located at the offices of Servicer listed below.
Compass Bank
701 South 32nd
Birmingham, Alabama 35233
Schedule B-1
<PAGE>
EXHIBIT A Attached
------------------
Form of Servicer's Report and Monthly Certificateholder
--------------------------------------------------------
and Noteholder Statement
------------------------
Exhibit A-1
<PAGE>
Exhibit 10.3
SECURITY AGREEMENT
June 30, 1998
Ladies and Gentlemen:
Please refer to (i) the First Tier Receivables Purchase Agreement, dated
as of the date hereof (the "First Tier Receivables Purchase Agreement"), between
Compass Bank, an Alabama state banking corporation ("Compass Bank"), Compass
Bank, a Texas state bank ("Compass Bank-Texas"; and together with Compass Bank,
the "Sellers"), and Compass Auto Receivables Corporation, a Delaware corporation
("Compass Auto"), (ii) the Second Tier Receivables Purchase Agreement, dated as
of June 24, 1998 (the "Second Tier Receivables Purchase Agreement"), between
Compass Auto and Asset Backed Securities Corporation (the "Company"), (iii) the
Sale and Servicing Agreement, dated as of the Closing Date (the "Sale and
Servicing Agreement"), between the Company, Compass Auto Receivables Trust 1998-
A, an Alabama business trust (the "Trust"), Compass Bank and The Chase Manhattan
Bank, in its capacity as indenture trustee (the "Indenture Trustee"), and (iv)
the Indenture, dated as of the date hereof (the "Indenture"), between the Trust
and the Indenture Trustee. Capitalized terms used herein but not otherwise
defined herein shall have the definitions assigned to such terms in Appendix X
to the Sale and Servicing Agreement.
Pursuant to the First Tier Receivables Purchase Agreement, each Seller
will, on the date hereof, transfer to Compass Auto all of such Seller's right,
title and interest in and to the Collateral (as defined below). Compass Auto
will in turn transfer the Collateral to the Company pursuant to the Second Tier
Receivables Purchase Agreement. Pursuant to the Sale and Servicing Agreement,
the Company will transfer the Collateral to the Trust, which in turn will grant
a security interest in such Collateral to the Indenture Trustee for the benefit
of the Holders of the Notes to be issued by the Trust.
It is each Seller's intent that the transfer to Compass Auto pursuant to
the First Tier Receivables Purchase Agreement be an absolute sale, and not
merely a pledge, of the Collateral. If, however, such transfer is for any
purpose construed not to be an absolute sale, then such transfer, together with
the other transactions effected by the Basic Documents, shall constitute a loan
to each
<PAGE>
Seller from the Noteholders. The terms of such loan shall entitle each
Noteholder to receive payment in full of the Secured Obligations (as defined
below) owed to it.
To secure the Secured Obligations, each Seller hereby grants to the
Indenture Trustee, in trust for the benefit of all Secured Parties (as defined
below), a security interest in and to, all right, title, and interest of such
Seller in and to (i) the Receivables, (ii) all monies received thereon and
allocable to principal on and after the Cutoff Date, (iii) all monies received
thereon and allocable to interest on and after July 1, 1998, (iv) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and, to the extent permitted by law, any accessions thereto, (v) any
proceeds with respect to the Receivables from claims on any Insurance Policies
covering Financed Vehicles or the Obligors, (vi) any recourse against Dealers
with respect to the Receivables under the Dealer Agreements and (vii) any and
all proceeds of the foregoing (collectively, the "Collateral); provided, that
no holder of a Secured Obligation shall be entitled to receive proceeds of the
security interest created hereunder in excess of the amount such Person would
have received if the transfer of Collateral under the First Tier Receivables
Purchase Agreement were determined to be an absolute sale of the Collateral by
the Sellers to Compass Auto.
"Secured Obligations" means (i) the rights of each Secured Party to be paid
its share of the Noteholders' Principal Distributable Amount under the
Indenture, interest on the Notes held by it at the rate specified in the
Indenture, and any other amounts owed to it under the terms of the Indenture,
and (ii) all other obligations of each Seller under the Basic Documents if such
obligations are to or for the benefit of any Secured Party.
"Secured Parties" means all Noteholders, excluding in each case any such
Person that is an Affiliate of a Seller.
Each Seller agrees that the Indenture Trustee (for the benefit of the
Secured Parties) shall have all of the rights of a secured creditor under the
New York Uniform Commercial Code. Additionally, each Seller agrees that the
Indenture Trustee shall have all of the rights with respect to the foregoing
collateral that the Indenture Trustee would have under the Indenture, the First
Tier Receivables Purchase Agreement and the other Basic Documents.
-2-
<PAGE>
This letter agreement 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 shall be
determined in accordance with such laws.
COMPASS BANK, an Alabama state
banking corporation
/s/ Garrett R. Hegel
By:_____________________________________
Name: Garrett R. Hegel
Title: Chief Financial Officer
COMPASS BANK, a Texas state bank
/s/ Garrett R. Hegel
By:_____________________________________
Name: Garrett R. Hegel
Title: Executive Vice President and Treasurer
S-1
<PAGE>
Acknowledged and Agreed as of the date
first written above:
COMPASS AUTO RECEIVABLES CORPORATION
/s/ Richard O. Hughes
By:___________________________________
Name: Richard O. Hughes
Title: Vice President
ASSET BACKED SECURITIES CORPORATION
/s/ Philip N. Weingord
By:___________________________________
Name: Philip N. Weingord
Title: Vice President
COMPASS AUTO RECEIVABLES TRUST 1998-A
By: The Bank of New York Trust Company of
Florida, N.A., a national banking association,
not in its individual capacity but solely as
Owner Trustee
/s/ David G. Sampson
By:___________________________________
Name: David G. Sampson
Title: Vice President
THE CHASE MANHATTAN BANK, a New York
banking corporation, not in its individual capacity
but solely as Indenture Trustee
/s/ Jo Ann Manieri
By:___________________________________
Name: Jo Ann Manieri
Title: Trust Officer
S-2
