Exhibit 10.1.5
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SECOND TIER RECEIVABLES PURCHASE AGREEMENT
between
COMPASS AUTO RECEIVABLES CORPORATION,
ASSET BACKED SECURITIES CORPORATION,
COMPASS BANK,
an Alabama state banking corporation
and
COMPASS BANK,
a Texas state bank
Dated as of June 24, 1998
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SECOND TIER RECEIVABLES PURCHASE AGREEMENT
This SECOND TIER RECEIVABLES PURCHASE AGREEMENT, dated as of June 24,
1998 (this "Agreement"), between COMPASS AUTO RECEIVABLES CORPORATION, a
Delaware corporation ("Compass Auto"), ASSET BACKED SECURITIES CORPORATION,
a Delaware corporation (the "Company"), and, solely for purposes of
Sections 4.2 and 4.3, COMPASS BANK, an Alabama state banking corporation
("Compass Bank"), and COMPASS BANK, a Texas state bank ("Compass Bank -
Texas" and, together with Compass Bank, the "Sellers").
WHEREAS, Company desires to purchase from Compass Auto a portfolio of
receivables in connection with Motor Vehicle Contracts purchased by Compass
Auto; and
WHEREAS, Compass Auto is willing to sell such portfolio to Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms are used in this
Agreement as defined in Appendix X to the Sale and Servicing Agreement,
dated as of June 30, 1998, between Compass Auto Receivables Trust 1998-A,
as Issuer, Company, as Depositor, Compass Bank, as Servicer and The Chase
Manhattan Bank, as Indenture Trustee.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the relevant
jurisdiction and not otherwise defined in this Agreement are used as
defined in that Article; (c) the words "hereof," "herein" and "hereunder"
and words of similar import refer to this Agreement as a whole and not to
any particular provision of this Agreement; (d) references to any Article,
Section, Schedule, Appendix or Exhibit are references to Articles,
Sections, Schedules, Appendices and Exhibits in or to this Agreement and
references to any paragraph,
subsection, clause or other subdivision within any Section or definition
refer to such paragraph, subsection, clause or other subdivision of such
Section or definition; (e) the term "including" means "including without
limitation"; (f) except as otherwise expressly provided herein, references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (g) references to
any Person include that Person's successors and assigns; and (h) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables.
Subject to the conditions precedent set forth in Section 2.4,
effective as of the Closing Date and immediately prior to the transactions
pursuant to the Sale and Servicing Agreement and the Indenture, Compass
Auto does hereby sell, transfer, assign, set over and otherwise convey to
Company, without recourse (subject to the obligations herein)
(collectively, the "Compass Auto Assets"), all of Compass Auto's right,
title and interest in and to:
(a) the Receivables and (i) all monies received thereon and
allocable to principal on and after the Cutoff Date and (ii) all
monies received thereon and allocable to interest on and after July 1,
1998;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, to the extent permitted by
law, any accessions thereto;
(c) any proceeds with respect to the Receivables from claims on
any Insurance Policies covering Financed Vehicles or the Obligors;
(d) any recourse against Dealers with respect to the Receivables
under Dealer Agreements;
(e) the First Tier Receivables Purchase Agreement, including the
right of Compass Auto to cause a Seller to repurchase Receivables
thereunder; and
(f) any and all proceeds of the foregoing.
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The sale, transfer, assignment, setting over and conveyance made
hereunder shall not constitute and is not intended to result in an
assumption by Company of any obligation of Sellers to the Obligors, the
Dealers or any other Person in connection with the Receivables and the
other assets and properties conveyed hereunder or any agreement, document
or instrument related thereto.
SECTION 2.2. Closing. The closing for the purchase and sale of the
Compass Auto Assets shall take place at the offices of ▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇, Chicago, Illinois, at 10:00 a.m., Chicago time, on June 30, 1998 or
such other place and time as the parties shall agree (the "Closing Date").
SECTION 2.3. Purchase Price. In consideration for the Compass Auto
Assets, Company shall, on the Closing Date, (a) pay to or upon the order of
Compass Auto, in immediately available funds, an amount (the "Purchase
Price") equal to $377,837,916.25, and (b) cause Issuer to issue $22,080,879
aggregate Certificate Balance of Certificates to Compass Auto.
SECTION 2.4. Conditions of Company's Obligations. The obligations
of Company to purchase the Compass Auto Assets will be subject to the
satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Compass Auto Assets, such conditions shall be
deemed satisfied or waived.
(a) Each of the obligations of Compass Auto and Sellers required
to be performed by them on or prior to the Closing Date pursuant to
the terms of this Agreement and the First Tier Receivables Purchase
Agreement shall have been duly performed and complied with, and all of
the representation and warranties of Compass Auto and Sellers under
this Agreement and the First Tier Receivables Purchase Agreement shall
be true and correct in all material respects as of the Closing Date,
and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement or the First
Tier Receivables Purchase Agreement, and Company shall have received
certificates to the effect of the foregoing signed by an authorized
officer of each of Compass Auto and Sellers.
(b) Company shall have received letters in form and substance
reasonably acceptable to Company and its counsel, prepared by KPMG
Peat Marwick LLP, independent certified public accountants, dated as
of the date of the Prospectus Supplement and as of the Closing Date
(i) regarding the numerical information contained in the Prospectus
Supplement and (ii) relating to certain agreed upon procedures as
specified by Company.
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(c) Company shall have received duly executed and delivered
copies of the following additional closing documents, in form and
substance reasonably satisfactory to Company and its counsel:
(i) the Schedule of Receivables;
(ii) the Basic Documents and the Underwriting Agreement,
dated as of June 24, 1998, between Company and CSFB, and all
documents required thereunder, in each case duly executed and
delivered by each of the parties thereto other than Company;
(iii) an officer's certificate of an officer of each of
Compass Auto and Sellers, dated as of the Closing Date, as to the
incumbency of officers and the due authorization of the
transactions contemplated by the Basic Documents, with
resolutions of their boards of directors and a copy of their
charter and by-laws attached thereto;
(iv) opinions of counsel for Sellers and Compass Auto as to
the matters, and in form and substance, reasonably acceptable to
Company (it being agreed that such opinions shall expressly
provide that Owner Trustee, Indenture Trustee, the Underwriters
and the Rating Agencies shall be entitled to rely on such
opinions), including as to such matters as shall be required for
the assignment of a rating to the Class A-1 Notes of "A-1+" by
Standard & Poor's and "P-1" by Moody's, and the Class A-2 Notes
and the Class A-3 Notes of "AAA" by Standard & Poor's and "Aaa"
by Moody's;
(v) a letter from each of Moody's and Standard & Poor's
that it has assigned a rating of "P-1" and "A-1+," respectively,
to the Class A-1 Notes and ratings of "Aaa" and "AAA,"
respectively, to the Class A-2 Notes and the Class A-3 Notes;
(vi) opinions of counsel for Owner Trustee and Indenture
Trustee, in form and substance reasonably acceptable to Company
(it being agreed that such opinions shall expressly provide that
Compass Auto, Sellers, the Underwriters and the Rating Agencies
shall be entitled to rely on such opinions); and
(vii) opinions of counsel for Issuer, in form and in
substance reasonably acceptable to Company (it being agreed that
such opinions shall expressly provide that Owner Trustee,
Indenture
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Trustee, the Underwriters and the Rating Agencies shall be
entitled to rely on such opinions).
(d) No Termination Event shall have occurred.
(e) All proceedings in connection with the transactions
contemplated by this Agreement and the other Basic Documents and all
documents incident hereto and thereto shall be reasonably satisfactory
in form and substance to Company and its counsel.
(f) Compass Auto and Sellers shall have furnished Company with
such other certificates of its officers or others and such other
documents or opinions as Company or its counsel may reasonably
request.
(g) All other terms and conditions of this Agreement shall have
been complied with in all material respects.
SECTION 2.5. True Sales. (a) Each of Compass Auto and Company
intend the transfer of the Compass Auto Assets to constitute a true sale by
Compass Auto to Company providing Company with the full benefits of
ownership thereof, and neither party hereto intends the transactions
contemplated hereunder to be, or for any purpose to be characterized as, a
loan from Company to Compass Auto.
(b) If (but only to the extent) that the transfer of the Compass Auto
Assets hereunder is characterized by a court or other Governmental
Authority as a loan rather than a sale, Compass Auto shall be deemed
hereunder to have granted to Company a security interest in all of Compass
Auto's right, title and interest in and to the Compass Auto Assets. Such
security interest shall secure all of Compass Auto's obligations (monetary
or otherwise) under this Agreement and the other Basic Documents to which
it is a party, whether now or hereafter existing or arising, due or to
become due, direct or indirect, absolute or contingent. Company shall
have, with respect to the property described in this Section 2.5, and in
addition to all the other rights and remedies available to Company under
this Agreement and applicable law, all the rights and remedies of a secured
party under any applicable UCC, and this Agreement shall constitute a
security agreement under applicable law.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Compass Auto.
Compass Auto hereby makes the following representations and warranties
upon which Company may rely. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Receivables to Company.
(a) Organization and Good Standing. Compass Auto has been duly
organized and is validly existing as a Delaware corporation in good
standing under the laws of the State of Delaware, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted and had at all relevant times, and shall have, power,
authority and legal right to acquire, own and sell the Compass Auto
Assets pursuant to Article II.
(b) Power and Authority. Compass Auto has the power, authority
and legal right to execute and deliver this Agreement and to carry out
its terms and to sell and assign the Compass Auto Assets; and the
execution, delivery and performance of this Agreement has been duly
authorized by Seller by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, other than the
filing of UCC financing statements.
(d) Valid Sale; Binding Obligation. Compass Auto intends this
Agreement to effect a valid sale, transfer and assignment of the
Receivables and the other properties and rights included in the
Compass Auto Assets conveyed by Compass Auto to Company hereunder,
enforceable against creditors of and purchasers from Compass Auto; and
this Agreement constitutes a legal, valid and binding obligation of
Compass Auto, enforceable against Compass Auto in accordance with its
terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation
and other similar laws affecting enforcement of the rights of
creditors generally and to equitable limitations on the availability
of specific remedies.
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(e) No Violation. The execution, delivery and performance by
Compass Auto of this Agreement and the consummation of the
transactions contemplated hereby shall not conflict with, result in
any material breach of any of the terms and provisions of, constitute
(with or without notice or lapse of time) a material default under or
result in the creation or imposition of any Lien upon any of its
material properties pursuant to the terms of, (i) the certificate of
incorporation or bylaws of Compass Auto, (ii) any material indenture,
contract, lease, mortgage, deed of trust or other instrument or
agreement to which Compass Auto is a party or by which Compass Auto is
bound, or (iii) any law, order, rule or regulation applicable to
Compass Auto of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Compass Auto.
(f) No Proceedings. There are no proceedings or investigations
pending or, to Compass Auto's knowledge threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Compass Auto or
its properties: (i) asserting the invalidity of this Agreement; (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement; (iii) seeking any determination or
ruling that might materially and adversely affect the performance by
Compass Auto of its obligations under, or the validity or
enforceability of, this Agreement or the transactions contemplated
herein.
(g) Chief Executive Office. The chief executive office of
Compass Auto is located at the address set forth in Section 5.7.
(h) No Untrue Statement. None of the statements of Compass Auto
in the Prospectus Supplement (excluding any reference to or
information contained in the Prospectus or any information deemed
incorporated by reference in the Prospectus Supplement from the
Prospectus or the Registration Statement) contains any untrue
statement or alleged untrue statement of any material fact or omits to
state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.2. Representations and Warranties as to Each Receivable.
Compass Auto hereby makes the following representations and warranties
as to each Receivable conveyed by it to Company hereunder on which Company
is relying in acquiring the Receivables. Unless otherwise indicated, such
representations and warranties shall speak as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables to
Company hereunder and from
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Company to Issuer under the Sale and Servicing Agreement, and the pledge
thereof to Indenture Trustee pursuant to the Indenture.
(a) Lien in Force. Compass Auto has not taken any action that
would have the effect of releasing the related Financed Vehicle from
the Lien granted pursuant to the Motor Vehicle Contracts in whole or
in part.
(b) No Liens. Compass Auto has not received notice of any Liens
or claims, or of any liens for work, labor, materials or unpaid state
or federal taxes, relating to the Financed Vehicle securing the
Receivable, that are or may be prior to or equal to the Lien granted
by the Receivable.
(c) Good Title. No Receivable has been sold, transferred,
assigned, or pledged by Compass Auto to any Person other than Company.
Immediately prior to the transfer and assignment herein contemplated,
Compass Auto had good and marketable title to the Receivable free and
clear of any Lien and had full right and power to transfer and assign
the Receivable to Company and immediately upon the transfer and
assignment of the Receivable to Company, Company shall have good and
marketable title to the Receivable, free and clear of any Lien.
(d) No Assignment. As of the Closing Date, Compass Auto shall
not have taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the
Receivable, that is senior to, or equal with that of Company.
SECTION 3.3. Repurchase upon Breach. Compass Auto, Company or any
assignee, transferee or designee of Company, as the case may be, shall
inform the other party to this Agreement promptly, in writing, upon the
discovery of any breach or failure to be true of the representations or
warranties made by Compass Auto in Section 3.2; provided that the failure
to give such notice shall not affect any obligation of Compass Auto. If
the breach or failure shall not have been cured by the last day of the
Collection Period in which the 60th day (or if Compass Auto elects, the
30th day) occurs after the date on which Compass Auto becomes aware of, or
receives written notice from Company of, such breach or failure, and such
breach or failure materially and adversely affects the interests of Issuer
and the Noteholders, Compass Auto shall repurchase each such Receivable
from Company as of such last day of such Collection Period at a purchase
price equal to the Purchase Amount for such Receivable as of such last day
of such Collection Period. In consideration of the purchase of a
Receivable hereunder, Compass Auto shall (unless otherwise directed by
Company in writing) deposit the Purchase Amount of such Receivable, no
later than the close of business on the next Deposit Date, into the
Collection Account. The sole remedy of Company with respect to a breach or
failure to be true
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of the warranties made by Compass Auto pursuant to Section 3.2 shall be to
require Compass Auto to repurchase Receivables pursuant to this Section.
SECTION 3.4. Representation and Warranty of Company. Company
hereby represents and warrants to Compass Auto and the Underwriters that
Company has filed or shall timely file the Prospectus and Prospectus
Supplement with the Commission in accordance with Rule 424(b) under the
Securities Act.
ARTICLE IV
COVENANTS OF COMPASS AUTO
Compass Auto covenants and agrees with Company as follows:
SECTION 4.1. Protection of Title to Compass Auto Assets. (a)
Compass Auto shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and
in such places as may be required by law fully to preserve, maintain and
protect the interest of Company, Owner Trustee and Indenture Trustee in the
Receivables and the proceeds thereof. Compass Auto shall deliver (or cause
to be delivered) to Company file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Compass Auto shall not change its name, identity or corporate
structure in any manner that could make any financing statement or
continuation statement filed in accordance with Section 4.1 seriously
misleading within the meaning of (S) 9-402(7) of the UCC, unless it shall
have given Company, Owner Trustee and Indenture Trustee written notice
thereof within 30 days after any such change and filed appropriate
amendments to all previously filed financing statements or continuation
statements within 60 days after any such change.
(c) Compass Auto shall give Company, Owner Trustee and Indenture
Trustee written notice of any relocation of its principal executive office
within 30 days after any such relocation if, as a result of such
relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any
such amendment or new financing statement within 60 days after any such
relocation.
(d) Promptly after taking the actions described in Section 4.1(b), (c)
or Section 4.5, Compass Auto shall deliver to Indenture Trustee and Owner
Trustee an Opinion of Counsel either (A) stating that, in the opinion of
such counsel, all
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financing statements and continuation statements have been executed and
filed that are necessary to preserve and protect the interest of Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
SECTION 4.2. Costs. In connection with the transactions
contemplated under this Agreement and the other Basic Documents, Compass
Auto shall, or shall cause Sellers to, promptly pay (or shall reimburse
Company or any other Person to the extent that Company or such other Person
shall pay): (a) the cost of the qualification of the Notes for offer and
sale under the securities or Blue Sky laws (including the reasonable fees
and expenses of counsel for the Underwriters relating to the preparation,
reproduction and delivery of any Blue Sky Memorandum prepared in connection
with such qualification); (b) the fees of the Rating Agencies; (c) any of
the initial fees of Owner Trustee and Indenture Trustee and the reasonable
fees and disbursements of their counsel (which, in the case of Indenture
Trustee, are set forth a fee letter dated as of June 25, 1998); (d)
expenses incurred in connection with printing (or otherwise reproducing)
and delivering this Agreement, the other Basic Documents, the Prospectus,
the Prospectus Supplement, any amendment or supplement thereto, any
preliminary prospectus and prospectus supplement, the Notes and the
Certificates; (e) fees and expenses relating to the filing of documents
with the Commission (including all related filings under Rule 424(b) of the
Securities Act, all related filings on Form 8-K and periodic reports under
the Exchange Act) in connection with the transactions contemplated hereby;
(f) the shelf registration amortization fee (which fee shall equal 1/33rd
of 1% times the aggregate principal amount of the offered Notes) paid in
connection with the issuance of offered Notes; and (g) all accountant's
fees incurred in connection with the accountant's review of the Prospectus
Supplement and delivery of the letters described in Section 2.4.
SECTION 4.3. Indemnification. (a)(i) Compass Auto and Sellers
agree, jointly and severally, to indemnify and hold harmless Company, each
of its directors, each of its officers who have signed the Registration
Statement, each Person who controls Company within the meaning of Section
15 of the Securities Act, each Underwriter and each Underwriter's
respective officers and directors and each Person, if any, who controls
such Underwriter within the meaning of the Securities Act and the Exchange
Act (each, an "Company Indemnified Party"), against any and all losses,
claims, damages or liabilities to which any Company Indemnified Party may
become subject under the Securities Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, and shall
reimburse such Company Indemnified Party for any legal or other expenses
incurred by the Company Indemnified Party in connection with investigating
or defending any such loss, claim, damage, liability or action, insofar as
such losses, claims, damages or
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liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the preliminary prospectus supplement (except as subsequently
updated in the Prospectus Supplement), the Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement approved in writing by
Sellers, or the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements in the preliminary prospectus supplement (except as subsequently
updated in the Prospectus Supplement), Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement approved in writing by
Sellers, in light of the circumstances under which they were made, not
misleading, other than any untrue statement or alleged untrue statement or
omission or alleged omission based on any information (A) in the last
paragraph of the first page of the Prospectus Supplement, (B) in the second
sentence of the third to last paragraph and in the second to last paragraph
on page S-2 of the Prospectus Supplement, (C) under the heading "Company"
in "Summary of Terms," (D) in the last sentence under the heading "Use of
Proceeds" in the Prospectus Supplement and (E) under the heading
"Underwriting" in the Prospectus Supplement (the "Company Information"), or
the Prospectus or the Registration Statement whether or not deemed a part
of or included in, by cross-reference or otherwise, the Prospectus
Supplement. This indemnity agreement shall be in addition to any liability
which Compass Auto or Sellers may otherwise have.
(ii) Compass Auto and Sellers agree, jointly and severally, to
indemnify and hold Company harmless against any and all losses, claims,
damages or liabilities that Company may sustain related to the failure of
Compass Auto or Sellers to perform in all material respects their duties
under this Agreement. Sellers shall immediately notify Company if a claim
is made by a third party with respect to this Agreement, and Sellers shall
assume the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge
and satisfy any judgment or decree which may be entered against Company in
respect of such claim.
(b) Company agrees to indemnify and hold harmless Compass Auto and
Sellers, each of their directors and officers and each Person who controls
Compass Auto or either Seller or any such Person, within the meaning of the
Securities Act and the Exchange Act, against any and all losses, claims,
damages or liabilities to which Compass Auto and Sellers or any such Person
may become subject under the Securities Act, the Exchange Act or otherwise,
and shall reimburse Compass Auto and Sellers and any such director, officer
or controlling Person for any legal or other expenses incurred by such
party or any such director, officer or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
action, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue
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statement of any material fact contained in the Prospectus, the
Registration Statement and the Company Information in the Prospectus
Supplement, and any amendment or supplement to the Prospectus, or the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. This
indemnity agreement shall be in addition to any liability which Company may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
4.3 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 4.3, notify the indemnifying party in writing of
the commencement thereof, but the omission to so notify the indemnifying
party shall not relieve the indemnifying party from any liability which the
indemnifying party may have to any indemnified party hereunder except to
the extent such indemnifying party has been prejudiced thereby. If any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party). After notice from the indemnifying
party to such indemnified party of its election to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 4.3 for any legal or otherwise expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability of any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section 4.3 is
unavailable or insufficient to hold harmless any Company Indemnified Party
under subsection (a) above or Compass Auto and Sellers, each of their
directors and officers and each Person who controls Compass Auto or either
Seller or any such Person, within the meaning of the Securities Act and the
Exchange Act, under subsection (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as
a result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above, as applicable, (i) in such proportion as is
appropriate to reflect the relative benefits received by Company on the one
hand and Compass Auto and Sellers on the other from the offering of the
offered Notes or (ii) if the
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allocation provided by clause (i) above is not permitted by applicable law
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
Company on the one hand and Compass Auto and Sellers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by Company on the one hand
and Compass Auto and Sellers on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of the Trust Property
(before deducting expenses) received by Sellers or Compass Auto bear to the
total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company Indemnified Parties or Compass Auto and
Sellers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any action or claim which is the subject to this subsection (d).
Notwithstanding the provisions of this subsection (d), except with respect
to liabilities of Company resulting directly from material misstatements or
material omissions of information contained in the Registration Statement
or the Prospectus, Company shall not be required to pay any amount in
excess of the amount by which the total price at which the Notes
underwritten by the Underwriters and distributed to the public were offered
to the public exceeds the amount of any damages which Company has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person quality of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
SECTION 4.4. Cooperation of Compass Auto. Compass Auto covenants to
Company that Compass Auto shall cooperate with Company and the firm of
independent certified public accountants retained with respect to the
issuance of the Notes in making available all information and taking all
steps reasonably necessary to permit the accountants' letters required
hereunder to be delivered within the times set for delivery herein.
SECTION 4.5. Merger or Consolidation. Compass Auto shall keep in
full effect its existence, rights and franchises as a corporation and shall
obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Receivables and to perform
its duties under this Agreement. Any Person into which
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Compass Auto may be merged or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which Compass Auto shall be
a party, or any Person succeeding to the business of Compass Auto, in all
events shall be the successor of Compass Auto under this Agreement without
the execution or filing of any paper or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding.
Compass Auto shall send written notice of any such merger or consolidation
to Indenture Trustee and the Rating Agencies.
SECTION 4.6. Reserve Account. Compass Auto shall establish with and
maintain in the name of Indenture Trustee, as agent for Issuer, and the
Noteholders, the Reserve Account. On the Closing Date, Compass Auto shall
deposit or cause to be deposited in the Reserve Account an amount equal to
the Reserve Account Initial Deposit. Compass Auto agrees that (i) the
Reserve Account shall be under the sole custody and control of Indenture
Trustee and (ii) that the terms of the Sale and Servicing Agreement shall
govern the establishment and maintenance of the Reserve Account and
deposits and withdrawals therefrom.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Obligations of Compass Auto. The obligations of
Compass Auto under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable.
SECTION 5.2. Reassignment of Purchased Receivables. With respect
to all Receivables repurchased by Compass Auto pursuant to this Agreement,
Company shall assign, without recourse, representation or warranty, to
Compass Auto all of Company's right, title and interest in and to such
Receivables, and all security and documents relating thereto.
SECTION 5.3. Subsequent Transfer to Issuer and Indenture Trustee.
Each Seller acknowledges that:
(a) Company shall, pursuant to the Sale and Servicing Agreement,
sell the Compass Auto Assets and assign its rights under the Second
Tier Receivables Purchase Agreement to Issuer, and that the
representations and warranties contained in this Agreement and the
rights of Company under Section 3.3 are intended to benefit Issuer,
Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders. Compass Auto hereby consents to such sale and
assignment.
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(b) Issuer shall, pursuant to the Indenture, pledge the
Receivables and its rights under the Sale and Servicing Agreement to
the Indenture Trustee for the benefit of the Noteholders. The
representations and warranties contained in this Agreement and the
rights of Company under this Agreement, including under Section 3.3,
are intended to benefit the Indenture Trustee and the Noteholders.
Compass Auto hereby consents to such pledge.
SECTION 5.4. Amendment. (a) This Agreement may be amended by
Compass Auto and Company, without the consent of any of the Noteholders or
the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions in this Agreement or (iii) for the purpose of
adding any provision to or changing in any manner or eliminating any of the
provisions in this Agreement, provided that any such action under this
clause (iii) shall not, as evidenced by an Opinion of Counsel delivered to
Owner Trustee, Indenture Trustee and the Rating Agencies, adversely affect
in any material respect the interests of the Company or any Noteholder.
(b) This Agreement may also be amended from time to time by Compass
Auto and Company, with the consent of the Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes (which consent
of any Holder of a Note given pursuant to this Section 5.4(b) or pursuant
to any other provision of this Agreement shall be conclusive and binding on
such Holder and on all future Holders of such Note and of any Note issued
upon the transfer thereof or in exchange thereof whether or not notation of
such consent is made upon the Note), for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of
the Noteholders; provided, that the Rating Agency Condition shall have been
satisfied with respect to such amendment prior to the execution thereof;
and provided, further, that no such amendment shall (i) increase or reduce
in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables, payments that shall be required to
be made on any Note, the Class A-1 Interest Rate, the Class A-2 Interest
Rate or the Class A-3 Interest Rate or (ii) reduce the aforesaid percentage
required to consent to any such amendment or any waiver hereunder, without
the consent of the Holders of all the Notes then outstanding.
(c) Prior to the execution of any such amendment or consent under
Section 5.4(a) or (b), Company shall furnish prior written notification of
such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent
under Section 5.4(b), Indenture Trustee shall furnish a copy of such
amendment or consent to each Noteholder and the Owner Trustee (who will
forward a copy thereof to the Certificateholders).
15
(e) It shall not be necessary for the consent of Noteholders pursuant
to Section 5.4(b) to approve the particular form of any proposed amendment
or consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Noteholders shall be
entitled, upon request, to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Section 5.4 and that all conditions precedent in this Section 5.4 to
the execution and delivery of such amendment has been satisfied subject to
such reasonable requirements as Indenture Trustee may prescribe.
SECTION 5.5. No Waiver, Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of Company, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
SECTION 5.6. Third-Party Beneficiaries. The parties further agree
that: (a) pursuant to the Granting Clause of the Indenture, the Indenture
Trustee on behalf of the Noteholders is an intended third-party beneficiary
of this Agreement; and (b) the Underwriters and each of their directors,
officers and each Person who controls the Underwriters or any such Person
within the meaning of the Securities Act and the Exchange Act (each, an
"Underwriter Entity") is an intended third-party beneficiary of this
Agreement to the extent necessary to obtain the benefit of the enforcement
of the obligations and covenants of Compass Auto and Sellers with respect
to each Underwriter Entity under Section 4.3 of this Agreement.
SECTION 5.7. Notices. All demands, notices and communications
pursuant to this Agreement to any party shall be in writing, personally
delivered, sent by overnight courier or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given upon
receipt: (a) in the case of Compass Auto, to Compass Auto Receivables
Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Manager, Structured Finance, and with a copy to the General Counsel
thereof; (b) in the case of Company, to Asset Backed Securities
Corporation, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Secretary, (c) in the case of Compass Bank, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Manager, Structured Finance, and with
a copy to the General Counsel thereof; and (d) in the case of Compass Bank-
Texas, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Manager,
Structured Finance, and with a copy to the General Counsel thereof.
16
SECTION 5.8. Termination of Obligations. Company may terminate its
obligations hereunder by notice to Compass Auto at any time before delivery
of and payment of the purchase price for the Receivables if: (a) any of
the conditions set forth in Section 2.4 is not satisfied when and as
provided therein; (b) there shall have been an Insolvency Event relating to
Sellers or Compass Auto; (c) a Seller or Compass Auto shall have entered
into a sale or other disposition agreement with respect to the sale or
other disposition of all or substantially all the assets and properties of
such Seller or Compass Auto; or (d) a Termination Event shall have
occurred. The termination of either party's obligations hereunder shall
not terminate such party's rights or obligations under Section 4.2 or 4.3
or its right to exercise any remedy available to it at law or in equity.
SECTION 5.9. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
create or render unenforceable such provision in any other jurisdiction.
SECTION 5.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 5.11. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.5 hereof, Section 2.1 of
the Sale and Servicing Agreement and in the Granting Clause of the
Indenture, this Agreement may not be assigned by Company or Compass Auto
without the prior written consent of Owner Trustee and Indenture Trustee
and unless the Rating Agency Condition shall have been satisfied.
SECTION 5.12. Representations to Compass Auto. The respective
agreements, representations, warranties and other statements by Compass
Auto and Company set forth in or made pursuant to this Agreement shall
remain in full force and effect and shall survive the Closing Date.
SECTION 5.13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
17
SECTION 5.14. Counterparts. This Agreement may be executed in two
or more counterparts and by different parties on separate counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
18
IN WITNESS WHEREOF, the parties hereby have caused this Second Tier
Receivables Purchase Agreement to be executed by their respective officers
thereunto duly authorized as of the date and year first above written.
COMPASS AUTO RECEIVABLES CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ASSET BACKED SECURITIES CORPORATION
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_______________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
SOLELY FOR THE PURPOSES SET FORTH
IN SECTIONS 4.2 AND 4.3:
COMPASS BANK,
an Alabama state banking corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
COMPASS BANK, a Texas state bank
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and Treasurer
S-1
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS........................................................... 1
SECTION 1.1. Definitions............................................. 1
SECTION 1.2. Other Interpretive Provisions........................... 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES...................................... 2
SECTION 2.1. Purchase and Sale of Receivables........................ 2
SECTION 2.2. Closing................................................. 3
SECTION 2.3. Purchase Price.......................................... 3
SECTION 2.4. Conditions of Company's Obligations..................... 3
SECTION 2.5. True Sales.............................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................................ 6
SECTION 3.1. Representations and Warranties of Compass Auto.......... 6
SECTION 3.2. Representations and Warranties as to Each Receivable.... 7
SECTION 3.3. Repurchase upon Breach.................................. 8
SECTION 3.4. Representation and Warranty of Company.................. 9
ARTICLE IV
COVENANTS OF COMPASS AUTO............................................. 9
SECTION 4.1. Protection of Title to Compass Auto Assets.............. 9
SECTION 4.2. Costs................................................... 10
SECTION 4.3. Indemnification......................................... 10
SECTION 4.4. Cooperation of Compass Auto............................. 13
SECTION 4.5. Merger or Consolidation................................. 13
SECTION 4.6. Reserve Account......................................... 14
ARTICLE V
MISCELLANEOUS PROVISIONS.............................................. 14
SECTION 5.1. Obligations of Compass Auto............................. 14
SECTION 5.2. Reassignment of Purchased Receivables................... 14
SECTION 5.3. Subsequent Transfer to Issuer and Indenture Trustee..... 14
SECTION 5.4. Amendment............................................... 15
SECTION 5.5. No Waiver, Cumulative Remedies.......................... 16
SECTION 5.6. Third-Party Beneficiaries............................... 16
SECTION 5.7. Notices................................................. 16
SECTION 5.8. Termination of Obligations.............................. 17
SECTION 5.9. Severability............................................ 17
SECTION 5.10. Headings................................................ 17
SECTION 5.11. Assignment.............................................. 17
SECTION 5.12. Representations to Compass Auto......................... 17
SECTION 5.13. Governing Law........................................... 17
SECTION 5.14. Counterparts............................................ 18
ii