Execution Copy
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AUTOBOND MASTER FUNDING CORPORATION,
as Company
AUTOBOND ACCEPTANCE CORPORATION,
as Administrator
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
---------------
TRUST INDENTURE
Dated as of June 30, 1997
---------------
Auto Loan-Backed Notes
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TRUST INDENTURE
This TRUST INDENTURE dated as of June 30, 1997, is among AUTOBOND
MASTER FUNDING CORPORATION, a Nevada corporation, as Company (the "Company"),
AUTOBOND ACCEPTANCE CORPORATION, a Texas corporation, as Administrator (the
"Administrator") and individually ("AutoBond"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company is a bankruptcy-remote corporation formed for
the sole purpose of acquiring from AutoBond Funding Corporation II ("AutoBond
Funding II") certain automobile finance contracts ("Auto Loans") acquired by
AutoBond and certain other rights and properties pertaining thereto;
WHEREAS, the Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its
debentures, notes or other evidences of indebtedness (herein called the
"Notes"), to be issued in one or more Series as in this Indenture provided;
WHEREAS, the Company intends that the Trustee, on behalf of the
Trust Estate (as defined herein) for the benefit of the Noteholders and the
Company, will take assignment of the Auto Loans and related rights and benefits,
including those under any collateral security agreement, insurance, guarantees
and dealer agreements from the Company simultaneously with the acquisition of
such Auto Loans by the Company; and
WHEREAS, the Administrator has been requested and is willing to
direct the Trustee to make certain distributions of funds to the Noteholders,
the Company and certain creditors in connection with amounts received as
proceeds from the Trust Estate and to otherwise perform certain administrative
functions in connection with the transactions contemplated hereby.
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of all Noteholders and the Company, as follows:
GRANTING CLAUSE
The Company hereby Grants to the Trustee for inclusion in the Trust
Estate on each Assignment Date, for the benefit and security of the Noteholders,
all of the Company's
right, title and interest in and to (a) the Transferred Assets specified in each
Collateral Assignment, including the Company's security interests in the
Financed Vehicles; (b) all moneys from time to time on deposit in any Trust
Accounts, including all investments and income from the investment of such
moneys, and (c) all proceeds of the conversion, whether voluntary or
involuntary, of any of the foregoing into cash or other property. Such Grant is
made in trust to secure (i) the payment of all amounts due on the Notes of each
Series, (ii) the payment of all other sums payable under this Indenture with
respect to the Notes and (iii) compliance with the provisions of this Indenture
with respect to the Notes.
The Trustee acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof, and agrees to perform the duties herein
required to the best of its ability and to the end that the Trust Estate and the
interests of the Noteholders and the Company may be adequately and effectively
protected as hereinafter provided.
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise
require, the following terms have the meanings set forth below for all purposes
of this Indenture, and the definitions of such terms are applicable to the
singular as well as to the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
Act: with respect to any Noteholder, as defined in Section 1.04.
Acquisition Agreement: the Amended and Restated Loan Acquisition,
Sale and Contribution Agreement, dated as of February 1, 1997, between AutoBond
and AutoBond Funding II.
Administrator: AutoBond and any permitted successor to such
functions in accordance, and in connection with, this Indenture in its capacity
as Administrator hereunder, and if AutoBond is acting as Collection Agent under
the Servicing Agreement, also in its capacity as Collection Agent.
Administrator Duties: specified in Section 5.03.
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Administrator Order: a written order or request delivered to the
Trustee and signed in the name of the Administrator by an Authorized Officer.
Adverse Claim: any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the interests created under this Indenture in
favor of the Trustee and the Noteholders.
Affiliate: of any specified Person, means any other Person which
directly or indirectly controls, or is controlled by, or is under common control
with, such specified Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
APR: the annual percentage rate of an Auto Loan as determined
according to the related contractual documents with the Obligor thereof.
Assignment: collectively, with respect to any Receivable, the
related Sale Assignment and any Collateral Assignment.
Assignment Date: each date when Auto Loans are transferred to the
Trust Estate.
Authorized Officer: with respect to any corporation or partnership,
the Chairman of the Board, the President, any Vice President, the Secretary, the
Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation or the general partner of such partnership
specifically authorized in resolutions of the Board of Directors of such
corporation to sign agreements, instruments or other documents in connection
with this Indenture on behalf of such corporation or partnership, as the case
may be.
AutoBond: AutoBond Acceptance Corporation, a Texas corporation.
AutoBond Funding II: AutoBond Funding Corporation II, a Nevada
corporation.
AutoBond Program Manual: the AutoBond Program Manual (including the
Credit and Collection Policies) attached hereto as Exhibit A, as modified from
time to time, with notice of each such modification to each Rating Agency, the
Servicer and the Trustee.
Auto Loan: set forth in the recitals hereto.
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Automobile Loan Sale Agreement: any agreement under which AutoBond
purchases Auto Loans from an Originator.
Board of Directors: either the board of directors of the Company or
any duly authorized committee of that board.
Board Resolution: a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
Business Day: any day other than a Saturday or a Sunday, or another
day on which banks in the City of New York, or the City of Minneapolis,
Minnesota or in Texas (or such other cities and states in which the Corporate
Trust Office, the principal administrative offices of the Administrator, Note
Registrar and Transfer Agent and Paying Agent or the principal offices of the
Servicer or the Administrator are subsequently located, as specified in writing
by the Administrator to the other parties hereto) are required, or authorized by
law, to close.
Cash Reserve Account: the account or accounts has that name
established and maintained by the Trustee pursuant to Section 3.03.
Class: with respect to a Series of Notes, each class of Notes so
designated within such Series.
Collateral Assignment: a certificate of assignment by the Company to
the Trustee substantially in the form of Exhibit B giving notice of, and
evidencing, the transfer of Auto Loans by the Company to the Trustee on behalf
of the Trust Estate.
Collection Account: the account or accounts by that name established
and maintained by the Trustee pursuant to Section 3.02.
Collection Agent: means AutoBond, in its capacity as Collection
Agent under a Servicing Agreement and hereunder.
Commission: the Securities and Exchange Commission.
Company: the Person named as the "Company" in the first paragraph of
this instrument.
Company Order or Company Request: a written order or request
delivered to the Trustee and signed in the name of the Company by an Authorized
Officer.
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Company's Interest: the interest of the Company in the Trust Estate,
including cash flows payable to in respect of any Series.
Corporate Trust Office: the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Indenture is located at the
address set forth in Section 12.05.
Credit and Collection Policies: written credit procedures and
policies consistent with the requirements of this Indenture and the Servicing
Agreement, in effect from time to time, as formulated by the Administrator and
comprising part of AutoBond Program Manual.
Cut-Off Date: with respect to the Receivables specified in any
Transfer, the date specified in the related Assignment.
Dealer: each automobile dealer with whom AutoBond or an Originator
has entered into a Dealer Agreement.
Dealer Agreement: each agreement between a Dealer and either
AutoBond or an Originator which provides for, among other things, origination of
the Receivables.
Debt: for any Person, (a) indebtedness of such Person for borrowed
money or credit extended, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such Person
to pay the deferred purchase price of property or services, (d) obligations of
such Person as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (e) obligations secured by any lien or
other charge upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations, (f)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above,
and (g) liabilities in respect of unfunded vested benefits under plans covered
by ERISA. For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire Debt of any other Person, or to purchase, sell
or lease, as lessee or lessor, property or services, in any such case primarily
for the purpose of enabling another Person to make payment of Debt, or to make
any payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with Debt of such Person.
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Defaulted Auto Loan: an Auto Loan (a) which by its terms has more
than 10% of any installment of principal or interest which is 60 or more days
contractually past due and (b) which is not a Liquidated Receivable.
Defaulted Receivable: as of the end of any Due Period, (a) a
Defaulted Auto Loan, (b) a Receivable as to which the proceeds of the sale of
the related Financed Vehicle have been received by the Administrator or (c) a
Receivable as to which the Administrator has determined (or should have
determined in accordance with the Credit and Collection Policies) that no
further proceeds other than from the Insurance Policies are expected to be
received or that such Receivable is uncollectible and such determination was
made at or prior to the last day of such Due Period.
Default: any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
Deposit Date: the Business Day immediately preceding each related
Payment Date.
Depositary: with respect to Notes of any Series issuable in whole or
in part in the form of one or more Global Notes, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such Notes as
contemplated by Section 2.01.
Determination Date: the 10th day of each month (or the preceding
Business Day, if such day is not a Business Day), or as otherwise specified for
a Series.
Due Period: as specified for each Series.
Eligible Account: a segregated account, which may be an account
maintained with the Trustee, which is either (a) maintained with a depository
institution or trust company (including the Trustee) whose short term unsecured
debt obligations are rated at least P-1 by Moody's and whose long term unsecured
debt obligations are rated at least A by Fitch and at least A3 by Moody's;
provided, that if only Moody's rates such institution, such single rating shall
suffice, or (b) a segregated trust account or similar account maintained with a
federally or state chartered depository institution with corporate trust powers,
subject to regulations regarding fiduciary funds on deposit substantially
similar to 12 C.F.R. ss.9.10(b) and with a long term debt rating of at least A3
by Moody's.
Eligible Investments: any of the following:
(i) Aaa-rated obligations of, or guaranteed as to the full and
timely payment of principal and interest by, the United States or obligations of
any agency or
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instrumentality thereof, when such obligations are backed by the full faith and
credit of the United States;
(ii) short-term repurchase agreements on obligations specified in
clause (a) having a maturity no greater than the next Payment Date ; provided,
that the short-term debt obligations of the party agreeing to repurchase are
rated no less than F-1 by Fitch and P-1 by Moody's (provided, that if only
Moody's rates such party, such single rating shall suffice);
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company incorporated under the laws of the United States or
any state; provided, that the short-term obligations of such depository
institution or trust company are rated no less than F-1 by Fitch and P-1 by
Moody's (provided, that if only Moody's rates such party, such single rating
shall suffice);
(iv) commercial paper (having original maturities of not more than
30 days) of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition are rated no less than F-1 by
Fitch and P-1 by Moody's (provided, that if only Moody's rates such party, such
single rating shall suffice);
(v) securities of money market funds rated in the highest investment
category by Fitch and Moody's (provided, that if only Moody's rates such fund,
such single rating shall suffice); and
(vi) such other investment grade investments as shall be acceptable
to each Rating Agency and to the holders of at least 75% in aggregate
Outstanding principal amount of the Notes of each affected Series, upon prior
written approval.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Event of Administrator Termination: as specified in the designated
Servicing Agreement.
Event of Default: as defined in Section 6.01, as supplemented with
respect to any Series.
Event of Servicing Termination: as specified in the designated
Servicing Agreement.
Exchange Act: the Securities Exchange Act of 1934, as amended.
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Financed Vehicle: a new or used automobile, van or light-duty truck,
the purchase of which the Obligor financed with an Auto Loan.
Fitch: Fitch Investors Service, L.P., a nationally recognized
statistical rating organization, and any successor thereto.
GAAP: generally accepted accounting principles as in effect in the
United States, consistently applied, as of the date of such application.
Global Note: a Note that evidences all or part of the Notes of any
Series and bears such legend as may be specified as contemplated by Section 2.01
for such Notes.
Grant: grant, bargain, sell, convey, assign, transfer, mortgage,
pledge, create and grant a security interest in and right of set-off against,
deposit, set over and confirm. The Grant of the Trust Estate effected by this
Indenture shall include all rights, powers, and options (but none of the
obligations) of the Company with respect thereto, including, without limitation,
the immediate and continuing right to claim for, collect, receive, and give
receipts for Payments in respect of the Auto Loans and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
judicial proceedings in the name of the Company or otherwise, and generally to
do and receive anything that the Company is or may be entitled to do or receive
thereunder or with respect thereto.
Governmental Authority: the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
Holder: a Person in whose name a Note is registered in the Note
Register.
Indenture: this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular Series of Notes
established as contemplated by Section 2.01.
Insurance Policies: the insurance policies issued by each of the
Insurers to AutoBond (the benefits of which have been assigned to the Trust
Estate as security for the Notes of a designated Series) and listed on Schedule
2 (as modified from time to time).
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Insurers: each of the insurance companies named in the Insurance
Policies.
Intended Tax Characterization: as specified in Section 4.04(b).
Interest Payment Date: as specified with respect to a Series.
Interest Payments: as defined in Section 2.01(c).
Issuance Date: as specified with respect to a Series.
Liquidated Receivable: as specified with respect to a Series.
List of Receivables: a list containing the Required Information with
respect to each Receivable delivered to the Trustee, the Series to which such
Receivable is allocated and certified by a duly authorized officer of the
Company, which is attached hereto as Schedule 1 (as supplemented from time to
time).
Loan Documents: with respect to an Auto Loan (a) the fully executed
original retail installment loan contract and security agreement evidencing such
Auto Loan, including the assignment to AutoBond, (b) the original confirmation
of title, copy of the application for title or letter of guaranty from the
applicable Dealer, as the case may be, for the related Financed Vehicle, (c) a
copy of the credit application, and (d) a copy of an executed agreement to
provide insurance signed by the Obligor, a binder in respect thereof or the
original confirmation of payment of premiums required under the VSI Policy.
Loan File: with respect to any Auto Loan, the original retail
installment loan contract and security agreement evidencing the Auto Loan and
originals or copies of such other documents and instruments relating to such
Auto Loan and the security interest on the selected Financed Vehicle as
specified in the Credit and Collection Policies.
Lockbox: the lockbox established and maintained pursuant to the
Lockbox Operations Agreement.
Lockbox Account: the account at the Lockbox Bank designated for
AutoBond Master Funding Corporation and any Series and maintained pursuant to
the Lockbox Operations Agreement.
Lockbox Bank: as designated with respect to a Series.
Lockbox Operations Agreement: the agreement so designated with
respect to a Series.
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Maturity: with respect to any installment of principal of or
interest on any Note, the date on which such installment is due and payable as
therein or herein provided, whether at the Stated Maturity, by declaration of
acceleration, or otherwise.
Monthly Trustee Fee: for any Payment Date, an amount equal to the
product of the aggregate Unpaid Principal Balance of Receivables at the
beginning of the related Due Period and the Trustee Fee Rate, multiplied by
1/12, plus amounts payable to the Trustee under Section 7.06 but not paid by the
Administrator.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. and any successors thereto.
Net Payoff Balance: in respect of any Precomputed Receivables, the
net payoff less any accrued but unpaid late charges.
Net Principal Balance: with respect to any Precomputed Receivable,
the Net Payoff Balance as of the due date of the last full Scheduled Payment, or
if more recent, the due date of the last periodic payment of principal thereon.
Net Unrealized Amount: (a) with respect to any Liquidated
Receivable, the Unpaid Principal Balance of such Auto Loan minus the sum of (i)
any repossession proceeds allocable to principal actually received on such Auto
Loan, (ii) any insurance proceeds allocable to principal actually received from
a claim with respect to such Auto Loan and (iii) refunds received from the
cancellation of any insurance policies or service contracts with respect to such
Auto Loan, and (b) with respect to any Auto Loan where the related Obligor is in
bankruptcy, the amount of losses allocable to principal incurred thereon.
Noteholder: at any time, any Person in whose name a Note is
registered in the Note Register.
Note Register: as defined in Section 2.03.
Notes: as set forth in the Recitals to this Indenture.
Obligor: with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
Officer's Certificate: with respect to any Person, a certificate
signed by the Chairman of the Board, Vice Chairman of the Board, the President,
a Vice President, the Treasurer, the Secretary, an Assistant Secretary, or the
manager of such Person.
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Opinion of Counsel: a written opinion, which shall be satisfactory
in form and substance to the Trustee, of counsel who may, except as otherwise
expressly provided in this Indenture, be inside or outside counsel for the
Company and who shall be satisfactory to the Trustee and the Rating Agencies.
Original Principal Balance: the Net Principal Balance of a
Precomputed Receivable and otherwise the outstanding Principal Balance of a
Receivable, in each case as of the related Cut-Off Date prior to its assignment
to the Trust Estate.
Originator: any Person, other than AutoBond, that acquires Auto
Loans directly from a Dealer.
Outstanding: with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore irrevocably deposited with the
Trustee in trust for the holders of such Notes; and
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a
Person in whose hands the Note is a valid obligation;
provided, however, that in determining whether the holders of the requisite
percentage of the Outstanding Principal Amount of the Notes have given any
request, demand, authorization, direction, notice, consent, or waiver hereunder,
Notes owned by the Company or any Affiliate of the Company shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded.
Outstanding Principal Amount: the aggregate unpaid principal amount
of the Notes of any Series Outstanding at any time.
Paying Agent: the Trustee.
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Payment Date: the 15th day (or, if such day is not a Business Day,
the next succeeding Business Day) of each month, commencing as so designated
with respect to a Series and ending with the Stated Maturity of such Series.
Payments: for any Receivable for any Due Period, all amounts
received with respect to such Receivable during such Due Period, including,
without limitation, payments (including prepayments) from the relevant Obligor
(including principal, interest, late fees and other charges), payments from
Dealers and warranty rebates, proceeds from any insurance policy, including the
Insurance Policies (other than proceeds applied to the restoration or repair, or
in certain circumstances, replacement, of the related Financed Vehicle),
including amounts which constitute Recoveries on Receivables.
Percentage: means, with respect to a particular Note within a Class,
the percentage obtained by dividing the outstanding principal amount of the
related Note by the aggregate Outstanding Principal Amount of all Notes in such
Class, or with respect to Notes of a Class within a Series, the percentage
obtained by dividing the aggregate outstanding principal amount of the related
Notes of such Class, by the aggregate Outstanding Principal Amounts of such
Series.
Person: any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
Precomputed Receivable: any Auto Loan under which earned interest
(which may be referred to in the Auto Loan as the add-on finance charge) and
principal is determined according to the sum of periodic balances or the sum of
monthly balances or the sum of the digits or any equivalent method commonly
referred to as the "Rule of 78s".
Predecessor Notes: with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.04 in lieu of a lost, destroyed or
stolen Note (or a mutilated Note surrendered to the Trustee) shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note (or a mutilated
Note surrendered to the Trustee).
Principal: with respect to a Note, the amount designated as such.
Principal Balance: of an Auto Loan means, on any date of
determination, the Original Principal Balance minus that portion of all payments
made on or prior to such date allocable to principal; provided that, for every
Due Period following the Due Period with respect to which an Auto Loan is
repurchased by the Administrator in accordance with the
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provisions of Section 11.03 or as to which the Net Unrealized Amount equals the
Unpaid Principal Balance, the Principal Balance shall be deemed to be zero.
Principal Charge-offs: with respect to any Due Period, the aggregate
Net Unrealized Amount experienced for Auto Loans which have become Liquidated
Receivables during such Due Period.
Principal Payments: as defined in Section 2.01(b).
Rating Agency: any nationally recognized statistical organization
rating the Notes of any Series at the request of the Company.
Receivable: a fixed rate fully amortizing closed-end consumer
installment Auto Loan (upon which interest is calculated based upon either a
simple interest basis or the Rule of 78s) arising from the sale of a Financed
Vehicle and assigned to the Trustee by the Company as part of the Trust Estate,
and includes, without limitation, (a) the related Assignment, (b) all security
interests or liens and property subject thereto from time to time purporting to
secure payment by the Obligor thereunder, including, without limitation, the
Financed Vehicle, AutoBond's or an Originator's rights under the related Dealer
Agreement, AutoBond's rights under an Automobile Loan Sale Agreement, and
AutoBond Funding II's rights under the Acquisition Agreements and the Company's
rights under the Sale Agreement, (c) all guarantees, indemnities and warranties,
proceeds of insurance policies (including the Insurance Policies), certificates
of title or other title documentation and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such Auto
Loan, (d) all collections and all related Loan Documents, Loan Files and records
with respect to the foregoing, and (e) all proceeds of any of the foregoing.
Record Date: with respect to any Payment Date, the last day of the
calendar month immediately preceding such Payment Date.
Records: all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Collection Agent, the Servicer or by or on behalf of the
Company with respect to Receivables and the related Obligors.
Recoveries on Receivables: for any Due Period, all amounts received
by the Servicer, the Administrator, the Company or the Trustee on behalf of the
Trust Estate during such Due Period with respect to (a) Defaulted Receivables
from any source, including, without limitation, net proceeds from the
repossession and liquidation of Financed Vehicles, proceeds of insurance
(including insurance maintained by Obligors and the Insurance
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Policies), and (b) the Repurchase Price of Receivables repurchased by AutoBond
pursuant to Section 11.03.
Reimbursable Administrator Expenses: with respect to any Payment
Date, all reasonable and customary out-of-pocket fees and expenses of third
parties incurred by the Administrator (including fees and expenses of the
Trustee paid by the Administrator under Section 7.06 or otherwise, and expenses
related to financing statements and titles required to be paid by the
Administrator) in connection with their respective repossession and liquidation
activities, including, without limitation, fees of attorneys, appraisers, third
party collateral managers and others (who shall have been retained by the
Administrator, in accordance with the Servicing Agreement) for the Due Period
immediately preceding such Payment Date, but not including expenses paid net of
recoveries.
Related Documents: with respect to any Series each Sale Assignment,
each Collateral Assignment, any Automobile Loan Sale Agreement, the Sale
Agreement, each Acquisition Agreement, the Insurance Policies, the Servicing
Agreement and all documents and instruments required to be delivered hereunder
or thereunder.
Repurchase Price: for any repurchase on a Payment Date of any Auto
Loan which AutoBond is obligated to repurchase in accordance with the provisions
of Section 3.03, the sum of (a) the Unpaid Principal Balance of such Receivable
as of the end of the preceding Due Period, plus (b) an amount equal to the
amount of interest accrued on such Unpaid Principal Balance at the greater of
the APR or the Note Rate from the last day to which interest has been paid and
credited to the Lockbox or the Collection Account with respect to such
Receivable through the last day of such Due Period, minus (c) the amount of any
principal deposited in the Lockbox or the Collection Account in respect of such
Auto Loan since the end of such Due Period.
Required Information: with respect to a Receivable as of the related
Cut-Off Date, (a) the name of the Obligor and a description of the Financed
Vehicle, (b) the Original Principal Balance and original term, (c) the maturity
date of such Receivable, (d) the APR, (e) the state of origination (f) the
dollar amount and the number of Scheduled Payments and (g) whether such
Receivable calculates interest based upon a simple interest basis or the Rule of
78s.
Sale Agreement: the Loan Sale and Contribution Agreement, dated as
of June 30, 1997 among AutoBond, AutoBond Funding II and the Company, providing
for the sale or contribution of the Receivables to the Company.
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Sale Assignment: each assignment executed by AutoBond Funding II in
favor of the Company from time to time pursuant to the Sale Agreement conveying
its interest in the Receivables to the Company.
Scheduled Payment: a payment due on an Auto Loan in accordance with
its terms.
Series: each Series of Notes designated as such pursuant to this
Indenture.
Securities Act: the Securities Act of 1933, as amended.
Servicer: the servicer designated as such, under the Servicing
Agreement and any successor thereto in accordance with this Indenture and the
Servicing Agreement.
Servicer Duties: specified in Section 2.04(a) of the Servicing
Agreement.
Servicer Order: a written order or request delivered to the Trustee
and signed in the name of the Servicer by an Authorized Officer.
Servicing Agreement: as designated with respect to a Series.
Stated Maturity: the date on which the entire remaining unpaid
Outstanding Principal Amount of a Class of Notes is due and payable.
Subservicer: any Person with whom the Servicer enters into a
Subservicing Agreement.
Subservicing Agreement: any written contract between the Servicer
and any Subservicer, relating to servicing and collection of Receivables, in
such form as has been approved by the Company, the Trustee and the Administrator
pursuant to the Servicing Agreement.
Subsidiary: as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
Successor Servicer: specified in Section 2.13(a) of the Servicing
Agreement.
Target Reserve Percentage: as so designated with respect to a
Series.
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Tax or Taxes: all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, profits, withholding,
excise, property, sales, use, occupation and franchise taxes (including, in each
such case, any interest, penalties or additions attributable to or imposed on or
with respect to any such taxes, charges, fees or other assessments) imposed by
the United States, any state or political subdivision thereof, any foreign
government or any other jurisdiction or taxing authority.
Title Document: with respect to any Auto Loan and the related
Financed Vehicle, either (a) the certificate of title for, or other evidence of
a security interest in (including, without limitation, dealer guaranty or proof
of application for notice of lien), such Financed Vehicle or (b) with respect to
any jurisdiction in which the certificate of title or other evidence of
ownership is not issued to the holder of a lien, evidence of the security
interest in the Financed Vehicle, in each case issued by the department of motor
vehicles or other appropriate Governmental Authority in the jurisdiction in
which such Financed Vehicle or the Obligor is located.
Transfer: as specified in Section 4.02(a).
Transfer Notice: as specified in Section 4.02(b).
Transferred Assets: the Receivables, all monies due or paid in
respect of the Receivables after the related Cut-off Date, all rights under the
VSI Policy in respect of the Receivables (but not the obligation to make any
payment thereunder to the Insurer or for taxes on premiums paid or payable
thereon), all rights of the Company under the Acquisition Agreements, the
Servicing Agreement, each Sale Assignment and the Sale Agreement, including
AutoBond's assigned rights under the Dealer Agreements and any Automobile Loan
Sale Agreement and AutoBond Funding II's rights under the Acquisition Agreement,
all documents contained in the Loan Files relating to the Receivables, all
monies due or to become due and all amounts received with respect thereto and
all related rights and benefits (but not obligations) and all proceeds of the
foregoing.
Trust Accounts: the Collection Account, the Cash Reserve Account and
any other account so designated with respect to such Series.
Trust Estate: all money, instruments and other property and rights
subject to the lien of this Indenture, including all proceeds thereof.
Trustee: the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Person shall have become the Trustee pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Person; provided, that the provisions of Section 7.07 and
Section 8.11, as applicable to any Person at
16
any time serving as Trustee hereunder, shall survive the termination of such
Person's status as Trustee hereunder and the succession of any other Person to
such status.
Trustee Fee Rate: 0.20% per annum, unless otherwise designated with
respect to a Series.
Trust Indenture Act: the Trust Indenture Act of 1939 as in effect on
the date on which this Indenture is qualified under the Trust Indenture Act,
except as provided in Section 9.06 hereof.
UCC: the Uniform Commercial Code as in effect in the relevant state.
Unpaid Principal Balance: with respect to any Auto Loan as of any
Determination Date, (a) for an Auto Loan bearing interest calculable on a simple
interest basis, the unpaid principal amount for such Auto Loan or (b) for a
Precomputed Receivable, the Net Principal Balance, in each case as of the end of
the most recent Due Period; provided that, for any Auto Loan where the Net
Unrealized Amount equals the Unpaid Principal Balance, such Unpaid Principal
Balance shall thereafter equal zero (other than for purposes of calculating the
Repurchase Price, Net Unrealized Amounts and other items designated for such
Series.
VSI Policy: the Vendor's Single Interest Insurance Policy issued by
each of Insurers, as listed on Schedule 2 (as modified from time to time) and
delivered to the Trustee, insuring against risk of physical damage on the
Financed Vehicles, and designated as applicable for a particular Series.
SECTION 1.02. Compliance Certificates and Opinions.
Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by the Company to the Trustee to take
any action under any provision of this Indenture, other than any request that
(a) the Trustee authenticate the Notes specified in such request, (b) the
Trustee invest moneys in any of the Trust Accounts pursuant to the written
directions specified in such request, or (c) the Trustee pay moneys due and
payable to the Company hereunder to the Company's assignee specified in such
request, the Trustee shall require the Company to furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of
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satisfaction of the conditions precedent thereto is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
SECTION 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company delivered to
the Trustee may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such officer's certificate or
opinion and any Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company as to such factual matters unless such
officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any Opinion of Counsel may be based on the written opinion of
other counsel, in which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Company shall
deliver any document as a condition of the granting of such application, or as
evidence of compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective
date of such certificate or report (as the case may be), of the facts and
opinions stated in such document shall in such case be conditions precedent to
the right of the Company to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed to
affect the Trustee's right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Section 7.01(b).
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Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default, Event of
Administrator Termination or Event of Servicing Termination is a condition
precedent to the taking of any action by the Trustee at the request or direction
of the Company, then, notwithstanding that the satisfaction of such condition is
a condition precedent to the Company's right to make such request or direction,
the Trustee shall be protected in acting in accordance with such request or
direction if it does not have knowledge of the occurrence and continuation of
such Default or Event of Default, Event of Administrator Termination or Event of
Servicing Termination. For all purposes of this Indenture, the Trustee shall not
be deemed to have knowledge of any Default or Event of Default, Event of
Administrator Termination or Event of Servicing Termination nor shall the
Trustee have any duty to monitor or investigate to determine whether a default
has occurred (other than an Event of Default of the kind described in Section
6.01(a)), Event of Administrator Termination or Event of Servicing Termination
unless a Responsible Officer of the Trustee shall have actual knowledge thereof
or shall have been notified in writing thereof by the Company, the Servicer, or
any Noteholder.
SECTION 1.04. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 7.01) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
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(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the holder of any Note shall bind every future holder of
the same Note and the holder of every Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder and the revisions
pursuant hereto for the benefit of such Noteholder; provided that nothing
contained in this Section 1.04(d) shall be deemed to confer upon the Trustee any
duty or power to vote on behalf of the Noteholders with respect to any matter on
which the Noteholders have a right to vote pursuant to the terms of this
Indenture.
SECTION 1.05. Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any
event, or the mailing of any report to Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy to each Noteholder
affected by such event or to whom such report is required to be mailed, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to Noteholders
is mailed, neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed, to any particular Noteholder shall affect the
sufficiency of such notice or report with respect to other Noteholders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
(b) In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.06(a), of any event or any report to
Noteholders when such notice or report is required to be delivered pursuant to
any provision of this Indenture, then such notification or delivery as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.
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SECTION 1.06. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 1.07. Successors and Assigns.
All covenants and agreements in this Indenture by each of the
Company, the Administrator or the Trustee shall bind its respective successors
and permitted assigns, whether so expressed or not.
SECTION 1.08. GOVERNING LAW.
THIS TRUST INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. UNLESS MADE
APPLICABLE IN A SUPPLEMENT HERETO, THIS TRUST INDENTURE IS NOT SUBJECT TO THE
TRUST INDENTURE ACT OF 1939 AND SHALL NOT BE GOVERNED THEREBY AND CONSTRUED IN
ACCORDANCE THEREWITH.
SECTION 1.09. Legal Holidays.
In any case where any Payment Date or the Stated Maturity or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) such payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such Payment Date, Stated Maturity, or other date on which principal of
or interest on any Note is proposed to be paid, provided that no interest shall
accrue for the period from and after such Payment Date, Stated Maturity, or any
other date on which principal of or interest on any Note is proposed to be paid,
as the case may be, until such next succeeding Business Day.
SECTION 1.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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SECTION 1.11. Inspection.
The Company agrees that, on reasonable prior notice, it will permit
the representatives of the Trustee or any Noteholder holding Notes evidencing at
least 25% of the Outstanding Principal Amount of the Notes of any Series, during
the Company's normal business hours, to examine all of the books of account,
records, reports and other papers of the Company, to make copies thereof and
extracts therefrom, and to discuss its affairs, finances and accounts with its
officers, employees and independent accountants (and by this provision the
Company hereby authorizes its accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing or evaluating the
financial condition or affairs of the Company or the performance of and
compliance with the covenants and undertakings of the Company and the
Administrator in this Indenture, the Sale Agreement and the Servicing Agreement
or any of the other documents referred to herein or therein. Any expense
incident to the exercise by the Trustee at any time or any Noteholder during the
continuance of any Default or Event of Default, of any right under this Section
1.12 shall be borne by the Company. Nothing contained herein shall be construed
as a duty of the Trustee to perform such inspection.
SECTION 1.12. Survival of Representations and Warranties.
The representations, warranties and certifications of the Company
made in this Indenture or in any certificate or other writing delivered by the
Company pursuant hereto shall survive the authentication and delivery of the
Notes hereunder.
SECTION 1.13. Security Forms.
The Notes of each Series shall be in such form as shall be
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. If the form of Notes of any Series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 2.03 for the
authentication and delivery of such Notes.
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The definitive Notes shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Notes, as evidenced by their execution of such
Notes.
ARTICLE 2.
THE NOTES
SECTION 2.01. General Provisions.
(a) Amount Unlimited; Issuable in Series; Denominations. The
aggregate principal amount of Notes which may be authenticated and delivered
under this Indenture is unlimited.
The Notes may be issued in one or more Series. Pursuant to an
Exchange permitted under Section 13.06, there shall be established in one or
more indentures supplemental hereto, prior to the issuance of Notes of any
Series (other than the Variable Funding Notes, Series A, established pursuant to
Article 13),
(1) the title of the Notes of the Series (which shall
distinguish the Notes of the Series from Notes of any other Series)
and the designation of each Class, if any, within such Series;
(2) any limit upon the aggregate principal amount of the Notes
of the Series which may be authenticated and delivered under this
Indenture (except for Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Notes of the Series pursuant to Section 2.04, 2.05 [9.06] or
[1107] and except for any Notes which, pursuant to Section 2.02, are
deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Note of the Series
shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Notes) is registered at the
close of business on the Record Date for such interest;
(4) the Payment Date or Dates on which the principal of any
Notes of the Series is payable and the amount of principal payable
on such date or dates;
(5) the rate or rates at which any Notes of the Series shall
bear interest, if any, the date or dates from which any such
interest shall accrue,
23
the Interest Payment Dates on which any such interest shall be
payable and the Record Date for any such interest payable on any
Interest Payment Date;
(6) the designation of the Lockbox Account and Transferred
Assets specific to such Series;
(7) the designation of Trust Assets allocable to such Series
and the Cut-off Date or Dates applicable thereto;
(8) any form of credit enhancement, including surety bonds,
letters of credit, derivative contracts, guarantees or cash reserve
accounts applicable to such Series (as required by the applicable
Rating Agencies);
(9) the priority of payments to Noteholders of such Series and
to the Trustee, the Servicer, the Collection Agent, any providers of
credit enhancement, liquidity or hedging contracts, the Company and
any other party with an interest in the proceeds of the allocated
Trust Assets;
(10) the applicable Servicing Agreement and the Servicer and
Collection Agent thereunder, if other than AutoBond;
(11) the Trustee;
(12) representations and warranties of the Company with
respect to the allocated Trust Assets, as customarily required for
such Series;
(13) the place or places where the principal of and any
premium and interest on any Notes of the Series shall be payable;
(14) if other than denominations of $100,000 and any integral
multiple of $1,000 in excess thereof, the denominations in which any
Notes of the Series shall be issuable;
(15) the forms of the Notes of such Series;
(16) if applicable, that any Notes of the Series shall be
issuable in whole or in part in the form of one or more Global Notes
and, in such case, the respective Depositaries for such Global
Notes, the form of any legend or legends which shall be borne by any
such Global Security and any circumstances in addition to or in lieu
of those set forth in Clause (2) of the last paragraph of Section
____ in which any such Global Security may be
24
exchanged in whole or in part for Notes registered, and any transfer
of such Global Security in whole or in part may be registered, in
the name or names of Persons other than the Depositary for such
Global Security or a nominee thereof;
(17) any addition to or change in the Events of Default which
applies to any Notes of the Series and any change in the right of
the Trustee or the requisite Holders of such Notes to declare the
principal amount thereof due and payable pursuant to Section 6.02 or
to liquidate all or a portion of the Trust Estate (in each case,
only to the extent customarily required for such a Series);
(18) any addition to or change in the covenants which applies
to Notes of the Series (in each case, only to the extent customarily
required for such a Series); and
(19) any other terms of the Series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 9.02).
(b) Denominations. The Notes of each Series shall be issuable only
in registered form without coupons and only in such denominations as shall be
specified as contemplated by Section 2.01(a). In the absence of any such
specified denomination with respect to the Notes of any Series, the Notes of
such Series shall be issuable in denominations of $1,000 and any integral
multiple thereof.
(c) Principal Payments; Clean-up Call. For each Payment Date,
payments of principal (the "Principal Payments") on the Notes will be made in
accordance with Sections 3.04 or 6.06, as applicable. Except as otherwise
provided in Section 6.02, no part of the principal of any Note shall be paid
prior to the Payment Date on which such principal is due in accordance with the
preceding provisions of this Section 2.01(b), except that, upon the
Administrator's direction, the Company may redeem the Notes of any Series in
their entirety, without premium, as of any Payment Date on which the sum of the
Outstanding Principal Amount of the Notes of such Series is less than or equal
to ten percent (10%) of the initial Outstanding Principal Amount of the Notes of
such Series (after giving effect to all Principal Payments on such Payment
Date). The Administrator will give notice of any such redemption to each
Noteholder and the Trustee at least 30 days before the Payment Date fixed for
such prepayment by certified mail return receipt requested, hand delivery or
overnight courier. Notice of such prepayment having been so given, the remaining
unpaid principal as of the Payment Date fixed for prepayment together with all
interest accrued and unpaid to such Payment Date, shall become due and payable
on such Payment Date.
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(d) Interest Payments. For each Payment Date, the interest due and
payable (the "Interest Payments") with respect to any Series of Notes will be
the interest that has accrued on the Notes during the previous Due Period, plus
unpaid interest from prior Due Periods, at the designated interest rates.
Interest Payments will be made in accordance with Sections 3.04 and 6.06, as
applicable. Interest will be calculated as designated with respect to a Series.
SECTION 2.02. Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the Company by
its Chairman or Vice Chairman.
(b) Any Note bearing the signature of an individual who was at the
time of execution thereof a proper officer of the Company shall bind the
Company, notwithstanding that such individual ceases to hold such office prior
to the authentication and delivery of such Note or did not hold such office at
the date of such Note.
(c) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Each Note shall be dated the date of
its authentication.
(d) The Notes may from time to time be executed by the Company and
delivered to the Trustee for authentication together with a Company Request to
the Trustee directing the authentication and delivery of such Notes and
thereupon the same shall be authenticated and delivered by the Trustee in
accordance with such Company Request.
SECTION 2.03. Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust Office
a register (the "Note Register") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
No transfer of any Note may be made unless that transfer is made
pursuant to an effective registration statement under the Notes Act and an
effective registration or a qualification under applicable state securities
laws, or is made in a transaction that does not require such registration or
qualification because the transfer satisfies one of the following:
26
(i) such transfer is in compliance with Rule 144A under the Notes Act, to a
person who the transferor reasonably believes is a Qualified Institutional Buyer
(as defined in Rule 144A) that is purchasing for its own account or for the
account of a Qualified Institutional Buyer and to whom notice is given that such
transfer is being made in reliance upon Rule 144A under the Notes Act as
certified by such transferee in a letter in the form of Exhibit __ hereto; (ii)
after the appropriate holding period, such transfer is pursuant to an exemption
from registration under the Notes Act provided by Rule 144 under the Notes Act;
(iii) such transfer is to a transferee who is an accredited investor in a
transaction exempt from the registration requirements of the Notes Act, in each
case in accordance with any applicable securities laws of any State of the
United States or (iv) such transfer is otherwise exempt from the registration
requirements of the Notes Act. The Trustee will require, in order to assure
compliance with such laws, that the Noteholder's prospective transferee referred
to in the preceding clauses (iii) or (iv) deliver an investment letter
certifying to the Company and the Trustee as to the facts surrounding such
transfer in the form of Exhibit __ hereto. Except in the case of a transfer of
Notes to a transferee referred to in the preceding clause (i) or, in general, a
transfer that is to be made after two years from the Issuance Date, the
Administrator shall require an opinion of counsel satisfactory to it to the
effect that such transfer may be made pursuant to an exemption from the Notes
Act without such registration (which opinion of counsel shall not be an expense
of the Trustee, the Administrator or the Company). None of the Company, the
Administrator or the Trustee is obligated to register or qualify the Notes under
the Notes Act or any other securities law or to take any action not otherwise
required under this Indenture to permit the transfer of any Note without
registration.
Neither the Trustee nor the Note Registrar shall effect the
registration of transfer of any Note, if after giving effect to such transfer,
the Notes of such Series would be held by more than ninety-eight Noteholders.
(b) Subject to Section 2.03(a), upon surrender for registration of
transfer of any Note at the office of the Company designated pursuant to Section
8.02 for such purpose, the Company shall execute and the Trustee upon request
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate original principal amount.
(c) Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer
or exchange of Notes, but the Company or the Trustee may require payment by the
transferor
27
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 9.05 not involving any transfer.
(e) The Administrator agrees to cause the Company, and the Company
agrees, to provide such information as required under Rule 144A under the Act so
as to allow resales of Notes to Qualified Institutional Buyers in accordance
herewith.
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefore a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of actual notice
to the Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Company in its discretion may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this Section,
the Company or the Trustee may require the payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed as
a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section 2.04 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
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(f) The provisions of this Section 2.04 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.05. Payment of Interest and Principal; Rights Preserved.
(a) Any installment of interest or principal, payable on any Note
that is punctually paid or duly provided for by or on behalf of the Company on
the applicable Payment Date shall be paid to the Person in whose name such Note
was registered at the close of business on the Record Date for such Payment Date
by check mailed to the address specified in the Note Register, or upon the
request of a holder of more than $1,000,000 aggregate principal amount of Notes,
by wire transfer of federal funds to the account and number specified in the
Note Register, in each case on such Record Date for such Person (which shall be,
as to each original purchaser of the Notes, the account and number specified by
such purchaser to the Trustee in writing, or, if no such account or number is so
specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date.
(b) All reductions in the principal amount of a Note effected by
payments of installments of principal made on any Payment Date shall be binding
upon all holders of such Note and of any Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof, whether or not
such payment is noted on such Note. All payments on the Notes shall be paid
without any requirement of presentment but each holder of any Note shall be
deemed to agree, by its acceptance of the same, to surrender such Note at the
Corporate Trust Office against payment of the final installment of principal of
such Note.
SECTION 2.06. Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee, and any agent of the Company or the Trustee may treat the
registered Noteholder as the owner of such Note for the purpose of receiving
payment of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee, nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION 2.07. Cancellation.
All Notes surrendered for registration of transfer or exchange or
following final payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The
Company may at any time deliver to the
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Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly cancelled by the 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 held by the Trustee may be disposed of in the normal course of its
business or as directed by a Company Order.
SECTION 2.08. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. In the event the Trustee no longer serves as the Note Registrar,
the Company (or any other obligor upon the Notes) shall furnish to the Trustee
at least five Business Days before each interest payment date (and in all events
in intervals of not more than 6 months) and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Noteholders.
SECTION 2.09. Treasury Notes.
In determining whether the Noteholders of the required Outstanding
Principal Amount of the Notes have concurred in any direction, waiver or
consent, Notes held or redeemed by the Company or any other obligor upon the
Notes or held by an Affiliate of the Company shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Responsible Officer knows are so owned shall be so disregarded.
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS
SECTION 3.01. Trust Accounts; Investments by Trustee.
(a) On or before the Issuance Date for any Series, the Trustee shall
establish in the name of the Trustee for the benefit of the Noteholders of such
Series and the Company to the extent of their interests therein as provided in
this Indenture and in the Servicing Agreement, the Trust Accounts designated for
such Series, which accounts shall be Eligible Accounts maintained at the
Corporate Trust Office.
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Subject to the further provisions of this Section 3.01(a), the Trustee shall,
upon receipt or upon transfer from another account, as the case may be, deposit
into such accounts all amounts received by it which are required to be deposited
therein in accordance with the provisions of this Indenture. All such amounts
and all investments made with such amounts, including all income and other gain
from such investments, shall be held by the Trustee in such accounts as part of
the Trust Estate as herein provided, subject to withdrawal by the Trustee in
accordance with, and for the purposes specified in the provisions of, this
Indenture.
(b) The Trustee shall hold in trust but shall not be required to
deposit in any account specified in Section 3.01(a) any payment received by it
until such time as the Trustee shall have identified to its reasonable
satisfaction the nature of such payment and, on the basis thereof, the proper
account or accounts into which such payment is to be deposited. In determining
into which of the accounts, if any, referred to above any amount received by the
Trustee is to be deposited, the Trustee may conclusively rely (in the absence of
bad faith on the part of the Trustee) on the advice of the Administrator. Unless
the Trustee is advised differently in writing by the Administrator, the Trustee
shall assume that any amount remitted to it is to be deposited into the
designated Collection Account pursuant to Section 3.03. The Trustee may
establish from time to time such deadline or deadlines as it shall determine are
reasonable or necessary in the administration of the Trust Estate after which
all amounts received or collected by the Trustee on any day shall not be deemed
to have been received or collected until the next succeeding Business Day.
(c) Neither the Administrator, the Trustee nor the institution then
acting as Trustee shall have any right of set-off with respect to any Lockbox
Account or any Trust Account, or any investment therein.
(d) So long as no Event of Default shall have occurred and be
continuing, all or a portion of the amounts in any Trust Account shall be
invested and reinvested by the Trustee pursuant to an Administrator Order in one
or more Eligible Investments. Subject to the restrictions on the maturity of
investments set forth in Section 3.01(f), each such Administrator Order may
authorize the Trustee to make the specific Eligible Investments set forth
therein, to make Eligible Investments from time to time consistent with the
general instructions set forth therein, or to make specific Eligible Investments
pursuant to instructions received in writing or by telegraph or facsimile
transmission from the employees or agents of the Administrator, as the case may
be, identified therein, in each case in such amounts as such Administrator Order
shall specify.
(e) In the event that either the Administrator, as the case may be,
shall have failed to give investment directions to the Trustee by 9:30 A.M., New
York City time on any Business Day on which there may be uninvested cash or (ii)
an Event of Default shall
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be continuing, the Trustee shall promptly invest and reinvest the funds then in
the designated Trust Account, as the case may be, to the fullest extent
practicable in one or more Eligible Investments, in accordance with Section
3.02(d). All investments made by the Trustee shall mature no later than the
maturity date therefore permitted by Section 3.01(f) unless the Trustee shall
have received written confirmation from each Rating Agency, that the liquidation
of such Eligible Investments prior to their respective maturity dates, will not
result in the reduction or withdrawal of such Rating Agency's then-current
rating of the Notes of such Series.
(f) No investment of any amount held in any Trust Account shall
mature later than the Deposit Date that is the Business Day immediately
preceding the Payment Date which is scheduled to occur immediately following the
date of investment. All income or other gains (net of losses) from the
investment of moneys deposited in any Trust Account shall be deposited by the
Trustee in such account immediately upon receipt.
(g) Any investment of any funds in any Trust Account and any sale of
any investment held in such accounts, shall be made under the following terms
and conditions:
(i) each such investment shall be made in the name of the Trustee or
in the name of a nominee of the Trustee, in each case in such manner as
shall be necessary to maintain the identity of such investments as assets
of the Trust Estate;
(ii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Trustee or its agent and the Trustee
shall have sole possession of such instrument, and all income on such
investment; and
(iii) the proceeds of any sale of an investment shall be remitted by
the purchaser thereof directly to the Trustee for deposit in the account
in which such investment was held.
(h) If any amounts are needed for disbursement from any Trust
Account and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of an Administrator Order for the
liquidation of investments held therein in an amount sufficient to provide the
required funds, the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such accounts.
(i) The Trustee shall not in any way be held liable by reason of any
insufficiency in any Trust Account resulting from losses on investments made in
accordance with the provisions of this Section 3.01 (but the institution serving
as Trustee shall at all times remain liable for its own debt obligations, if
any, constituting part of such
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investments). The Trustee shall not be liable for any investment made by it in
accordance with this Section 3.01 on the grounds that it could have made a more
favorable investment or a more favorable selection for sale of an investment.
The Trustee may trade with itself or an Affiliate in the purchase or sale of
Eligible Investments.
SECTION 3.02. Establishment and Administration of the Lockbox and
the Collection Accounts. (a) The Administrator shall cause to be established and
maintained at all times a Lockbox and related Lockbox Account pursuant to the
designated Lockbox Agreement for such Series, of which such Lockbox and Lockbox
Account and shall be in the name of the Servicer, as custodian, and shall be
maintained on behalf of the Trustee for the benefit of the allocated Trust
Estate. Each Collection Account shall be an Eligible Account initially
established at the office of the Trustee, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series. The Trustee shall possess all right, title and interest in all funds on
deposit from time to time in each Lockbox Account and each Collection Account
and in all proceeds thereof. Each Lockbox Account and each Collection Account
shall be under the sole dominion and control of the Trustee for the benefit of
the Noteholders as their interests appear in the designated Trust Estate. The
Administrator or Servicer agrees to cause the Lockbox Bank to sweep funds from
each Lockbox to the related Lockbox Account on a daily basis and from each
Lockbox Account to related Collection Account at least once each week. The
Administrator agrees to require, and to cause the Servicer to require, that all
Payments by Obligors on Auto Loans be made to the Lockbox Account (and that only
Payments on Receivables will be received in the Lockbox Account and no other
funds other than funds in which the Trust Estate has an interest hereunder will
be commingled therein). If, at any time, the Collection Account ceases to be an
Eligible Account, the Administrator and the Trustee shall within 5 Business Days
establish a new Collection Account which shall be an Eligible Account, transfer
any cash and/or any investments to such new Collection Account and from the date
such new Collection Account is established, it shall be the "Collection
Account".
(b) The Administrator shall cause the Servicer to deposit into the
applicable Collection Account, as soon as practicable, but in no event later
than the close of business on the second Business Day after the date of receipt
thereof (i) all amounts representing Payments (net of insufficient fund fees and
overpayment credits), if any, collected by the Servicer or anyone else and (ii)
all Recoveries on Receivables received by the Servicer during such Due Period.
(c) Each of the Administrator and the Company shall immediately
deposit and pay directly into the applicable Lockbox Account any Payments it may
receive, all Recoveries on Receivables and the Repurchase Price of Receivables
repurchased by it pursuant to the Sale Agreement and pursuant to Section 3.03
hereof, with a written notice to the Servicer of such remittance.
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(d) The Administrator shall direct the Trustee in writing to invest,
and the Trustee shall so invest, the amounts in each Collection Account in
specified Eligible Investments that mature not later than the next succeeding
Deposit Date; provided, that any Eligible Investment as to which the Trustee is
the obligor in its individual capacity may mature not later than such Payment
Date. If the Trustee receives no such direction, such amounts shall be invested
in mutual funds maintained by the Trustee (or an Affiliate of the Trustee),
provided such mutual funds constitute Eligible Investments; and provided,
further, that such mutual funds maintain at all times a net asset value of $1
per share. The Trustee may trade with itself or an Affiliate in the purchase or
sale of Eligible Investments. The Trustee shall not be liable for any losses
suffered on amounts invested hereunder so long as such investments are Eligible
Investments satisfying the timing requirements specified in the first sentence
of this Section 3.02(d).
(e) Subject to Section 3.06, the Administrator shall instruct the
Trustee in writing to make withdrawals and payments from each Collection Account
for the purposes of carrying out the Administrator's and the Trustee's duties
hereunder.
SECTION 3.03. Establishment and Administration of Cash Reserve
Accounts. (a) If so designated, on or prior to each Issuance Date, the
Administrator shall cause to be established and maintained at all times a Cash
Reserve Account on behalf of and in the name of the Trustee for the benefit of
the Trust Estate allocated to such Series. Each Cash Reserve Account shall be an
Eligible Account initially established at the offices of the Trustee. If, at any
time, the Cash Reserve Account ceases to be an Eligible Account, the
Administrator on behalf of the Trustee shall within 5 Business Days establish a
new Cash Reserve Account which shall be an Eligible Account, transfer any cash
and/or any investments to such new Cash Reserve Account and from the date such
new Cash Reserve Account is established, it shall be the "Cash Reserve Account"
in the name of the Trustee for the benefit of the Trust Estate. On the Issuance
Date, the Company shall deposit an amount equal to the Initial Cash Reserve
Account Deposit into the Cash Reserve Account which amounts shall be allocated
in the manner provided herein.
(b) The Administrator shall deliver or cause to be delivered to the
Trustee no later than the Business Day following any applicable Determination
Date a written notice (a "Cash Reserve Account Withdrawal Notice") requesting
the withdrawal and application of funds in each Cash Reserve Account in
accordance with the terms of the designated Series, and the Trustee shall so
withdraw and allocate such funds.
(c) Funds on deposit in the Cash Reserve Account shall be invested
in accordance with Section 3.01.
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SECTION 3.04. Distributions.
(a) Distributions from that portion of Trust Assets allocated to
such Series will be made by the Trustee in accordance with the terms of such
Series.
(b) On the first Business Day following the Payment Date on which
all Noteholders of a given Series have been paid in full, all amounts held in
the applicable Trust Accounts, if any, shall be disbursed to the Company and all
interests of the Trust Estate in all Receivables allocated to such Series which
have an outstanding balance shall be reconveyed by the Trustee to the Company.
Such disbursement and reconveyance shall constitute the final payment to which
the Company is entitled with respect to its Company Interest pursuant to the
terms of this Indenture.
SECTION 3.05. Reports to Noteholders. On each Payment Date,
concurrently with the distribution or allocation to the Noteholders, the Trustee
shall furnish to the Noteholders (with a copy to each Rating Agency), a report
(which the Administrator covenants to timely prepare and deliver to the Trustee
at least one Business Day prior to such Payment Date) prepared by the
Administrator substantially in the form designated for such Series. Such report
shall include a certification (i) that the information contained in such report
is accurate, (ii) that no Event of Administrator Termination, or event that with
notice or lapse of time or both would become an Event of Administrator
Termination, has occurred, or if an Event of Administrator Termination or such
event has occurred and is continuing, specifying the Event of Administrator
Termination or such event and its status and (iii) that the representations and
warranties of the Administrator contained in the Servicing Agreement are true
and correct as though made on and as of the date of such certificate.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall have no duty or obligation with respect to the information
provided via the monthly computer tape or diskette, including, without
limitation, to verify, monitor or otherwise supervise or administer the
performance of the Servicer or the Administrator.
SECTION 3.06. Returned Payments. If the principal amount of any Note
or any other amount payable under any Note (including interest) shall have been
reduced by any distribution or allocation of any portion of collections or other
Payments on Receivables, and thereafter such distribution or allocation is
rescinded or must otherwise be returned by or on behalf of the recipient thereof
to the Company, the Trust Estate or any other creditor of the Company for any
reason, such principal or other amount distributed or allocated in respect of
such Note shall be increased by the amount of such distribution or allocation to
the extent so returned, all as though such distribution or allocation had not
been made.
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ARTICLE 4.
THE TRUST ESTATE
SECTION 4.01. Acceptance by Trustee and Agreement to Act as
Custodian. (a) Pursuant to each Collateral Assignment, the Trustee will
acknowledge the conveyance of the Transferred Assets and the receipt of Loan
Files and other Transferred Assets conveyed by the Company pursuant to such
Collateral Assignment and the Trustee will hold such Receivables, the Loan Files
and all other Trust Assets comprising the Trust Estate, to the extent allocated
to a Series, in trust for the benefit of the Noteholders of such Series and the
Company, subject to the terms and provisions hereof.
(b) The Trustee shall perform its duties under this Section 4.01 and
hereunder on behalf of the Trust Estate and for the benefit of the Noteholders
and the Company in accordance with the terms of this Indenture and applicable
law and, in each case, taking into account its other obligations hereunder, but
without regard to:
(i) any relationship that the Trustee or any Affiliate of the
Trustee may have with the related Obligor;
(ii) the ownership of any Note by the Trustee or any Affiliate of
the Trustee;
(iii) the Trustee's right to receive compensation for its services
hereunder or with respect to any particular transaction; or
(iv) the ownership, or holding in trust for others, by the Trustee
of any other automobile loans or property.
(v) The Trustee shall promptly report to the Administrator, each
Rating Agency and the Noteholders any failure by it to hold the Loan Files as
herein provided and shall promptly take appropriate action to remedy any such
failure but shall be liable therefor only to the extent (i) any such failure is
caused by the acts or omissions of the Trustee and (ii) such remedial action is
or was at the time of such failure otherwise within its capabilities or control.
As custodian, the Trustee shall have and perform the following powers and
duties:
(A) hold the Loan Files on behalf of the Trust Estate as
allocated for the benefit of the Noteholders of each Series and the
Company, maintain accurate records pertaining to each Receivable to enable
it to comply with the terms and conditions of this Indenture, and maintain
a current inventory thereof;
36
(B) implement policies and procedures in accordance with the
Trustee's normal business practices with respect to custody of the Loan
Files so that the integrity and physical possession of the Loan Files will
be maintained; and
(C) attend to all details in connection with maintaining
custody of the Loan Files on behalf of the Trust Estate.
(vi) In acting as custodian of the Loan Files and as Trustee
hereunder, the Trustee agrees further that it does not and will not have or
assert any interest in the Trust Assets in its individual capacity. Promptly
upon the Trustee's receipt thereof, the Trustee on behalf of the Trust Estate
shall ▇▇▇▇ the Loan Files and its master data processing records to reflect that
the Trust Estate has been assigned the Receivables as provided herein.
(vii) The Trustee agrees to maintain the related Loan Files at its
office located in Minneapolis, Minnesota or at such other offices of the Trustee
as shall from time to time be identified by prior written notice to the
Administrator and the Noteholders; provided that prior to relocating any Loan
Files at any of such other offices, the Trustee shall have obtained an Opinion
of Counsel as to the Trustee's perfected security interest in the Auto Loans.
Subject to the foregoing, the Trustee may temporarily move individual Loan Files
or any portion thereof without notice as necessary to conduct collection and
other servicing activities.
SECTION 4.02. Subsequent Transfers. (a) On each Assignment Date the
Company shall request that the Trust Estate acquire and the Trust Estate shall
so acquire Receivables (each, a "Transfer") from the Company on the terms and
subject to the conditions of this Indenture; provided, however, that the
conditions specified in Section 4.03 shall have been satisfied; and provided,
further, that the Administrator may cause Company to contribute (i) Receivables
that satisfy Section 11.02(a) to the Trust Estate as allocated to a Series on
any Payment Date and (ii) funds for deposit in a Cash Reserve Account at any
time.
(b) On any Business Day which is an Assignment Date after the
Issuance Date for a Series, the Company shall give the Administrator, the
Trustee and the Servicer written notice of each Transfer (in each case, a
"Transfer Notice") specifying the Unpaid Principal Balance of each Receivable
transferred thereby to the Trust Estate on such Assignment Date. The
Administrator shall independently confirm and hereby represents and warrants as
to, and the Trustee may, without any duty to make any independent investigation
with respect thereto, rely on, the facts set forth in such Transfer Notice.
(c) On each Assignment Date following its delivery of a Transfer
Notice, the Company will complete, execute and deliver a Collateral Assignment
to the Administrator
37
and the Trustee. The Administrator and the Trustee, as custodian for and on
behalf of the Trust Estate, shall thereupon execute such Collateral Assignment
and deliver executed copies thereof to each other and to the Company and the
Noteholders.
(d) Following delivery of a duly executed Collateral Assignment,
subject to the satisfaction of the conditions set forth in Sections 4.02(a) and
4.03, all Receivables specified in such Collateral Assignment (including all
Payments allocable to principal and interest received after the related Cut-off
Date) will be assigned to the Trustee on behalf of the Trust Estate and such
Receivables shall become Trust Assets and part of the Trust Estate, as allocated
to a particular Series.
SECTION 4.03. Conditions Precedent to All Transfers.
Each Transfer shall be subject to the conditions precedent that:
(a) On the related Assignment Date (including the initial Transfer
on the date hereof), the Company and the Administrator shall have certified and
are deemed to have represented and warranted hereunder and shall so represent
and warrant in the related Collateral Assignment that:
(i) the representations and warranties (A) of the Company and
AutoBond set forth in Sections 11.01 and 11.02 hereof and (B) of the
Administrator set forth in the applicable Servicing Agreement, are true
and correct on and as of such date, before and after giving effect to such
Transfer, as though made on and as of such date;
(ii) no event has occurred, or would result from such Transfer
or from the application of the proceeds therefrom, which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both;
(iii) each of the Company and AutoBond is in material
compliance with each of its covenants set forth herein and in all Related
Documents;
(iv) no event has occurred which constitutes an Event of
Servicing Termination or would constitute an Event of Servicing
Termination but for the requirement that notice be given or time elapse or
both; and
(v) no event has occurred which constitutes an Event of
Administrator Termination or would constitute an Event of Administrator
Termination but for the requirement that notice be given or time elapse or
both;
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(b) The Company shall have delivered to the Trustee (with a copy to
each Rating Agency and the Noteholders) as custodian for and on behalf of the
Trust Estate an executed copy of the related Collateral Assignment and an
Officer's Certificate stating and representing and warranting (and hereby
represents and warrants) that all conditions precedent to the effectiveness
thereof as specified herein shall have been satisfied;
(c) The Trustee shall have confirmed receipt of the Loan Files with
respect to the Receivables subject to such Transfer; and
(d) No Responsible Officer of the Trustee has actual knowledge that
any conditions to such Transfer have not been fulfilled and no Noteholder shall
have notified the Trustee of the same, and the Trustee shall have received such
other documents, opinions, certificates and instruments as any Noteholder or the
Trustee may request.
SECTION 4.04. Grant of Security Interest; Tax Treatment. (a) For
purposes of legal form and the Intended Tax Characterization, it is the
intention of the parties hereto that this Indenture and each related Collateral
Assignment shall constitute a security agreement under applicable law, and that
the Company has granted to the Trustee on behalf of the Trust Estate for the
benefit of the Noteholders, the Company and other creditors of the Trust Estate,
a first priority perfected security interest in all of the Company's right,
title and interest in, to and under the Transferred Assets and the other Trust
Assets. The Trustee shall treat the Trust Estate as a security device for tax
purposes and shall not file tax returns or obtain an employer identification
number on behalf of the Trust Estate; provided, however, that if any Class of
Notes is recharacterized as equity interests in the Trust Estate for tax
purposes, the parties hereto agree to treat the Trust Estate as a partnership
under the New York Uniform Partnership Act in which the Company was a general
partner and each such recharacterized Noteholder was a limited partner. The
provisions of this Indenture shall be construed in furtherance of the foregoing
intended tax treatment. The conveyance by the Company of the Transferred Assets
to the Trustee on behalf of the Trust Estate on each Assignment Date shall not
constitute and are not intended to result in an assumption by the Trustee or any
Noteholder (other than the Company or any Affiliate of any obligations at the
Trust Estate or of the Company) of any obligation of the Company or the
Administrator to the Obligors, the insurers under any insurance policies
including the VSI Policies, or any other Person in connection with the
Transferred Assets.
(b) It is the intention of the parties hereto that, with respect to
all Taxes, the Notes will be treated as indebtedness of the Company to the
Noteholders secured by the Transferred Assets (the "Intended Tax
Characterization"). The Company, the Administrator and the Trustee, by entering
into this Agreement, and each Noteholder by the purchase of a Note, agree to
report such transactions for purposes of all Taxes in a manner consistent with
the Intended Tax Characterization.
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(c) The Company and the Administrator shall take no action
inconsistent with the Trust Estate's interest in the Transferred Assets and
shall indicate or shall cause to be indicated in its books and records held on
its behalf that each Receivable and the other Transferred Assets has been
assigned to the Trustee on behalf of the Trust Estate and the Noteholders.
SECTION 4.05. Further Action Evidencing Assignments. (a) The Company
and the Administrator each agrees that, from time to time, at its respective
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Administrator, the Servicer or the Trustee or Noteholders of a Series
with a Percentage greater than 50% may reasonably request, in order to perfect,
protect or more fully evidence the security interest in the Transferred Assets
allocated to such Series or to enable the Trustee to exercise or enforce any of
its rights hereunder, and under any Collateral Assignment. Without limiting the
generality of the foregoing, the Company will, without the necessity of a
request and upon the request of the Administrator or the Trustee, execute and
file (or cause to be executed and filed) such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate including, without
limitation, recording and filing UCC-1 financing statements, amendments or
continuation statements with the office of the Secretary of State of the state
of Nevada (and other locations): (i) each Assignment Date, and (ii) prior to the
effective date of any change of the name, identity or structure or relocation of
its chief executive office or any change that would or could affect the
perfection pursuant to any financing statement or continuation statement or
assignment previously filed or make any UCC-1 or continuation statement
previously filed pursuant to this Agreement seriously misleading within the
meaning of applicable provisions of the UCC (and the Company shall give the
Trustee at least 10 Business Days prior notice of any circumstance in (ii)
before the same occurs). The Company shall deliver promptly to the Trustee
file-stamped copies of any such filing.
(b) (i) The Company hereby grants to each of the Administrator and
the Trustee a power of attorney to execute all documents on behalf of the
Company as may be necessary or desirable to effectuate the foregoing and (ii)
AutoBond hereby grants to the Trustee a power of attorney to execute all
documents on behalf of AutoBond as may be necessary or desirable to effectuate
the foregoing; provided, however, that such grant shall not create a duty on the
Trustee to file, prepare, record or monitor or any responsibility for the
contents or adequacy of any such documents.
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ARTICLE 5.
SERVICING OF TRUST ASSETS
SECTION 5.01. Appointment of Servicer. (a) For each Series
hereunder, there shall be designated a Servicing Agreement for the servicing,
administration and collection of the Receivables and the Trustee shall enforce
the provisions thereof on behalf of the Noteholders.
(b) The Servicer shall not be obligated to perform the duties and
functions of the Collection Agent under any Servicing Agreement unless the
Servicer has succeeded to such duties pursuant to the terms thereof.
SECTION 5.02. Appointment of Administrator; Monthly Administration
Fee. (a) AutoBond agrees to act as the Administrator under this Indenture and
the Noteholders by their acceptance of Notes consent to AutoBond acting as
Administrator subject to the terms and conditions hereof. AutoBond shall cease
to act as the Administrator hereunder with respect to any Series, in each case
after the determination of the Trustee or the holders of more than 50% of the
principal amount of the affected Notes upon the occurrence of an Event of
Administrator Termination under the related Servicing Agreement, whereupon the
Trustee shall assume the Administrator's duties hereunder (but not including
Collection Agent duties under the Servicing Agreement and the duties specified
in Section 5.03(a)(i)-(vi), which shall remain duties of the Collection Agent)
as additional Trustee duties. The Administrator shall have no right to
voluntarily resign from its duties and obligations hereunder.
(b) The Administrator shall conduct the duties specified herein and
as Collection Agent, as specified in each Servicing Agreement (together, the
"Administrator Duties") in accordance with (i) customary and prudent business
practices for the performance of similar activities, all applicable laws, rules
and regulations and contracts with respect to it, its business and properties
and all Receivables, Insurance Policies, and other Trust Assets with respect
thereto and, (ii) to the extent consistent with the foregoing, in the same
manner in which, and the same care, skill, prudence and diligence with which, it
performs similar management and administrative services for its own account or
on behalf of other Persons giving due consideration to customary and prudent
business practices.
(c) As compensation for its services hereunder and as Collection
Agent under the Servicing Agreement subject to the terms and conditions hereof,
the Trustee shall remit to the Administrator such fees as may be designated from
time to time in respect of a particular Series.
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SECTION 5.03. Duties and Responsibilities of the Administrator. (a)
In addition to the other duties specified in this Agreement and in the Servicing
Agreement, the Administrator Duties shall, on behalf of the Trust Estate,
consist of: (i) administering collections on the Receivables; (ii) arranging for
and administering repossessions of the Financed Vehicles related to the
Receivables; (iii) disposing of each Financed Vehicle related to a Receivable
whether following repossession or otherwise; (iv) maximizing collections of
Receivables, and filing of insurance claims under and in accordance with the VSI
Policy with respect to each Auto Loan affected by a repossession or otherwise;
(v) delivering to the Trustee and to any Noteholder with a Percentage of at
least 50% in respect of a Series upon the request of such Noteholder the List of
Receivables allocated to such Series as amended from time to time, on each
Assignment Date; and (vi) formulating the Credit and Collection Policies, from
time to time;
(b) Other than in connection with its duty as Collection Agent to
effect liquidations of Financed Vehicles and its obligation to make repurchases
of Receivables hereunder, AutoBond shall not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or written respect to, any Receivable (or any right to receive income
in respect thereof), or the Collection Account.
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein with respect to Notes of
any Series, means any one of the following :
(a) (i) default in the making of Principal Payments or Interest
Payments in respect of any Note of that Series when such become due and
payable, and continuance of such default for one Business Day; or (ii)
failure to make any deposit when due hereunder or under the applicable
Servicing Agreement and continuance of such default for one Business Day;
(b) failure of AutoBond to repurchase pursuant to Section 11.03 any
Auto Loans allocated to such Series, and such failure continues for 30
days;
(c) default in the performance, or breach, of any covenant of the
Company or the Administrator in this Indenture and applicable to such
Series (other than a covenant dealing with a default in the performance of
which or the breach of which is
42
specifically dealt with elsewhere in this Section 6.01) and continuance of
such default or breach for a period of 30 days after the earliest of (i)
any officer of the Company or the Administrator first acquiring knowledge
thereof, (ii) the Trustee's giving written notice thereof to the Company
or (iii) the holders of a majority of the then Outstanding Principal
Amount of the Notes of such Series giving written notice thereof to the
Company and the Trustee;
(d) if any representation or warranty of the Company or the
Administrator made in this Indenture and applicable to such Series shall
prove to be incorrect in any material respect as of the time when the same
shall have been made, and such breach is not remedied within 30 days after
notice of breach from the Trustee; provided, however, that a breach of any
representation or warranty made by the Company or the Administrator in
Section 11.02 with respect to any of the Auto Loans or the interests in
the Financed Vehicles shall not constitute an Event of Default if the
Company or the Administrator repurchases such Receivables in accordance
with Section 11.03(a);
(e) the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or (ii) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of the Company under any applicable federal
or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit
of
43
creditors, or the Company's failure to pay its debts generally as they
become due, or the taking of corporate action by the Company in
furtherance of any such action.
(g) an Event of Administrator Termination under the Servicing
Agreement applicable to such Series shall have occurred and be continuing;
or
(h) any Transfer shall for any reason (other than pursuant to the
terms hereof) cease to create a valid and perfected first priority
security interest (within the meaning of the UCC) in the Auto Loans taken
as a whole and the related security and collections with respect thereto
in favor of the Trustee on behalf of the Trust Estate, or the applicable
Note shall for any reason cease to be entitled to the benefits of security
interest (within the meaning of the UCC) in the Receivables and related
security and other Transferred Assets allocated to such Series, to the
extent of such Note's purported interest therein; or
(i) AutoBond shall at any time cease to own, directly or indirectly,
at least 100% of the outstanding shares of common stock of the Company; or
(j) a judgment or judgments aggregating in excess of $25,000 shall
be entered against the Company and shall not be paid, stayed or dismissed
within 30 days thereof; or
(k) any other Event of Default provided with respect to Notes of
that Series.
SECTION 6.02. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default of the kind specified in Section 6.01(e)
or Section 6.01(f) occurs, the unpaid principal amount of the Notes of each
Series shall automatically become due and payable at par together with all
accrued and unpaid interest thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company. If an Event
of Default (other than an Event of Default of the kind described in Section 6.01
(e) and Section 6.01(f)) with respect to Notes of any Series occurs and is
continuing, then and in every such case the Trustee shall, if so directed by the
holders of Notes evidencing 66-2/3% of the then Outstanding Principal Amount of
the most senior Class of such Series (or if the Notes of such Class are no
longer Outstanding, the holders of Notes evidencing 66-2/3% of the then
Outstanding Principal Amount of the next most senior Class, and so on), or the
holders of 66-2/3% of the then Outstanding Principal Amount of Notes of such
Series may, declare the unpaid principal amount of all the Notes of such Series
to be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Noteholders), and upon any such declaration such
principal amount shall
44
become immediately due and payable together with all accrued and unpaid interest
thereon, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company.
(b) At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the holders of
a like percentage of Notes of such Series by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all Principal Payments on any Notes of such Series which
have become due otherwise than by such declaration of acceleration
and interest thereon from the date when the same first became due
until the date of payment or deposit at the appropriate Note
Interest Rate,
(B) all Interest Payments due with respect to any Notes of
such Series and, to the extent that payment of such interest is
lawful, interest upon overdue interest from the date when the same
first became due until the date of payment or deposit at a rate per
annum equal to the appropriate Note Interest Rates, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements, and advances of
each of the Trustee, the Servicer and the Administrator, its agents
and counsel;
and
(ii) all Events of Default with respect to Notes of that Series,
other than the non-payment of the Outstanding Principal Amount of the
Notes of such Series which become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
45
SECTION 6.03. Remedies.
(a) If an Event of Default with respect to Notes of any Series
occurs and is continuing of which a Responsible Officer has actual knowledge,
the Trustee shall immediately give notice to each Noteholder of such Series as
set forth in Section 7.02 and shall solicit such Noteholders for advice. The
Trustee shall then take such action as so directed by the holders of 66-2/3% of
the Outstanding Principal Amount of the Notes of such Series, subject to the
provisions of this Indenture.
(b) Following any acceleration of the Notes of any Series, the
Trustee shall have all of the rights, powers and remedies with respect to the
Trust Estate allocated to such Series as are available to secured parties under
the Uniform Commercial Code or other applicable law, subject to subsection (d)
below. Such rights, powers and remedies may be exercised by the Trustee in its
own name as trustee of an express trust.
(c) (i) If an Event of Default specified in Section 6.01(a) occurs
and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the
whole amount of principal and interest remaining unpaid with respect to
the affected Series of Notes.
(ii) If an Event of Default occurs and is continuing, the
Trustee may in its discretion, and at the instruction of an aggregate
Percentage of greater than 50% of the Noteholders of each affected Series
shall, proceed to protect and enforce its rights and the rights of the
Noteholders of such Series by such appropriate judicial or other
proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy. The Trustee
shall notify the Company, the Administrator, the Servicer, the Noteholders
of such Series and each applicable Rating Agency of any such action.
(d) If (i) the Trustee shall have received instructions within 90
days from the date notice pursuant to Section 6.03(a) is first given from
holders of each Class of Notes of such Series evidencing more than 50% of the
aggregate unpaid principal amount of such Class of Notes, to the effect that
such Persons approve of or request the liquidation of the Trust Assets allocated
to such Series and do not wish to continue such Trust Estate pursuant to the
terms of this Indenture or (ii) upon an Event of Default set forth in Section
6.01(e) or (f), the Trust Estate allocated to such Series shall be terminated
and, the Trustee shall to the extent lawful, promptly sell, dispose of or
otherwise liquidate the Trust Assets allocated to such Series in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids; provided, however, that, upon an
46
Event of Default set forth in Section 6.01(e) or (f), to the extent holders of
Notes evidencing more than 50% of the aggregate principal amount of each Class
of Notes of such Series notify the Trustee that they wish to reconstitute such
Trust Estate, such liquidation shall not occur and the parties hereto agree that
the Trust Estate allocated to such Series shall be reconstituted pursuant to a
new indenture or amendment hereto on applicable terms identical hereto. The
Trustee may obtain a prior determination from any such conservator, receiver or
liquidator of the Company that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable.
SECTION 6.04. Trustee May File Proofs of Claim. (a) In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company, or any other obligor upon the Notes, or the
property of the Company, or such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Notes or any
amounts owing on the Receivables or the other Trust Assets and to file
such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee and any predecessor Trustee (including
any claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and
counsel) and of the Noteholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee and to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee and any predecessor Trustee under Section
7.06.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, agreement, adjustment or composition
affecting the Notes or the rights of any
47
Noteholder thereof or affecting the Receivables or the other Trust Assets or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Agreement, the Notes, the
Receivables or the other Trust Assets may be prosecuted and enforced by the
Trustee without the possession of any of the Notes or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provisions for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, be for the benefit of the
Noteholders in respect of which such judgment has been recovered, and pursuant
to the priorities contemplated by Section 3.04.
SECTION 6.06. Application of Money Collected. Any money collected by
the Trustee pursuant to this Article 6 shall be deposited in the applicable
Collection Account or Accounts for disbursement in accordance with the
provisions of Article 3.
SECTION 6.07. Limitation on Suits. No Noteholder of any Series shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture or for any other remedy hereunder, unless:
(a) there is a continuing Event of Default with respect to such
Series and such Noteholder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) within 30 days after notice, each of the Noteholders holding an
aggregate Percentage of greater than 50% of such Series shall not have objected
to such Noteholder's written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(c) such Noteholder or Noteholders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(d) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Noteholders of 66 2/3% in
aggregate principal amount of the Outstanding Notes of such Series;
48
it being understood and intended that no one or more of such Noteholders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Noteholders, or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided and for the ratable benefit of all such Noteholders.
It is further understood and intended that so long as any portion of the Notes
remains Outstanding, AutoBond shall not have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture (other than
for the enforcement of Section 3.04) or for the appointment of a receiver or
trustee (including without limitation a proceeding under the Bankruptcy Code),
or for any other remedy hereunder. Nothing in this Section 6.07 shall be
construed as limiting the rights of otherwise qualified Noteholders to petition
a court for the removal of a Trustee pursuant to Section 7.09 hereof.
SECTION 6.08. Unconditional Right of Noteholders to Receive
Principal and Interest.
Notwithstanding any other provision in this Indenture, other than
the provisions hereof limiting the right to recover amounts due on the Notes to
recoveries from the property of the allocated Trust Estate, the holder of any
Note shall have the absolute and unconditional right to receive payment of the
principal of and interest on such Note on the Maturities for such payments,
including the Stated Maturity, and such right shall not be impaired without the
consent of such Noteholder.
SECTION 6.09. Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Noteholder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders
continue as though no such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph of
Section 2.04, no right or remedy herein conferred upon or reserved to the
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
49
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 6.12. Control by Noteholders.
Except as may otherwise be provided in this Indenture, until such
time as the conditions specified in Sections 10.01(a)(i) and (ii) have been
satisfied in full, the holders of 66-2/3% of the then Outstanding Principal
Amount of the Notes of any Series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Notes of such Series. Notwithstanding the foregoing,
(i) no such direction shall be in conflict with any rule of law or
with this Indenture;
(ii) the Trustee shall not be required to follow any such direction
which the Trustee reasonably believes might result in any personal
liability on the part of the Trustee for which the Trustee is not
adequately indemnified; and
(iii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with any such direction; provided that
the Trustee shall give notice of any such action to each Noteholder of
such Series.
SECTION 6.13. Waiver of Events of Default.
(a) The holders of 66-2/3% of the then Outstanding Principal Amount
of the Notes of any Series may, by one or more instruments in writing, waive any
Event of Default on behalf of all Noteholders of such Series hereunder and its
consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or interest on any
Note (which may only be waived by the holder of such Note), or
50
(ii) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
holder of each Outstanding Note affected (which only may be waived by the
holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by the Company to the Trustee. Upon any such waiver, such Event of
Default shall cease to exist and shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Event of Default or impair any right consequent thereon.
SECTION 6.14. Undertaking for Costs.
All parties to this Indenture agree (and each holder of any Note by
its acceptance thereof shall be deemed to have agreed) that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the then Outstanding Principal Amount
of the Notes of any Series, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or interest on any Note on or
after the Maturities for such payments, including the Stated Maturity as
applicable.
SECTION 6.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted allocated to a Series of
Notes.
SECTION 6.16. Sale of Trust Estate.
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(a) The power to effect any sale of any portion of the Trust Estate
allocated to a Series of Notes pursuant to Section 6.03 shall not be exhausted
by any one or more sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate so allocated shall
have been sold or all amounts payable on the Notes of such Series shall have
been paid. The Trustee may from time to time, upon directions in accordance with
Section 6.12, postpone any public sale by public announcement made at the time
and place of such sale.
(b) To the extent permitted by applicable law, the Trustee shall not
sell to a third party the Trust Estate, or any portion thereof except as
permitted under Section 6.03(d).
(c) In connection with a sale of all or any portion of the Trust
Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale may
hold, retain, and possess and dispose of such property, without further
accountability, and any Noteholder may, in paying the purchase money
therefore, deliver in lieu of cash any Outstanding Notes or claims for
interest thereon for credit in the amount that shall, upon distribution of
the net proceeds of such sale, be payable thereon, and the Notes, in case
the amounts so payable thereon shall be less than the amount due thereon,
shall be returned to the Noteholders after being appropriately stamped to
show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Trust Estate
in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Company to transfer and convey its interest in any
portion of the Trust Estate in connection with a sale thereof, and to take
all action necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(d) The method, manner, time, place and terms of any sale of all or
any portion of the Trust Estate shall be commercially reasonable.
52
ARTICLE 7.
THE TRUSTEE
SECTION 7.01. Certain Duties. (a) The Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee (including, without limitation, the duties
referred to in the Servicing Agreement during the continuance of an Event of
Servicing Termination, or an Event of Administrator Termination resulting in the
appointment of the Trustee as Successor Servicer).
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(c) In case an Event of Default, an Event of Servicing Termination
(resulting in the appointment of the Trustee as Successor Servicer) or an Event
of Administrator Termination (resulting in the appointment of the Trustee as
successor Administrator) has occurred and is continuing with respect to any
Series, the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs; provided, however, that no provision in this
Indenture shall be construed to limit the obligations of the Trustee to provide
notices under Section 7.02.
(d) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(e) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(i) this Section shall not be construed to limit the effect of
Section 7.01(a) and (b);
53
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it shall be proved that
the Trustee shall have been negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the written direction of the holders of the requisite principal amount of
the outstanding Notes, or in accordance with any written direction
delivered to it under Section 6.02(a), relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture.
(f) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
(g) The Trustee makes no representations or warranties with respect
to the Trust Assets or the validity or sufficiency of any assignment of the
Receivables to the Company or to the Trust Estate.
SECTION 7.02. Notice of Events of Default. The Trustee shall
promptly (but in any event within five Business Days) notify the applicable
Rating Agencies, the Administrator, the Servicer and the Noteholders of any
Series upon a Responsible Officer obtaining actual knowledge of any event which
constitutes an Event of Default, an Event of Servicing Termination, or an Event
of Administrator Termination or would constitute an Event of Default, an Event
of Servicing Termination, or an Event of Administrator Termination but for the
requirement that notice be given or time elapse or both, in each case with
respect to such Series. In addition, the Trustee shall, within 10 Business Days
following a Responsible Officer receiving actual knowledge of any Event of
Default, Event of Servicing Termination or Event of Administrator Termination
specified in the immediately preceding sentence, transmit to all Noteholders, as
their names and addresses appear in the Note Register notice of such event known
to the Trustee, unless such default shall have been cured or waived; provided,
further, that this Section 7.02 shall not limit the obligations of the Trustee
to provide notices expressly required by this Indenture.
SECTION 7.03. Certain Matters Affecting the Trustee. Subject to the
provisions of Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or
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other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) Any request or direction of any Noteholders, the Administrator,
the Company, or the Servicer mentioned herein shall be in writing;
(c) Whenever in the performance of its duties hereunder the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate or Opinion of Counsel;
(d) The Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be deemed authorization in respect of
any action taken, suffered, or omitted by it hereunder in good faith and in
reliance thereon;
(e) Prior to the occurrence of an Event of Default, an Event of
Servicing Termination, or an Event of Administrator Termination, or after the
curing of all Events of Default, Events of Servicing Termination or Events of
Administrator Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by Noteholders of any affected Series holding an
aggregate Percentage of more than 50%; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
reasonable opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid by
the Administrator or, if paid by the Trustee, shall be reimbursed by the
Administrator upon demand; and
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian (which may be Affiliates of the Trustee) and the
Trustee shall not be liable for any acts or omissions of such agents, attorneys
or custodians appointed with due care by it hereunder.
SECTION 7.04. Trustee Not Liable for Notes or Receivables. (a) The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or any Related Document, the Notes (other than the authentication
thereof) or of any Receivable. The Trustee shall not be accountable for the use
or application by the Company of funds paid to the Company in consideration of
conveyance of the Receivables to the Trust Estate.
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(b) Except with respect to the Trustee in its capacity as Successor
Servicer pursuant to the Servicing Agreement, the Trustee shall have no
responsibility or liability for or with respect to: the validity of any security
interest in any Financed Vehicle; the existence or validity of any Receivable,
the validity of the assignment of any Receivable to the Trust Estate or of any
intervening assignment; the review of any Receivable, any Loan File or the
Electronic Ledger as defined in the Servicing Agreement, the completeness of any
Loan File, the receipt by it or its custodian of any Receivable or Loan File (it
being understood that the Trustee has not reviewed and does not intend to review
such matters); the performance or enforcement of any Receivable; the compliance
by the Administrator, the Company or the Servicer with any covenant or the
breach by the Administrator or the Company of any warranty or representation
made hereunder or in any related document or the accuracy of any such warranty
or representation; the acts or omissions of the Administrator, the Servicer or
any Obligor or Dealer; or any action of the Administrator or the Servicer taken
in the name of the Trustee.
SECTION 7.05. Trustee May Own Notes. The Trustee in its individual
or any other capacity may become the owner or pledgee of Notes with the same
rights as it would have if it were not Trustee.
SECTION 7.06. The Administrator to Pay Trustee's Fees and Expenses.
The Administrator agrees to reimburse the Trustee upon its request for all
reasonable third-party expenses, disbursements and advances incurred or made by
the Trustee in its capacity as such in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursement of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith. The
obligations of the Administrator under this Section 7.06 shall survive the
termination of this Indenture and the resignation or removal of the Trustee.
SECTION 7.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times (a) be a corporation, depository institution, or
trust company organized and doing business under the laws of the United States
of America or any state thereof authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $250,000,000,
(b) be subject to supervision or examination by federal or state authority, (c)
be capable of maintaining an Eligible Account and (d) have a long-term unsecured
debt rating of not less than Baa2 from ▇▇▇▇▇'▇ and BBB+ from Fitch or such other
rating as may be acceptable to the Rating Agencies, and shall be acceptable to
Noteholders of each Series with a Percentage of more than 50%. If such
institution publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purpose of this Section 10.07, the combined capital and surplus of such
institution shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any
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time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 10.07, the Trustee shall resign immediately in the manner and with
the effect specified in Section 7.08.
SECTION 7.08. Resignation or Removal of Trustee. (a) The Trustee may
at any time resign and be discharged with respect to the Notes of one or more
Series by giving 90 days' written notice thereof to the Administrator, the
Servicer, the Company, the Noteholders of such Series and the Rating Agencies.
Upon receiving such notice of resignation, the Administrator shall promptly
appoint a successor Trustee not objected to by Noteholders of such Series with a
Percentage of more than 50% within 30 days after prior written notice, by
written instrument, in quintuplicate, one counterpart of which instrument shall
be delivered to each of the Company, the Servicer, the successor Trustee and the
predecessor Trustee. A copy of such instrument shall be delivered to the Rating
Agencies. If no successor Trustee shall have been so appointed and have accepted
appointment within 90 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.07 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Administrator or Noteholders of each Series with a Percentage greater than 50%
may direct, and the Administrator shall follow such direction and remove the
Trustee. If it removes the Trustee under the authority of the immediately
preceding sentence, the Administrator shall promptly appoint a successor Trustee
not objected to by Noteholders of each Series with a Percentage of more than
50%, within 30 days after prior written notice, by written instrument, in
quintuplicate, one counterpart of which instrument shall be delivered to each of
the Company, the Servicer, the Noteholders, the successor Trustee and the
predecessor Trustee. Copies of such instrument shall also be delivered by the
Administrator to each of the Rating Agencies.
(c) The Trustee may be removed by the Administrator at any time by
giving written notice thereof to the Trustee and each of the holders of the
Notes then outstanding. Such removal by the Administrator will become effective
unless the holders of 51% of the principal amount of the Notes of each Series
then outstanding deliver a written statement to the Administrator opposing such
removal within 30 days following receipt of such notice of removal from the
Administrator.
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(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 7.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 7.09.
SECTION 7.09. Successor Trustee. (a) Any successor Trustee appointed
as provided in Section 7.08 shall execute, acknowledge and deliver to each of
the Administrator, the Company, the Servicer, the Noteholders and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to the
successor Trustee or its custodian any related documents and statements held by
it or its custodian hereunder; and the Administrator and the Company and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for the full and certain vesting and
confirmation in the successor Trustee of all such rights, powers, duties and
obligations.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Notes of one or more (but not all) Series, the Company, the
retiring Trustee and each successor Trustee with respect to the Notes of one or
more Series shall execute and deliver an indenture supplemental hereto wherein
each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Notes of that or those Series to
which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Notes, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Notes of
that or those Series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) shall add to or change
any of the provisions of this Indenture s shall be necessary to provide for or
facilitate the administration of the Trust Estate hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same allocated trust
and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Notes of that or those
Series to which the appointment of such successor trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee shall
duly assign,
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transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Notes of that or those
Series to which the appointment of such successor Trustee relates.
Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in the preceding paragraph.
(c) No successor Trustee shall accept appointment as provided in
this Section 7.09 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 7.07.
(d) Upon acceptance of appointment by a successor Trustee as
provided in this Section 7.09, the Administrator shall mail notice of the
succession of such Trustee hereunder to each Noteholder of each affected Series
at its address as shown in the Note Register and to the Rating Agencies. If the
Administrator fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Company and the Administrator.
SECTION. 7.10. Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 7.07, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
ARTICLE 8.
COVENANTS
SECTION 8.01. Payment of Principal and Interest.
The Company will cause the due and punctual payment of the principal
of and interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 8.02. Maintenance of Office or Agency; Chief Executive
Office.
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(a) The Company will maintain at the Corporate Trust Office an
office or agency where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands.
(b) The Company will not change the location of its principal place
of business without giving the Trustee and the Rating Agencies at least 30 days'
prior written notice thereof.
SECTION 8.03. Money for Payments to Noteholders to be Held in Trust.
(a) All payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Trust Accounts
pursuant to Section 3.04 or Section 6.06 shall be made on behalf of the Company
by the Trustee, and no amounts so withdrawn from the applicable Collection
Account for payments of Notes shall be paid over to the Company under any
circumstances except as provided in this Section 8.03, in Section 3.04 or
Section 6.06.
(b) In making payments hereunder, the Trustee will hold all sums
held by it for the payment of amounts due with respect to the Notes in trust for
the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided.
(c) Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Noteholders
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will hold all sums held by it for the payment of the principal
of or interest on Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided.
(d) Except as required by applicable law, any money held by the
Trustee in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for three years after such amount has become due and payable
to the Noteholder shall be
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discharged from such trust and, subject to applicable escheat laws, and so long
as no Event of Default has occurred and is continuing, paid to the Company upon
request; otherwise, such amounts shall be redeposited in the Collection Account
as available funds, and such Noteholder shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof (but only to the
extent of the amounts so paid to the Company), and all liability of the Trustee
with respect to such trust money shall thereupon cease.
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.
(a) The Company will keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Nevada, and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes or any of
the Auto Loans.
(b) The Company shall at all times observe and comply in all
material respects with (i) all laws applicable to it, (ii) all requirements of
law in the declaration and payment of dividends on its capital stock, and (iii)
all requisite and appropriate corporate and other formalities (including without
limitation meetings of the Company's board of directors and, if required by law,
its charter or otherwise, meetings and votes of the shareholders of the Company
to authorize corporate action) in the management of its business and affairs and
the conduct of the transactions contemplated hereby.
(c) The Company shall not issue or register the transfer of any of
its common stock to any Person other than AutoBond or a wholly-owned subsidiary
of AutoBond.
(d) The Company shall not (i) consolidate or merge with or into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any other Person or (ii) commingle its assets with those of any
other Person.
SECTION 8.05. Protection of Trust Estate; Further Assurances.
The Company will from time to time execute and deliver all such
supplements and amendments hereto and all such Financing Statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively the Trust Assets comprising all or any
portion of the Trust Estate;
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(ii) maintain or preserve the lien of this Indenture or carry out
more effectively the purposes hereof;
(iii) publish notice of, or protect the validity of, any Grant made
or to be made by this Indenture and perfect the security interest
contemplated hereby in favor of the Trustee in each of the Receivables and
all other property included in the Trust Estate; provided, that the
Company shall not be required to cause the recordation of the Trustee's
name as lienholder on the related certificates of title for the Financed
Vehicles so long as no Event of Default has occurred and is continuing;
(iv) enforce or cause the Administrator to enforce any of the
Receivables;
(v) preserve and defend title to the Receivables (including the
right to receive all payments due or to become due thereunder), the
interests in the Financed Vehicles, or other property included in the
Trust Estate and preserve and defend the rights of the Trustee in such
Trust Assets (including the right to receive all payments due or to become
due thereunder) against the claims of all Persons and parties other than
as permitted hereunder; and
(vi) cause the Trustee to be added as an additional named insured on
each of the Insurance Policies.
The Company, upon the Company's failure to do so, hereby designates the Trustee
its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.05; provided,
however, that such designation shall not be deemed to create a duty in the
Trustee to monitor the compliance of the Company with the foregoing covenants,
and provided, further, that the duty of the Trustee to execute any instrument
required pursuant to this Section 8.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure of the Company to comply with
the provisions of this Section 8.05.
SECTION 8.06. Servicing Agreement.
(a) If any Authorized Officer of the Administrator shall have
knowledge of the occurrence of a default under any Servicing Agreement, the
Administrator shall promptly notify the Trustee and the Noteholders of each
affected Series, and shall specify in such notice the action, if any, the
Administrator and the Company is taking in respect of such default. Unless
consented to by the holders of 66 2/3% of the then Outstanding Principal Amount
of the Notes of each affected Series, the Company may not waive any material
default under or amend the Servicing Agreement in a manner materially adverse to
the Noteholders of such Series.
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SECTION 8.07. Additional Covenants.
(a) The Company will not:
(i) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture;
(ii) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes by reason of the payment of any taxes
levied or assessed upon any portion of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture or
any Grant hereby to be impaired, or permit the lien of this Indenture to
be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations under
this Indenture, except as may be expressly permitted hereby, (B) permit
any lien, charge, security interest, mortgage or other encumbrance to be
created on or to extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds thereof
other than the lien of this Indenture, or (C) except as otherwise
contemplated in this Indenture, permit the lien of this Indenture not to
constitute a valid first priority security interest in the Trust Estate.
(b) Notice of Event of Default - immediately upon becoming aware of
the existence of any condition or event which constitutes a Default or an
Event of Default, the Company shall deliver to the Trustee a written
notice describing its nature and period of existence and what action the
Company is taking or proposes to take with respect thereto.
(c) Report on Proceedings - promptly upon the Company's becoming
aware of
(i) any proposed or pending investigation of it by any governmental
authority or agency, or
(ii) any pending or proposed court or administrative proceeding
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition
(financial or otherwise) of the Company
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the Company shall deliver to the Trustee a written notice specifying the nature
of such investigation or proceeding and what action the Company is taking or
proposes to take with respect thereto and evaluating its merits.
SECTION 8.08. Taxes.
The Company shall pay all Taxes when due and payable or levied
against its assets, properties or income, including any property that is part of
the Trust Estate.
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of any Noteholders, the Company, by a
Company Order, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or to better assure, convey
and confirm unto the Trustee any property subject or required to be
subjected to the lien of this Indenture; provided such action pursuant to
this clause (ii) shall not adversely affect the interests of the
Noteholders of any Series in any respect; or
(ii) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes of one or more
series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 7.09; or
(iii) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that such action pursuant
to this Clause (iv) shall not adversely affect the interests of the
Holders of Notes of any Series.
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(b) The Trustee shall promptly deliver to each Noteholder of an
affected Series of an affected Series and each Rating Agency a copy of any
supplemental indenture entered into pursuant to Section 9.01(a).
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.
(a) With the consent of the holders of not less than 66-2/3% of the
then Outstanding Principal Amount of the Notes of each Series affected by such
supplemental indenture and by Act of said Noteholders delivered to the Company
and the Trustee, the Company, by a Company Order, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Noteholders of
such Series under this Indenture; provided, that no supplemental indenture
shall, without the consent of the holder of each Outstanding Note affected
thereby,
(i) change the Stated Maturity of any Note or the Principal Payments
or Interest Payments due or to become due on any Payment Date with respect
to any Note, or change the priority of payment thereof as set forth
herein, or reduce the principal amount thereof or the Note Interest Rate
thereon, or change the place of payment where, or the coin or currency in
which, any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal Amount of
the Notes of any Series, the consent of whose Noteholders is required for
any such supplemental indenture, for any waiver of compliance with
provisions of this Indenture or Events of Default and their consequences,
provided for in this Indenture;
(iii) modify any of the provisions of this Section or Section 6.13
except to increase any percentage or fraction set forth therein or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the holder of each Outstanding Note
affected thereby;
(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as provided in the applicable Servicing Agreement,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive any Noteholder of the security afforded by the lien of
this Indenture;
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provided, no such supplemental indenture may modify or change any terms
whatsoever of the Indenture that could be construed as increasing the Company's
or AutoBond's discretion hereunder.
(b) The Trustee shall promptly deliver to each Noteholder of an
affected Series and each Rating Agency a copy of any supplemental indenture
entered into pursuant to Section 9.02(a).
SECTION 9.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture (a) pursuant to Section 9.01 of this Indenture or (b)
pursuant to Section 9.02 of this Indenture without the consent of each holder of
the Notes to the execution of the same, or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be, fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any supplemental indenture which affects the Trustee's
own rights, duties, projections, or immunities under this Indenture or
otherwise.
SECTION 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 9.05. Reference in Notes to Supplemental Indentures.
Notes of any Series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. New Notes of any Series
so modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes of
such Series.
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ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) 100 days shall have elapsed since either
(A) all Notes theretofore authenticated and delivered (other
than (1) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.04 and (2) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section
8.03(c)) have been delivered to the Trustee for cancellation; or
(B) the final installments of principal on all such Notes not
theretofore delivered to the Trustee for cancellation
(1) have become due and payable, or
(2) will become due and payable at their Stated
Maturity, as applicable, within one year,
and the Company has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation, for
principal and interest to the date of such deposit (in the case of
Notes which have become due and payable) or to the Stated Maturity
thereof;
(ii) the Company and the Administrator have paid or caused to be
paid all other sums payable hereunder by the Company and the Administrator
for the benefit of the Noteholders and the Trustee; and
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(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
At such time, the Trustee shall deliver to the Company all cash, securities and
other property held by it as part of the Trust Estate other than funds deposited
with the Trustee pursuant to Section 10.01(a)(i)(B), for the payment and
discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Sections 7.07 and
8.11, and, if money shall have been deposited with the Trustee pursuant to
Section 10.01(a)(i)(B), the obligations of the Trustee under Section 10.02 and
Section 8.03(c) shall survive.
(c) The Trustee shall provide prompt written notice to each Rating
Agency of any satisfaction and discharge of this Indenture pursuant to this
Article 10.
SECTION 10.02. Application of Trust Money.
Subject to the provisions of Section 8.03(c), all money deposited
with the Trustee pursuant to Sections 10.01 and 8.03 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
SECTION 10.03. Trust Termination Date. Upon the full application of
(a) moneys deposited pursuant to this Article 10 or (b) proceeds of the Trust
Assets pursuant to Sections 3.04 or 6.06, the Trust Estate created by this
Indenture shall be deemed to have terminated (the "Trust Termination Date").
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
SECTION 11.01. Representations and Warranties of the Company. The
Company represents and warrants to the Trustee and the Noteholders, as of the
Issuance Date and on each day until the discharge of this Indenture, as follows:
(a) The Company is a wholly-owned bankruptcy remote subsidiary of
[AutoBond Funding Corporation II] ("AutoBond Funding") and is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada and is
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duly qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified and which
permits such qualification;
(b) The Company has the power and authority to own and convey all of
its properties and to execute and deliver this Indenture and the Related
Documents and to perform the transactions contemplated hereby and thereby;
(c) The Company is operated in such a manner and is constituted so
that it would not be substantively consolidated in the bankruptcy trust estate
of any Affiliate, such that the separate existence of the Company and any
Affiliate would be disregarded, and to such end:
(i) the Company maintains separate records, books of account
and financial statements from those of AutoBond and each other Affiliate
of AutoBond;
(ii) the Company does not commingle any of its assets or funds
with those of AutoBond or any of the other Affiliates of AutoBond;
(iii) the Company maintains a separate board of directors with
at least two independent directors and observes all separate corporate
formalities, and all decisions with respect to the Company's business and
daily operations have been and shall be independently made by the officers
of the Company pursuant to resolutions of its board of directors;
(iv) other than contributions of capital, payment of dividends
and return of capital, no transactions have been entered into between the
Company and [AutoBond] or between the Company and any of the other
Affiliates of AutoBond except such transactions as are contemplated by
this Indenture and the Related Documents;
(v) except for such administration and collection and
functions as Auto Bond may perform on behalf of the Company and the Trust
Estate pursuant to this Indenture and the Related Documents, the Company
acts solely in its own name and through its own authorized officers and
agents and the Company does not act as agent of AutoBond or any other
Person in any capacity;
(vi) except for any funds received from AutoBond Funding (or
from AutoBond indirectly by way of AutoBond Funding) as a capital
contribution, the Company shall not accept for its own account funds from
AutoBond or any of the other Affiliates of AutoBond; and the Company shall
not allow AutoBond or any of
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the other Affiliates of AutoBond otherwise to supply funds to, or
guarantee any obligation of, the Company;
(vii) the Company shall not guarantee, or otherwise become
liable with respect to, any obligation of AutoBond or any of the other
Affiliates of AutoBond; and
(viii) the Company shall at all times hold itself out to the
public under the Company's own name as a legal entity separate and
distinct from AutoBond and the other Affiliates of AutoBond.
(d) The Company is a special purpose company and has not engaged,
and does not presently engage and shall not engage, in any activity other than
the activities undertaken pursuant to this Agreement and the Related Documents
and contemplated hereby and thereby and activities ancillary or incident
thereto, and has no Debt other than the Notes;
(e) The execution, delivery and performance by the Company of this
Agreement, the Related Documents and the transactions contemplated hereby and
thereby, (i) have been duly authorized by all necessary corporate or other
action on the part of the Company, (ii) do not contravene or cause the Company
to be in default under (A) the Company's certificate of incorporation or bylaws,
(B) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other agreement
or instrument binding on or affecting the Company or its property, (C) any law,
rule, regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Company or its property, and (iii) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
the property of the Company;
(f) This Indenture and the Related Documents have each been duly
executed and delivered on behalf of the Company;
(g) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority or any other party, is required for the due
execution, delivery and performance by the Company of this Agreement or any of
the Related Documents or for the perfection of or the exercise by the Trustee or
the Noteholders of any of their rights or remedies thereunder which have not
been duly obtained;
(h) Each of this Agreement, and each other Related Document is the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its respective terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws relating to or affecting the
70
rights of creditors generally, and by general principles of equity (regardless
of whether such enforcement is considered in a proceeding in law or in equity);
(i) There is no pending or threatened action, suit or proceeding,
nor any injunction, writ, restraining order or other order of any nature against
or affecting the Company, its officers or directors, or the property of the
Company, in any court or tribunal, or before any arbitrator of any kind or
before or by any Governmental Authority (i) asserting the invalidity of this
Agreement or any of the Related Documents, (ii) seeking to prevent the sale and
assignment of any Receivable or the consummation of any of the transactions
contemplated thereby, (iii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the Company of this
Agreement or any of the Related Documents or the interests of the Noteholders,
(B) the validity or enforceability of this Agreement or any of the Related
Documents, (C) any Receivable, (D) the Intended Tax Characterization, or (iv)
asserting a claim for payment of money adverse to the Company or the conduct of
its business or which is inconsistent with the due consummation of the
transactions contemplated by this Agreement or any of the Related Documents;
(j) The principal place of business and chief executive office of
the Company are located at the address in Nevada indicated in Section 12.05 and
there are now no, and there have not been any, other locations where the Company
is located (as that term is used in the UCC) or keeps Records except, after the
date of this Agreement, as disclosed in writing to the Trustee and the
Noteholders and the Administrator at least 30 Business Days prior to any such
change;
(k) The legal name of the Company is as set forth in the beginning
of this Agreement and the Company has not changed its name since its formation,
and during such period, the Company did not use, nor does the Company now use
any tradenames, fictitious names, assumed names or "doing business as" names;
(l) The Company does not have any Subsidiaries;
(m) The Company is solvent and will not become insolvent after
giving effect to the transactions contemplated by this Indenture and each of the
Related Documents; the Company's transfers of Transferred Assets to the Trust
Estate have been and will be made for reasonably equivalent value and fair
consideration; and the Company, after giving effect to the transactions
contemplated by this Indenture and each of the Related Documents, will have an
adequate amount of capital to conduct its business in the future; and
(n) The Company has complied in all material respects with all
applicable laws, rules, regulations, and orders with respect to it, its business
and properties and all of the Transferred Assets.
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SECTION 11.02. Representations and Warranties as to Each Receivable.
(a) In connection with the establishment of each Series of Notes, each of the
Company and AutoBond will make the representations and warranties designated
with respect to such Series.
(b) The Company and the Administrator each hereby certifies that the
representations and warranties contemplated in this Section 11.02 shall survive
the transfer of the Receivables to the Trust Estate.
SECTION 11.03. Repurchases and Transfers. (a) Upon the occurrence of
(i) a breach of any of the representations and warranties set forth in Sections
11.01 and 11.02, without regard to any limitation set forth in such
representation or warranty concerning the knowledge of the Company or the
Administrator as to the facts stated therein, which may, or does materially and
adversely affect the interests of the Trust Estate or the Noteholders in any
Receivable, (ii) a failure of any Loan Files to contain original documents as
set forth in Section 4.01, if the Trustee is unable, or is adversely affected in
its ability, to enforce the obligations of the related Obligor by reason of not
having possession of such original documentation, or if the original certificate
of title for any Financed Vehicle has not been obtained within 180 days after
the applicable Transfer Date, or (iii) a failure to make any filing or take
other action referred to in Section 4.05, the party discovering such breach
shall give prompt written notice to the others. If within 30 days of such
notice, occurrence or discovery referred to in the immediately preceding
sentence, such breach or failure shall remain uncured, the Receivable as to
which the breach or failure relates shall be repurchased or purchased for the
Repurchase Price as follows:
(i) in respect of matters set forth in Sections 4.05, 11.01,
and 11.02(a), by the Company;
(ii) in respect of the matters set forth in Section 4.05 or
11.02(a), by AutoBond; and
(iii) the Trustee may demand that AutoBond repurchase
Receivables pursuant to any the Agreement.
(b) Upon receipt by the Trustee of written certification of the
Administrator to the effect that the Repurchase Price has been deposited in the
Collection Account, the Trustee as custodian on behalf of the Trust shall
contemporaneously therewith release such Receivable and the related Loan Files
to the Company or AutoBond, as the case may be, and the Trustee on behalf of the
Trust Estate shall assign to the Company or AutoBond, as the case may be, all of
the Trust Estate's right, title and interest in such purchased or
72
repurchased Receivable, and all property and rights conveyed to the Trustee and
the Trust Estate relating thereto (excluding, however, payments previously
received under the Insurance Policies), and the Assignments to the extent such
payments relate to such repurchased or purchased Receivables, without recourse,
representation or warranty. The Trustee and the Company shall execute and
deliver to the Company or AutoBond, as the case may be, an assignment
substantially in the form of Exhibit __. The repurchase and purchase obligations
pursuant to this Section 11.03 constitute the sole remedy available to the
Trustee and the Noteholders for a breach of a representation or warranty or
agreement of the Company or AutoBond, set forth in Sections 4.05 and 11.02;
provided, that the foregoing limitation shall not be construed to limit in any
manner the right of the Trustee or the Noteholders to declare an Event of
Default to have occurred or to terminate the responsibilities of the
Administrator as Collection Agent under the Servicing Agreement to the extent
such breaches also constitute or contribute to the determination of an Event of
Default or an Event of Administrator Termination. For the purposes of this
Agreement, a Receivable has not been "repurchased" or "purchased" by the Company
or AutoBond, as the case may be, pursuant to this Section 3.03 unless the
Repurchase Price therefor has been deposited into the Collection Account.
(c) As used herein, references to the "repurchase" of Auto Loans by
the Company means the release of the Lien of this Indenture with respect to such
Auto Loans.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. Indemnities of the Administrator.
(a) The Administrator agrees to indemnify (i) the Trust Estate from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses (including reasonable attorneys' fees of counsel) arising as a
result of the Administrator's acts or omissions (subject to the administration
standard set forth in Section 5.02(b)) in violation of this Indenture and (ii)
the Trustee, its directors, officers, employees and agents, from, and hold it
harmless against, any and all losses, liabilities, damages, claims, expenses
(including attorney's fees and disbursements), fines or penalties, or judgments
arising out of or in connection with the performance by the Trustee of its
duties hereunder or in connection with the Trust Estate, or the issuance of the
Notes except to the extent the Trustee's own bad faith, willful misconduct or
negligence contributes to the loss, liability, damage, claim or expense.
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(b) This Section 12.01 shall survive the termination of this
Indenture or the resignation or removal of the Trustee in respect of rights
accrued prior to such resignation or removal.
SECTION 12.02. Officers' Certificate and Opinion of Counsel as to
Conditions Precedent.
Upon any request or application by the Company (or any other obligor
upon the Notes) to the Trustee to take any action under this Indenture, the
Company (or such other Obligor) shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 12.04) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements set
forth in Section 12.04) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
SECTION 12.03. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 12.04. Notices. (a) All communications, instructions,
directions and notices to the parties thereto shall be (i) in writing (which may
be by telecopy, followed
74
by delivery of original documentation within one Business Day), (ii) effective
when received and (iii) delivered or mailed first class mail, postage prepaid to
it at the following address:
If to the Company:
AutoBond Master Funding Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
If to the Administrator:
AutoBond Acceptance Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee:
Norwest Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Services - Asset Backed Administration
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Rating Agencies:
▇▇▇▇▇'▇ Investor Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Monitoring Department
75
Fitch Investors Service
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Monitoring Department
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices pursuant hereto to a Noteholder
shall be in writing and delivered or mailed first class mail, postage prepaid or
overnight courier at the address shown in the Note Register. The Trustee agrees
to deliver to each Noteholder upon receipt, all notices and reports that the
Trustee may receive hereunder and under any Servicing Agreement and Related
Documents. Unless otherwise provided herein (including Section 8.11 hereof) the
Trustee may consent to any requests received under such documents or, at its
option, follow the directions of Noteholders with a Percentage of greater than
50% within 30 days after prior written notice to the Noteholders. All notices to
Noteholders (or any Class thereof) shall be sent simultaneously.
SECTION 12.05. Notices and Reports to be Delivered to the Rating
Agencies. On or before the later to occur of each Payment Date and, the Business
Day following its receipt thereof, the Administrator shall promptly deliver to
each of the Rating Agencies the notices, reports and certificates referred to in
Section 3.05.
SECTION 12.06. No Proceedings. The Noteholders, the Administrator
and the Trustee each hereby agrees that it will not, directly or indirectly
institute, or cause to be instituted, against the Company or the Trust any
proceeding of the type referred to in Section 6.01(e) so long as there shall not
have elapsed one year plus one day since the Trust Termination Date.
ARTICLE 13.
VARIABLE FUNDING NOTES
SECTION 13.01. Designation.
(a) There is hereby created a Series of Notes to be issued pursuant
to this Indenture designated as "AutoBond Master Funding Corporation -- Variable
Funding Notes, Series A (the "Variable Funding Notes"). The Variable Funding
Notes shall initially be evidenced by a single certificated note in the form
attached hereto as Exhibit C.
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(b) The maximum aggregate principal amount of the Variable Funding
Notes which may be Outstanding at anytime is $50,000,000, subject to the
exceptions contained in Section 2.01(a)(2).
(c) The first Payment Date with respect to the Variable Funding
Notes shall be the July 15, 1997 Payment Date.
(d) The Variable Funding Notes shall bear interest at the rate set
forth in the Credit Agreement (as defined in Section 13.02); principal and
interest shall be payable to the Holder in whose name a Variable Funding Note is
registered as of the end of the month preceding the applicable Payment Date; and
principal and interest shall be payable on the Payment Dates and such other
dates as set forth in the Credit Agreement.
(e) The Trust Assets allocated to the Variable Funding Notes are as
set forth in Schedule 1, as modified from time to time in accordance with this
Indenture.
(f) The Issuance Date in respect of the Variable Funding Notes shall
be June 30, 1997.
(g) The representations and warranties with respect to the Auto
Loans allocated to such Series, additional covenants, and conditions precedent
to Advances are set forth in the Credit Agreement.
SECTION 13.02. Certain Definitions.
(a) As used in this Article 13 and with respect to the Variable
Funding Notes, the following terms shall have the following meanings:
"Accounts" shall mean the Lockbox Account, the Cash Reserve Account,
the Loan Purchase Account and the Collection Account.
"Advances" shall have the meaning specified in the Credit Agreement.
"Automobile" shall mean a new or used automobile, light-duty truck
or van.
"Cash Reserve Account" shall have the meaning assigned to such term
in Section 13.03 hereof.
"Collection Account" shall have the meaning assigned to such term in
Section 13.03 hereof.
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"Collection Agent" shall mean AutoBond, as collection agent under
the Servicing Agreement.
"Credit Agreement" means the Credit Agreement, dated as of June 30,
1997 among the Company, AutoBond and the Note Agent.
"Collection Agent Fee" shall mean, a fee equal to the product of (i)
$7 and (ii) the total number of Specified Auto Loans which were outstanding at
any time during the preceding Interest Period, plus Reimbursable Collection
Agent Expenses.
"Due Period" shall mean, (a) with respect to the initial Due Period,
the month of June, 1997, and (b) thereafter, with respect to any Payment Date,
the period commencing on the first day of the calendar month preceding the
calendar month in which such Payment Date occurs and ending on the last day of
the calendar month preceding the calendar month in which such Payment Date
occurs.
"Delinquency Ratio" shall mean, as of any Determination Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
(i) the aggregate Unpaid Principal Balance of Auto Loans which have become
Defaulted Auto Loans as of the end of the most recently ended Due Period minus
(ii) the sum of the aggregate Unpaid Principal Balance of (A) all Auto Loans
against which insurance claims have been filed as of the end of the most
recently ended Due Period and (B) Auto Loans for which the related Financed
Vehicles are subject to repossession as of the end of the most recently ended
Due Period and which are not included in (A), and (B) the denominator of which
equals the aggregate Unpaid Principal Balance of Auto Loans outstanding as of
the end of the most recently ended Due Period minus the amount determined
pursuant to clause (ii) above.
"Exchange" has the meaning set forth in Section 13.
"Excess Reserve Account Amount" shall mean, as of each Payment Date,
the amount, if any, held in the Cash Reserve Account in excess of the Reserve
Account Required Balance after giving effect to any withdrawals from the Reserve
Account pursuant to Section 13.05(c)(i), (ii) and (iii) on such Payment Date.
"Excess Spread Notes" means Notes issued by the Company to the
extent their principal amount is derived from the discounting of excess spread
cash flows on the Auto Loans allocated to such Series of Notes.
"Funding Date" shall have the meaning set forth in the Credit
Agreement.
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"Interest Period" means the period beginning with a Payment Date (or
in the case of the initial Interest Period, June 15, 1997) to and excluding the
following Payment Date.
"Liquidated Receivable" means, as of any date of determination, any
Auto Loan upon the earlier to occur of (a) receipt of all Recoveries on
Receivables reasonably expected to be received in respect thereof and (b) the
date such Auto Loan is more than 180 days contractually past due.
"Loan Acquisition Price" shall have the meanings set forth in the
Credit Agreement.
"Loan Purchase Account" shall have the meaning assigned to such term
in Section 13.03 hereof.
"Lockbox" means the Lockbox established and maintained pursuant to
the Lockbox Agreement.
"Lockbox Account" means the account in the name of the Servicer, as
custodian for AutoBond and the Trustee, or in the name of the Trustee,
established in respect of the Auto Loans at the Lockbox Bank and maintained
pursuant to the Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Operations Agreement, dated as
of September 30, 1996 between the Servicer, as custodian for AutoBond and the
Trustee, and the Lockbox Bank, or any successor agreement hereunder.
"Lockbox Bank" means Banc One, Texas, N.A or any successor
hereunder.
"Monthly Administrator Fee" shall mean, as of any Payment Date, so
long as AutoBond is acting as Administrator hereunder and as Collection Agent
under the Servicing Agreement, the sum of (a) a fee, payable monthly, equal to
the product of (i) $7.00 and (ii) the total number of Auto Loans included in the
Trust Estate and allocated to the Variable Funding Notes at any time during the
immediately preceding Due Period and (b) Reimbursable Administrator Expenses;
provided, that to the extent the Servicer assumes the duties of the Collection
Agent under the Servicing Agreement, such fee shall be payable to the Servicer
and shall equal the amount set forth in the preceding clause.
"Monthly Repossession Ratio" shall mean on any Determination Date, a
fraction (a) the numerator of which is equal to the aggregate Unpaid Principal
Balance of all Designated Auto Loans which were put out for repossession as of
the end of the related Due Period and (b) the denominator of which is the
aggregate Unpaid Principal Balance of all Designated Auto Loans as of the end of
the related Due Period.
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"Monthly Servicing Fee" means, as of any Payment Date, the sum of
(a) unless previously boarded under a servicing agreement with the Servicer, an
initial booking fee equal to the product of (i) $10 and (ii) the number of Auto
Loans transferred to the Trust Estate and allocated to the Variable Funding
Notes during the previous Due Period, (b) the servicing fee, payable monthly
hereunder, equal to the product of (i) $8.00 and (ii) the total number of Auto
Loans subject to the lien of this Indenture and allocated to the Variable
Funding Notes at any time during such Due Period, and (c) expenses of the
Servicer reimbursable from the Trust Estate pursuant to the Servicing Agreement;
provided, however, that to the extent that the Servicer is not an Affiliate of
the Company and has assumed the obligations of the Collection Agent under the
Servicing Agreement, the Monthly Servicing Fee shall include the Monthly
Administrator Fee.
"Note Agent" means Daiwa Finance Corporation, its successors and
assigns.
"Payment Date" shall mean the 15th day of each month (or, if such
day is not a Business Day, the next succeeding Business Day), commencing July
15, 1997, and each other date on which Advances and interest thereon are paid or
payable.
"Reimbursable Collection Agent Expenses" means, with respect to any
Payment Date, all reasonable and customary out-of-pocket fees and expenses of
third parties incurred by the Collection Agent (including expenses related to
financing statements and titles required to be paid or reimbursed by the
Collection Agent) in connection with their respective repossession activities,
including, without limitation, fees of attorneys, appraisers, third party
collateral managers and others (who shall have been retained by the Collection
Agent, in accordance with the Servicing Agreement) for the Due Period
immediately preceding such Payment Date, but not including expenses paid net of
recoveries.
"Repossession Ratio" shall mean, on any Determination Date on or
after July 10, 1997, the product of (a) the average of the Monthly Repossession
Ratios for the three immediately preceding calendar months and (b) 12.
"Reserve Account Balance" shall mean the amount of funds on deposit
in the Cash Reserve Account.
"Reserve Account Deficiency Amount" shall mean as of any Payment
Date the amount by which the Reserve Account Required Balance exceeds the
Reserve Account Balance as of such Payment Date.
"Reserve Account Required Balance" shall mean, as of any
Determination Date, the greater of (a) $150,000 and (b) the product of (i) the
Target Reserve Percentage
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and (ii) the aggregate Unpaid Principal Balance of the Specified Auto Loans as
of the end of the preceding Due Period.
"Servicer" means the entity designated as such under the Servicing
Agreement.
"Servicing Agreement" means the Servicing Agreement, dated January
29, 1997 between AutoBond and CSC Logic/MSA LLP, as Servicer.
"Specified Auto Loan" shall mean each Auto Loan subject to the Lien
of this Indenture and allocated to the Variable Funding Notes.
"Target Reserve Percentage" shall mean 6%; provided, that if, as of
a Determination Date,
(a) the Delinquency Ratio on such Determination Date or any
prior Determination Date is greater than or equal to the 7%, then
the Target Reserve Percentage shall thereafter equal 9%;
(b) the Repossession Ratio on such Determination Date or any
prior Determination Date is greater than or equal to 20%, then the
Target Reserve Percentage shall thereafter equal 9%; and
(c) the Repossession Ratio on such Determination Date or any
prior Determination Date is greater than or equal to 27%, then the
Target Reserve Percentage shall thereafter equal 12%.
If more than one of the foregoing clauses is applicable as of a
particular Determination Date, then the applicable Target Reserve Percentage
shall be the highest amount so applicable.
"Unused Facility Fee" shall have the meaning specified in the Credit
Agreement.
SECTION 13.03. Establishment and Maintenance of Lockbox and Trust
Accounts. The Administrator shall cause to be established and maintained at all
times a lockbox and related account (the "Lockbox" and the "Lockbox Account") in
the name of the Servicer, as custodian for the Administrator and the Trustee, or
in the name of the Trustee. The Administrator agrees to cause the Lockbox Bank
to sweep funds from the Lockbox Account to the Collection Account at least once
each week. The Administrator agrees to require, and to cause the Servicer to
require, that all payments by Obligors on
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Specified Auto Loans be made to the Lockbox. Only payments on Specified Auto
Loans will be received in the Collection Account and no other funds other than
funds in which the Trustee has an interest hereunder will be commingled therein.
In addition, concurrently with the execution and delivery hereof, the Trustee
shall establish the following segregated accounts entitled (a) the "AutoBond
Master Funding Corporation -- Loan Purchase Account, Norwest Bank Minnesota,
National Association, as Trustee" (the "Loan Purchase Account"); (b) the
"AutoBond Master Funding Corporation -- Variable Funding, Series A Collection
Account, Norwest Bank Minnesota, National Association, as Trustee" (the
"Collection Account"); and (c) the "AutoBond Funding Corporation -- Variable
Funding, Series A Reserve Account, Norwest Bank Minnesota, National Association,
as Trustee" (the "Cash Reserve Account"). The Loan Purchase Account, the
Collection Account and the Cash Reserve Account are sometimes collectively
referred to in this Article 13 as the "Trust Accounts".
SECTION 13.04. Required Deposits to the Accounts. (a) The Company
shall cause the following amounts to be paid to the Trustee for deposit to the
accounts established pursuant to Section 13.03:
(i) on the Issuance Date, an amount equal to $ __________ shall be
deposited in the Cash Reserve Account;
(ii) all amounts payable to or for the account of the Company by or
on behalf of the Holders of Variable Funding Notes in respect of Advances
shall be deposited directly in the Loan Purchase Account;
(iii) all amounts representing payments in respect of Specified Auto
Loans (including, without limitation, all Recoveries on Receivables, all
late charges, all payments in respect of the Repurchase Price of Specified
Auto Loans repurchased by AutoBond or the Company in accordance with
Section 11.03 and all proceeds of any Exchange) shall be sent to the
Lockbox Account and then deposited in the Collection Account.
(b) The Trustee acting on behalf of the Holders and the Company
agree (i) that the Trust Accounts shall be maintained in the name of the
Trustee, (ii) that the Trust Accounts shall be subject to the exclusive dominion
of the Trustee, and (iii) that the Trustee shall have the sole right of
withdrawal from the Trust Accounts. The Company, the Holders and AutoBond shall
timely provide written remittance information to the Trustee specifying payment
instructions with respect to amounts payable pursuant to each provision of
Section 13.05. The Trustee shall have no liability to the Company, any Holder or
any other Person for failure to pay funds to any Person in accordance with
Section 13.05 in the absence of
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timely receipt of such written remittance instructions or in the event of any
errors in such written remittance instructions.
SECTION 13.05. Application of Funds in the Trust Accounts. (a)
Except as otherwise provided in Section 13.06, if no Event of Default shall have
occurred and be continuing, the Trustee, in the case of clause (iii), on each
Payment Date or, in the case of clause (ii), on each Business Day, shall apply
funds in the Loan Purchase Account in the following order of priority pursuant
to written instructions of the Company in the case of clauses (i) and (ii) or
pursuant to the Servicer Report (as defined in the Servicing Agreement) in the
case of clause (iii):
(i) on each Funding Date, deposit to the Reserve Account, 2% of each
related Advance;
(ii) to pay to AutoBond (for the account of the Company) an amount
equal to the Loan Acquisition Price (less the amount deposited in (i)
above), in respect of all Specified Auto Loans, if any, to be purchased by
the Company on such date on or before 10:00 a.m., New York City time;
provided that, with respect to each such Specified Auto Loan, such amounts
shall be payable only if the Trustee has received each of the Loan
Documents with respect to such Specified Auto Loan from AutoBond; and
(iii) to pay to the Noteholders, all interest on the Advances and
any Unused Facility Fee then due to the extent funds on deposit in the
Collection Account and the Cash Reserve Account on such date are
insufficient therefor;
and, if any such funds shall remain unused after being applied for the foregoing
purposes, so long as any Advances remain outstanding the remaining funds shall
be retained in the Loan Purchase Account and continue to be part of the Trust
Estate hereunder, and if so instructed in writing by AutoBond, may be invested
or withdrawn by the Trustee in accordance with Section 13.06 hereof. The Trustee
may liquidate any investment when required to make an application pursuant to
clauses (i), (ii) and (iii) above. No investment made pursuant to this section
will have a maturity later than one Business Day prior to the date on which such
funds will be needed to make payments on the Variable Funding Notes.
(b) If no Event of Default shall have occurred and be continuing,
the Trustee on each Payment Date shall apply funds held in the Collection
Account in respect of the prior Due Period in the following order of priority:
83
(i) to the Noteholders, an amount equal to accrued and unpaid
interest on the Advances and an amount equal to the Unused Facility Fee
payable on such Payment Date;
(ii) to the Trustee and the Servicer, an amount equal to the Monthly
Trustee Fee and the Monthly Servicer Fee, respectively, payable on such
Payment Date;
(iii) to the Loan Purchase Account as Advances to fund Auto Loans,
unless directed by the Note Agent to pay to the Noteholders principal on
the Advances, an amount equal to any principal received in respect of
Specified Auto Loans during the immediately preceding Due Period;
(iv) to the Cash Reserve Account, an amount equal to the Reserve
Account Deficiency Amount, until the Reserve Account Balance equals the
Reserve Account Required Balance;
(v) to the Administrator, an amount equal to the sum of (i) the
Monthly Administrator Fee payable on such Payment Date and (ii) any late
charges received in respect of Specified Auto Loans during the immediately
preceding Due Period;
(vi) to the discharge of all other obligations of the Company which
are then due under the Credit Agreement (or, to the extent such
obligations have not yet matured, to be set aside and held in trust solely
to satisfy such obligations, as and when they mature or otherwise become
due) in an amount equal to such obligations; and
(vii) to the Company, an amount equal to any funds remaining in the
Collection Account.
(c) If no Event of Default shall have occurred and be continuing,
the Trustee on each Payment Date shall apply funds held in the Cash Reserve
Account in the following order of priority (in accordance with the Servicer
Report):
(i) to the Noteholders, an amount equal to the accrued and unpaid
interest and fees on the Variable Funding Notes (including, any accrued
and unpaid Unused Facility Fees) to the extent that funds on deposit in
the Collection Account on such date are insufficient therefor;
(ii) to the Noteholders, an amount equal to the principal of the
Notes due and payable on such date to the extent that funds on deposit in
the Collection Account on such date are insufficient therefor; and
84
(iii) to the Collection Account, an amount equal to the Excess
Reserve Account Amount.
(d) If an Event of Default shall have occurred and be continuing,
the Trustee shall apply all amounts held in the Loan Purchase Account, the
Collection Account and the Cash Reserve Account and the proceeds of any
collection, recovery, receipt, appropriation, realization or sale of any Trust
Assets in connection with any Event of Default (after deducting all reasonable
costs and expenses of every kind incurred in any way relating to the exercise of
rights of the Trustee with respect to the Trust Assets upon an Event of Default,
including reasonable attorney's fees and expenses) in the following order of
priority:
(i) to the Trustee, an amount equal to all fees, costs and expenses
owing to the Trustee under this Indenture;
(ii) to the Servicer (if other than AutoBond), an amount equal to
all fees, costs and expenses owing to the Servicer under the Servicing
Agreement;
(iii) to the Noteholders, in the following order of priority (A) an
amount equal to all unpaid interest on, (B) other amounts due or to become
due with respect to including, without limitation, any accrued and unpaid
Unused Facility Fees, and (C) principal of, the Notes (in the event any
such principal is not due and the Notes have not been accelerated, all
such amounts shall be retained in the Trust Accounts and applied solely to
pay principal of and interest on, and other amounts due or to become due
with respect to, the Notes, as and when due until all principal and
interest on, and other amounts due or to become due with respect to, the
Notes shall have been paid and satisfied in full);
(iv) to the discharge of all other obligations of the Company which
are then due under the Credit Agreement and the Servicing Agreement (or,
to the extent such obligations have not yet matured, to be set aside and
held in trust solely to satisfy such obligations, as and when they mature
or otherwise become due) in an amount equal to such obligations; and
(v) to the Company, an amount equal to any funds remaining in the
Trust Accounts.
(e) To the extent that the sum of amounts held in the Loan Purchase
Account exceeds $5,000,000, the Trustee shall notify the Company and the Note
Agent. In the event that three (3) Business Days following the Business Day on
which the amount on deposit in the Loan Purchase Account exceeded $5,000,000,
the amount on deposit in the Loan Purchase Account (after giving effect to any
disbursements pursuant to Section 13.05 on such
85
date) is still greater than $5,000,000, the Trustee, unless otherwise directed
by the Note Agent, shall withdraw an amount equal to the amount by which the
amount on deposit in the Loan Purchase Account exceeds $4,000,000 and disburse
such amount to the Noteholders as a prepayment of the Notes in accordance with
Section 8.2 of the Credit Agreement.
SECTION 13.06. Exchanges for New Series.
(a) From time to time, on any Business Day on or before March 31,
1998, and upon 7 days' written notice to the Administrator and the Trustee, the
Note Agent on behalf of the Noteholders (after consultation with the
Administrator), may elect to exchange all or a portion of the unpaid Outstanding
Principal Amount of the Variable Funding Notes for a new Series of Notes (the
"Term Notes") to be issued in accordance with Section 2.01(a) of this Indenture
(each such election, an "Exchange").
(b) The Company agrees to cause the creation of such Series of Term
Notes under the Indenture and to execute and order the authentication of the
Notes of such Series so long as, as designated by the Note Agent:
(1) The aggregate principal amount of the Term Notes of such
Series (other than Excess Spread Notes) shall equal the Unpaid Principal
Balance of the Auto Loans in the Trust Estate allocated to such Series.
(2) the Stated Maturity of the Term Notes is 5 years from the
Issuance Date for such Series;
(3) (A) at least 90% of the aggregate principal amount of the
Term Notes (the "Senior Class") are rated at least A by Fitch and A3 by
▇▇▇▇▇'▇; and (B) up to 10% of the aggregate principal amount of the Term
Notes (the "Mezzanine Class") are rated at least BB by Fitch or ▇▇▇▇▇'▇;
(4) (A) the fixed interest rate of the Senior Class shall be
"at the market" and in any event shall not exceed 200 basis points over
comparable U.S. Treasury securities; and (B) the fixed interest rate of
the Mezzanine Class shall be "at the market" and in any event shall not
exceed 280 basis points over comparable U.S. Treasury securities;
(5) the Unpaid Principal Balance of the Auto Loans allocated
to the Term Notes shall equal 109% of the aggregate principal amount of
the portion of the Variable Funding Notes tendered for an Exchange;
86
(6) if risk default insurance is purchased, the Series shall
provide for a Class of Excess Spread Notes, sized to obtain a rating of at
least "BB" from Fitch or a similar rating from ▇▇▇▇▇'▇ and with an
interest rate no greater than 17% per annum, which shall be retained by
the Company until sold;
(7) funds released from the Cash Reserve Account for the
Variable Funding Notes shall be deposited in the Cash Reserve Account for
the Term Notes;
(8) upon payment of risk default insurance premiums, the Auto
Loans allocated to the Term Notes shall be covered by a risk default
Insurance Policy;
(9) a Trustee shall have been appointed for such Series;
(10) after such Exchange, pending their sale by the Note
Agent, payments on the Notes in excess of the aggregate principal amount
of, and accrued interest on, the Variable Funding Notes exchanged for the
Notes shall be for the Company's account; and
(11) after such Exchange, the Term Notes will be sold at least
at par and the proceeds of such sale less a customary underwriting
commission for Notes placed by the Holder thereof (not to exceed 1.00%),
shall be applied as follows:
(A) to the Holders of Variable Funding Notes exchanged for the
Notes, an amount equal to the aggregate principal amount of the
portion of the Variable Funding Notes so exchanged, plus interest
accrued thereon at the weighted average interest rate on the Senior
Notes and Mezzanine Notes through the date of sale;
(B) to the Cash Reserve Account for the Term Notes additional
amounts needed to fill such Trust Account to the initial required
amount (not to exceed 2%); and
(C) the remainder, to the Company.
SECTION 13.07. Additional Events of Default; Remedies. (a) In
addition to the Events of Default set forth in Section 6.01, the following
additional Events of Default shall be applicable to the Variable Funding Notes:
(i) a Borrowing Base Deficiency (as defined in the Credit Agreement)
is determined to exist on a Determination Date and continues unremedied
after giving
87
effect to the transactions on the related Payment Date, in each case
within five (5) Business Days after notice from the Note Agent; or
(ii) the Company or AutoBond shall default in the due and punctual
performance of or compliance with any material covenant, condition or
agreement to be performed or observed by it under the Credit Agreement,
respectively, hereof and any such default shall continue unremedied for a
period of twenty (20) Business Days after an Authorized Officer of the
Company or AutoBond obtains knowledge thereof; or
(iii) any representation, warranty, certification or statement of
the Company or AutoBond made or contained in the Credit Agreement or in
any agreement, instrument, certificate, statement or other writing
furnished in connection herewith or therewith or pursuant hereto or
thereto, shall prove to have been false or inaccurate in any material
respect on the date as of which such representation or warranty was made
and any such breach shall continue unremedied for a period of thirty (30)
days after an Authorized Officer of the Company or AutoBond obtains
knowledge thereof.
(b) in addition to the remedies set forth in Article 6, upon the
occurrence and continuance of any Event of Default set forth in this Section
13.07 by AutoBond, the Note Agent may remove AutoBond as Collection Agent under
the Servicing Agreement and appoint a successor Collection Agent.
SECTION 13.08. Resignation or Removal of Trustee. Notwithstanding
Section 7.08(a), the Trustee may at any time resign and be discharged with
respect to the Variable Funding Notes by giving 30 days' written notice thereof
to the Administrator, the Company, the Note Agent and Fitch. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Trustee not objected to by Note Agent within 30 days after prior written notice,
by written instrument, in quintuplicate, one counterpart of which instrument
shall be delivered to each of the Company, the successor Trustee and the
predecessor Trustee. A copy of such instrument shall be delivered to Fitch.
88
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed as of the day and year first above written.
AUTOBOND MASTER FUNDING CORPORATION
as Issuer
By
--------------------------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION, as
Administrator and individually
By
--------------------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Trustee
By
--------------------------------------------------
Name:
Title: Corporate Trust Officer
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TABLE OF CONTENTS
Page
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ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION......................... 2
SECTION 1.01. General Definitions..................................... 2
SECTION 1.02. Compliance Certificates and Opinions.................... 17
SECTION 1.03. Form of Documents Delivered to Trustee.................. 18
SECTION 1.04. Acts of Noteholders, etc................................ 19
SECTION 1.05. Notice to Noteholders; Waiver........................... 20
SECTION 1.06. Effect of Headings and Table of Contents................ 21
SECTION 1.07. Successors and Assigns.................................. 21
SECTION 1.08. GOVERNING LAW........................................... 21
SECTION 1.09. Legal Holidays.......................................... 21
SECTION 1.10. Execution in Counterparts............................... 21
SECTION 1.11. Inspection.............................................. 22
SECTION 1.12. Survival of Representations and Warranties.............. 22
SECTION 1.13. Security Forms.......................................... 22
ARTICLE 2.
THE NOTES............................... 23
SECTION 2.01. General Provisions...................................... 23
SECTION 2.02. Execution, Authentication, Delivery, and Dating......... 26
SECTION 2.03. Transfer and Exchange................................... 26
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes............. 28
SECTION 2.05. Payment of Interest and Principal; Rights Preserved..... 29
SECTION 2.06. Persons Deemed Owners................................... 29
SECTION 2.07. Cancellation............................................ 29
SECTION 2.08. Noteholder Lists........................................ 30
SECTION 2.09. Treasury Notes.......................................... 30
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS..................... 31
SECTION 3.01. Trust Accounts; Investments by Trustee.................. 31
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SECTION 3.02. Establishment and Administration of the Lockbox and the
Collection Accounts.............................................. 33
SECTION 3.03. Establishment and Administration of Cash Reserve
Accounts......................................................... 34
SECTION 3.04. Distributions............................................ 35
SECTION 3.05. Reports to Noteholders................................... 35
SECTION 3.06. Returned Payments........................................ 36
ARTICLE 4.
THE TRUST ESTATE............................ 36
SECTION 4.01. Acceptance by Trustee and Agreement to Act as
Custodian........................................................ 36
SECTION 4.02. Subsequent Transfers................................. 37
SECTION 4.03. Conditions Precedent to All Transfers................ 38
SECTION 4.04. Grant of Security Interest; Tax Treatment............ 39
SECTION 4.05. Further Action Evidencing Assignments................ 40
ARTICLE 5.
SERVICING OF TRUST ASSETS....................... 41
SECTION 5.01. Appointment of Servicer.............................. 41
SECTION 5.02. Appointment of Administrator; Monthly Administration
Fee.............................................................. 41
SECTION 5.03. Duties and Responsibilities of the Administrator..... 42
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES...................... 43
SECTION 6.01. Events of Default....................................... 43
SECTION 6.02. Acceleration of Maturity; Rescission and Annulment...... 45
SECTION 6.03. Remedies................................................ 46
SECTION 6.04. Trustee May File Proofs of Claim........................ 47
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Notes............................................................ 48
SECTION 6.06. Application of Money Collected....................... 48
SECTION 6.07. Limitation on Suits.................................. 49
SECTION 6.08. Unconditional Right of Noteholders to Receive Principal
and Interest..................................................... 49
SECTION 6.09. Restoration of Rights and Remedies...................... 50
SECTION 6.10. Rights and Remedies Cumulative.......................... 50
SECTION 6.11. Delay or Omission Not Waiver............................ 50
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SECTION 6.12. Control by Noteholders.................................. 50
SECTION 6.13. Waiver of Events of Default............................. 51
SECTION 6.14. Undertaking for Costs................................... 51
SECTION 6.15. Waiver of Stay or Extension Laws........................ 52
SECTION 6.16. Sale of Trust Estate.................................... 52
ARTICLE 7.
THE TRUSTEE.............................. 53
SECTION 7.01. Certain Duties......................................... 53
SECTION 7.02. Notice of Events of Default.......................... 55
SECTION 7.03. Certain Matters Affecting the Trustee................... 55
SECTION 7.04. Trustee Not Liable for Notes or Receivables.......... 56
SECTION 7.05. Trustee May Own Notes................................ 57
SECTION 7.06. The Administrator to Pay Trustee's Fees and Expenses. 57
SECTION 7.07. Eligibility Requirements for Trustee................. 57
SECTION 7.08. Resignation or Removal of Trustee.................... 57
SECTION 7.09. Successor Trustee.................................... 58
SECTION. 7.10. Merger or Consolidation of Trustee................... 60
ARTICLE 8.
COVENANTS ............................... 60
SECTION 8.01. Payment of Principal and Interest....................... 60
SECTION 8.02. Maintenance of Office or Agency; Chief Executive Office. 60
SECTION 8.03. Money for Payments to Noteholders to be Held in Trust... 60
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc......... 61
SECTION 8.05. Protection of Trust Estate; Further Assurances.......... 62
SECTION 8.06. Servicing Agreement..................................... 63
SECTION 8.07. Additional Covenants.................................... 63
SECTION 8.08. Taxes................................................... 64
ARTICLE 9.
SUPPLEMENTAL INDENTURES........................ 65
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.. 65
SECTION 9.02. Supplemental Indentures with Consent of Noteholders..... 65
SECTION 9.03. Execution of Supplemental Indentures.................... 67
SECTION 9.04. Effect of Supplemental Indentures....................... 67
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SECTION 9.05. Reference in Notes to Supplemental Indentures........... 67
ARTICLE 10.
SATISFACTION AND DISCHARGE....................... 67
SECTION 10.01. Satisfaction and Discharge of Indenture................ 67
SECTION 10.02. Application of Trust Money............................. 69
SECTION 10.03. Trust Termination Date................................. 69
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
.................................... 69
SECTION 11.01. Representations and Warranties of the Company........ 69
SECTION 11.02. Representations and Warranties as to Each Receivable 72
SECTION 11.03. Repurchases and Transfers............................ 72
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. Indemnities of the Administrator..................... 74
SECTION 12.02. Officers' Certificate and Opinion of Counsel as to
Conditions Precedent............................................. 74
SECTION 12.03. Statements Required in Certificate or Opinion.......... 75
SECTION 12.04. Notices.............................................. 75
SECTION 12.05. Notices and Reports to be Delivered to the Rating
Agencies......................................................... 77
SECTION 12.06. No Proceedings....................................... 77
ARTICLE 13.
VARIABLE FUNDING NOTES......................... 77
SECTION 13.01. Designation.......................................... 77
SECTION 13.02. Certain Definitions.................................. 78
SECTION 13.03. Establishment and Maintenance of Lockbox and Trust
Accounts............................................. 82
SECTION 13.04. Required Deposits to the Accounts.................... 83
SECTION 13.05. Application of Funds in the Trust Accounts........... 83
SECTION 13.06. Exchanges for New Series............................. 87
iv
SECTION 13.07. Additional Events of Default; Remedies................. 88
SECTION 13.08. Resignation or Removal of Trustee...................... 89
Schedules
Schedule 1 - List of Trust Assets allocated to each Series.
Schedule 2 - VSI Policies
EXHIBITS
EXHIBIT A - AutoBond Program Manual
EXHIBIT B - Form of Collateral Assignment
EXHIBIT C - Forms of Variable Funding Note
EXHIBIT D - Form of Rule 144A Transferee Letter
EXHIBIT E - Form of Investor Letter
EXHIBIT F - Form of Administrator Report
EXHIBIT G - Form of Repurchase Assignment
v
EXHIBIT C
FORM OF VARIABLE FUNDING NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS ACCEPTANCE
HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST
OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION 4975(e)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN INDIVIDUAL
RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR ACCOUNT DESCRIBED
ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL BE COVERED BY A
DEPARTMENT OF LABOR CLASS EXEMPTION.
AUTOBOND MASTER FUNDING CORPORATION
VARIABLE FUNDING NOTE, SERIES A
$50,000,000 June 30, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, AutoBond Master Funding Corporation, a Nevada
corporation (the "Company") for value received, hereby promises to pay to Daiwa
Finance Corporation (the "Holder") or its assigns, the principal sum of Fifty
Million Dollars ($50,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Advances made by the Holder to the
Company under the Credit Agreement (as modified and supplemented and in effect
from time to time, the "Credit Agreement") dated as of June 30, 1997 among the
Company, AutoBond Acceptance Corporation and the Holder), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the
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principal amounts provided in the Indenture referred to below, and to pay
interest on the unpaid principal amount of this Note until paid in full, at the
rates per annum and on the dates provided in the Indenture and the Credit
Agreement.
The date, amount, interest rate and maturity date of each Advance
made by the Holder shall be recorded by the Holder on its books and, prior to
any transfer of this Note, endorsed by the Holder on the schedule attached
hereto or any continuation thereof.
By its holding of this Note, the Holder shall be deemed to accept
the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
This Note is one of a duly authorized issue of Notes of the Company
designated as its "Variable Funding Notes, Series A" (herein called the "Notes")
limited in aggregate principal amount of $50,000,000, issued under the Trust
Indenture, dated as of June 30, 1997 (herein called the "Indenture"), among the
Company, AutoBond Acceptance Corporation ("AutoBond") and Norwest Bank
Minnesota, National Association, as trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, AutoBond, the Trustee and the Holders and of the terms upon
which the Notes are authenticated and delivered. Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings set forth in
the Indenture.
This Note is secured by the pledge to the Trustee under the
Indenture of the Trust Estate allocated to the Notes. The amounts owed under
this Note shall not include any recourse to AutoBond, the Servicer, the Trustee
or any affiliates thereof.
In addition to the Notes, the Company may from time to time issue
additional Series of Notes under the Indenture, including in exchange for all or
a portion of the outstanding principal amount of this Note.
If certain Events of Default under the indenture have been declared,
the unpaid principal of the Notes may be declared immediately due and payable in
the manner and with the effect provided in the Indenture. Notice of Note
declaration will be given by mail to Noteholders, as their names and addresses
appear in the Note Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the
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obligations of the Company with respect to the payment of principal and interest
on this Note shall terminate.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Noteholders of the percentages
specified in the Indenture at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes, at the time Outstanding, on behalf of all the
Holders, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by he Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
Each Class A Note may be issued only in registered form and only in
minimum denominations of at least $100,000 and integral multiples of $1,000 in
excess thereof; provided that the foregoing shall not restrict or prevent the
transfer in accordance with Section 2.03 of the Indenture of any Note having a
remaining Outstanding Principal Amount of other than an integral multiple of
$1,000, or the issuance of a single Note with a denomination less than $100,000.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note may be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be deemed to be contracts made
under the laws of the State of New York and shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual signature of its duly authorized officer.
Dated: June 30, 1997
AUTOBOND MASTER FUNDING CORPORATION
By:
--------------------------------
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Trustee's Certificate of Authentication
This is one of the Variable Funding Notes, Series A referred to in
the within mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------------
Authorized Signatory
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ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _________________, agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated: ____________________ Signed:
(sign exactly as the name appears on the
other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this
C-6
Assignment Form, you may sign a separate "power of attorney" form and then mail
the unsigned Note and the signed "power of attorney" in separate envelopes. For
added protection, use certified or registered mail for a Note.
C-7
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Indenture and
Credit Agreement to the Company, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Date of Amount of Interest Date of Paid or Principal Notation
Advance Advance Rate Advance Prepaid amount Made By
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C-8