EXECUTION COPY
================================================================================
AUTOBOND MASTER FUNDING CORPORATION V,
as Company
AUTOBOND ACCEPTANCE CORPORATION,
as Administrator
and
DYNEX CAPITAL, INC.,
as Trustee
-------------
TRUST INDENTURE
Dated as of June 9, 1998
-------------
Automobile Loan-Backed Notes
================================================================================
TABLE OF CONTENTS Page
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION......................................................2
SECTION 1.01 General Definitions...........................................2
SECTION 1.02 Compliance Certificates and Opinions.........................15
SECTION 1.03 Form of Documents Delivered to Trustee.......................15
SECTION 1.04 Acts of Noteholders, etc.....................................16
SECTION 1.05 Notice to Noteholders; Waiver................................17
SECTION 1.06 Effect of Headings and Table of Contents.....................17
SECTION 1.07 Successors and Assigns.......................................17
SECTION 1.08 GOVERNING LAW................................................18
SECTION 1.09 Legal Holidays...............................................18
SECTION 1.10 Execution in Counterparts....................................18
SECTION 1.11 Inspection...................................................18
SECTION 1.12 Survival of Representations and Warranties...................19
SECTION 1.13 Security Forms...............................................19
ARTICLE 2.
THE NOTES..................................................................19
SECTION 2.01 General Provisions...........................................19
SECTION 2.02 Execution, Authentication, Delivery, and Dating..............22
SECTION 2.03 Transfer and Exchange........................................22
SECTION 2.04 Mutilated, Destroyed, Lost and Stolen Notes..................24
SECTION 2.05 Payment of Interest and Principal; Rights Preserved..........24
SECTION 2.06 Persons Deemed Owners........................................25
SECTION 2.07 Cancellation.................................................25
SECTION 2.08 Noteholder Lists.............................................25
SECTION 2.09 Treasury Notes...............................................25
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS.............................................26
SECTION 3.01 Trust Accounts; Investments by Trustee.......................26
SECTION 3.02 Establishment and Administration of the Lockbox
and the Collection Accounts................................28
SECTION 3.03 Establishment and Administration of Cash Reserve Accounts....29
SECTION 3.04 Distributions................................................29
SECTION 3.05 Reports to Noteholders.......................................30
SECTION 3.06 Returned Payments............................................30
i
Page
----
ARTICLE 4.
THE TRUST ESTATE...........................................................30
SECTION 4.01 Acceptance by Trustee and Agreement to Act as Custodian......30
SECTION 4.02 Subsequent Transfers.........................................32
SECTION 4.03 Conditions Precedent to All Transfers........................32
SECTION 4.04 Grant of Security Interest; Tax Treatment....................33
SECTION 4.05 Further Action Evidencing Assignments........................34
ARTICLE 5.
SERVICING OF TRUST ASSETS..................................................35
SECTION 5.01 Appointment of Servicer......................................35
SECTION 5.02 Appointment of Administrator; Monthly Administration Fee.....35
SECTION 5.03 Duties and Responsibilities of the Administrator.............35
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES................................................36
SECTION 6.01 Events of Default............................................36
SECTION 6.02 Acceleration of Maturity; Rescission and Annulment...........38
SECTION 6.03 Remedies.....................................................39
SECTION 6.04 Trustee May File Proofs of Claim.............................40
SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.......40
SECTION 6.06 Application of Money Collected...............................41
SECTION 6.07 Limitation on Suits..........................................41
SECTION 6.08 Unconditional Right of Noteholders to Receive
Principal and Interest....................................41
SECTION 6.09 Restoration of Rights and Remedies...........................42
SECTION 6.10 Rights and Remedies Cumulative...............................42
SECTION 6.11 Delay or Omission Not Waiver.................................42
SECTION 6.12 Control by Noteholders.......................................42
SECTION 6.13 Waiver of Events of Default..................................43
SECTION 6.14 Undertaking for Costs........................................43
SECTION 6.15 Waiver of Stay or Extension Laws.............................44
SECTION 6.16 Sale of Trust Estate.........................................44
ARTICLE 7.
THE TRUSTEE................................................................45
SECTION 7.01 Certain Duties...............................................45
SECTION 7.02 Notice of Events of Default..................................46
SECTION 7.03 Certain Matters Affecting the Trustee........................46
ii
Page
----
SECTION 7.04 Trustee Not Liable for Notes or Receivables..................47
SECTION 7.05 Trustee May Own Notes........................................48
SECTION 7.06 The Administrator to Pay Trustee's Fees and Expenses.........48
SECTION 7.07 Eligibility Requirements for Trustee.........................48
SECTION 7.08 Resignation or Removal of Trustee............................48
SECTION 7.09 Successor Trustee............................................49
SECTION 7.10 Merger or Consolidation of Trustee...........................50
ARTICLE 8.
COVENANTS .................................................................51
SECTION 8.01 Payment of Principal and Interest............................51
SECTION 8.02 Maintenance of Office or Agency; Chief Executive Office......51
SECTION 8.03 Money for Payments to Noteholders to be Held in Trust........51
SECTION 8.04 Corporate Existence; Merger; Consolidation, etc..............52
SECTION 8.05 Protection of Trust Estate; Further Assurances...............52
SECTION 8.06 Servicing Agreement..........................................53
SECTION 8.07 Additional Covenants.........................................53
SECTION 8.08 Taxes........................................................54
ARTICLE 9.
SUPPLEMENTAL INDENTURES....................................................55
SECTION 9.01 Supplemental Indentures Without Consent of Noteholders.......55
SECTION 9.02 Supplemental Indentures with Consent of Noteholders..........55
SECTION 9.03 Execution of Supplemental Indentures.........................56
SECTION 9.04 Effect of Supplemental Indentures............................57
SECTION 9.05 Reference in Notes to Supplemental Indentures................57
ARTICLE 10.
SATISFACTION AND DISCHARGE.................................................57
SECTION 10.01 Satisfaction and Discharge of Indenture.....................57
SECTION 10.02 Application of Trust Money..................................58
SECTION 10.03 Trust Termination Date......................................58
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
..........................................................................59
SECTION 11.01 Representations and Warranties of the Company...............59
SECTION 11.02 Representations and Warranties as to Each Receivable .......61
iii
Page
----
SECTION 11.03 Repurchases and Transfers...................................62
ARTICLE 12.
MISCELLANEOUS..............................................................63
SECTION 12.01 Indemnities of the Administrator............................63
SECTION 12.02 Officers' Certificate and Opinion of Counsel as to
Conditions Precedent......................................63
SECTION 12.03 Statements Required in Certificate or Opinion...............63
SECTION 12.04 Notices.....................................................64
SECTION 12.05 Notices and Reports to be Delivered to the Rating Agencies..65
SECTION 12.06 No Proceedings..............................................65
ARTICLE 13.
VARIABLE FUNDING NOTE......................................................65
SECTION 13.01 Designation.................................................65
SECTION 13.02 Certain Definitions.........................................66
SECTION 13.03 Establishment and Maintenance of Lockbox and Trust
Accounts..................................................69
SECTION 13.04 Required Deposits to the Accounts...........................70
SECTION 13.05 Application of Funds in the Trust Accounts..................70
SECTION 13.06 Exchanges for New Series....................................72
SECTION 13.07 Additional Events of Default; Remedies......................73
SECTION 13.08 Resignation or Removal of Trustee...........................73
SCHEDULES
Schedule 1 - List of Trust Assets allocated to each Series.
EXHIBITS
EXHIBIT A - AutoBond Program Manual
EXHIBIT B - Form of Collateral Assignment
EXHIBIT C-1 - Form of Variable Funding Note
EXHIBIT C-2 - Form of Variable Funding Note
EXHIBIT D - Form of Rule 144A Transferee Letter
EXHIBIT E - Form of Investor Letter
EXHIBIT F - Form of Administrator Report (See Servicing Agreement or Series
Supplement)
EXHIBIT G - Form of Repurchase Assignment
EXHIBIT H - Form of Lockbox Agreement
iv
TRUST INDENTURE
This TRUST INDENTURE dated as of June 9, 1998, is among AUTOBOND
MASTER FUNDING CORPORATION V, a Nevada corporation (the "Company"), AUTOBOND
ACCEPTANCE CORPORATION, a Texas corporation, as Administrator (the
"Administrator") and individually ("AutoBond"), and DYNEX CAPITAL, INC., as
trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company is a bankruptcy-remote corporation formed for
the sole purpose of acquiring from AutoBond and its Affiliates certain
automobile finance contracts ("Auto Loans") acquired by AutoBond and certain
other rights and properties pertaining thereto;
WHEREAS, the Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its
debentures, notes or other evidences of indebtedness (herein called the
"Notes"), to be issued in one or more Series as in this Indenture provided;
WHEREAS, the Company intends that the Trustee, on behalf of the
Trust Estate (as defined herein) for the benefit of the Noteholders and the
Company, will take assignment of the Auto Loans and related rights and benefits,
including those under any collateral security agreement, insurance, guarantees
and dealer agreements from the Company simultaneously with the acquisition of
such Auto Loans by the Company; and
WHEREAS, the Administrator has been requested and is willing to
direct the Trustee to make certain distributions of funds to the Noteholders,
the Company and certain creditors in connection with amounts received as
proceeds from the Trust Estate and to otherwise perform certain administrative
functions in connection with the transactions contemplated hereby.
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of all Noteholders and the Company, as follows:
GRANTING CLAUSE
The Company hereby Grants to the Trustee for inclusion in the Trust
Estate on each Assignment Date, for the benefit and security of the Noteholders,
all of the Company's right, title and interest in and to (a) the Transferred
Assets specified in each Collateral Assignment, including the Company's security
interests in the Financed Vehicles; (b) all moneys from time to
time on deposit in any Trust Accounts, including all investments and income from
the investment of such moneys, and (c) all income or payments received with
respect to any of the foregoing and the proceeds of the conversion, whether
voluntary or involuntary, of any of the foregoing into cash or other property.
Such Grant is made in trust to secure (i) the payment of all amounts due on the
Notes of each Series, (ii) the payment of all other sums payable under this
Indenture with respect to the Notes and (iii) compliance with the provisions of
this Indenture with respect to the Notes.
The Trustee acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof, and agrees to perform the duties herein
required to the best of its ability and to the end that the Trust Estate and the
interests of the Noteholders and the Company may be adequately and effectively
protected as hereinafter provided.
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01 General Definitions.
Except as otherwise specified or as the context may otherwise
require, the following terms have the meanings set forth below for all purposes
of this Indenture, and the definitions of such terms are applicable to the
singular as well as to the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
Act: with respect to any Noteholder, as defined in Section 1.04.
Administrator: AutoBond and any permitted successor to such
functions in accordance, and in connection with, this Indenture in its capacity
as Administrator hereunder, and if AutoBond is acting as Servicer and/or
Collection Agent under a Servicing Agreement, also in its capacity as Servicer
and/or Collection Agent.
Administrator Duties: specified in Section 5.03.
Administrator Order: a written order or request delivered to the
Trustee and signed in the name of the Administrator by an Authorized Officer.
Adverse Claim: any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the interests created under this Indenture in
favor of the Trustee and the Noteholders.
Affiliate: of any specified Person, means any other Person which
directly or indirectly controls, or is controlled by, or is under common control
with, such specified Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause
2
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
APR: the annual percentage rate of an Auto Loan as determined
according to the related contractual documents with the Obligor thereof.
Assignment: collectively, with respect to any Receivable, the
related Sale Assignment and any Collateral Assignment.
Assignment Date: each date when Auto Loans are transferred to the
Trust Estate.
Authorized Officer: with respect to any corporation or partnership,
the Chairman of the Board, the President, any Vice President, the Secretary, the
Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation or the general partner of such partnership
specifically authorized in resolutions of the Board of Directors of such
corporation to sign agreements, instruments or other documents in connection
with this Indenture on behalf of such corporation or partnership, as the case
may be.
AutoBond: AutoBond Acceptance Corporation, a Texas corporation, and
its successors and permitted assigns.
AutoBond Program Manual: the AutoBond Program Manual (including the
Credit and Collection Policies) attached hereto as Exhibit A, as modified from
time to time.
Auto Loan: set forth in the recitals hereto.
Automobile Loan Sale Agreement: any agreement under which AutoBond
purchases Auto Loans from an Originator.
Board of Directors: either the board of directors of the Company or
any duly authorized committee of that board.
Board Resolution: a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
Business Day: any day other than a Saturday or a Sunday, or another
day on which banks in the City of New York, or in Texas (or such other cities
and states in which the Corporate Trust Office, the principal administrative
offices of the Administrator, Note Registrar and Transfer Agent and Paying Agent
or the principal offices of the Servicer or the Administrator are subsequently
located, as specified in writing by the Administrator to the other parties
hereto) are required, or authorized by law, to close.
Cash Reserve Account: the account or accounts, if any, so
designated, established and maintained by the Trustee pursuant to Section 3.03.
3
Class: with respect to a Series of Notes, each class of Notes so
designated within such Series.
Collateral Assignment: a certificate of assignment by the Company to
the Trustee substantially in the form of Exhibit B giving notice of, and
evidencing, the pledge of Auto Loans and the related Transferred Assets by the
Company to the Trustee on behalf of the Trust Estate.
Collection Account: the account or accounts by that name established
and maintained by the Trustee pursuant to Section 3.02.
Collection Agent: means the entity designated as such.
Commission: the Securities and Exchange Commission.
Company: the Person named as the "Company" in the first paragraph of
this instrument.
Company Order or Company Request: a written order or request
delivered to the Trustee and signed in the name of the Company by an Authorized
Officer.
Corporate Trust Office: the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Indenture is located at the
address set forth in Section 12.04.
Credit and Collection Policies: written credit procedures and
policies consistent with the requirements of this Indenture and each Servicing
Agreement, in effect from time to time, as formulated by the Administrator and
comprising part of AutoBond Program Manual.
Cut-Off Date: with respect to the Receivables specified in any
Transfer, the date specified in the related Assignment.
Dealer: each automobile dealer with whom AutoBond or an Originator
has entered into a Dealer Agreement.
Dealer Agreement: each agreement between a Dealer and either
AutoBond or an Originator which provides for, among other things, origination of
the Receivables.
Debt: for any Person, (a) indebtedness of such Person for borrowed
money or credit extended, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such Person
to pay the deferred purchase price of property or services, (d) obligations of
such Person as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (e) obligations secured by any lien or
other charge upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations, (f)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
4
obligations of others of the kinds referred to in clauses (a) through (e) above,
and (g) liabilities in respect of unfunded vested benefits under plans covered
by ERISA. For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire Debt of any other Person, or to purchase, sell
or lease, as lessee or lessor, property or services, in any such case primarily
for the purpose of enabling another Person to make payment of Debt, or to make
any payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with Debt of such Person.
Defaulted Auto Loan: an Auto Loan (a) which by its terms has more
than 10% of any installment of principal or interest which is 60 or more days
contractually past due and (b) which is not a Liquidated Receivable.
Defaulted Receivable: as of the end of any Due Period, (a) a
Defaulted Auto Loan, (b) a Receivable as to which the proceeds of the sale of
the related Financed Vehicle have been received by the Administrator or (c) a
Receivable as to which the Administrator has determined (or should have
determined in accordance with the Credit and Collection Policies) that no
further proceeds other than from the Insurance Policies are expected to be
received or that such Receivable is uncollectible and such determination was
made at or prior to the last day of such Due Period.
Default: any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
Deposit Date: the Business Day immediately preceding each related
Payment Date.
Depositary: with respect to Notes of any Series issuable in whole or
in part in the form of one or more Global Notes, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such Notes as
contemplated by Section 2.01.
Determination Date: the 10th day of each month (or the preceding
Business Day, if such day is not a Business Day), or as otherwise specified for
a Series.
Due Period: as specified for each Series.
Eligible Account: a segregated account, which may be an account
maintained with the Trustee, which is either (a) maintained with a depository
institution or trust company (including the Trustee) whose short term unsecured
debt obligations are rated at least P-1 by Moody's or A-1 by Standard & Poor's
and whose long term unsecured debt obligations are rated at least A by Standard
& Poor's and at least A3 by Moody's; provided, that if only Moody's rates such
institution, such single rating shall suffice, or (b) a segregated trust account
or similar account maintained with a federally or state chartered depository
institution with corporate trust powers, subject to regulations regarding
fiduciary funds on deposit substantially similar to 12
5
C.F.R. ss.9.10(b) and with a long term debt rating of at least A3 by Moody's or
A by Standard & Poor's.
Eligible Investments: any of the following:
(i) Aaa-rated obligations of, or guaranteed as to the full and
timely payment of principal and interest by, the United States or obligations of
any agency or instrumentality thereof, when such obligations are backed by the
full faith and credit of the United States;
(ii) short-term repurchase agreements on obligations specified in
clause (a) having a maturity no greater than the next Payment Date; provided,
that the short-term debt obligations of the party agreeing to repurchase are
rated no less than A-1 by Standard & Poor's or P-1 by Moody's;
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company incorporated under the laws of the United States or
any state; provided, that the short-term obligations of such depository
institution or trust company are rated no less than A-1 by Standard & Poor's or
P-1 by Moody's;
(iv) commercial paper (having original maturities of not more than
30 days) of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition are rated no less than A-1 by
Standard & Poor's or P-1 by Moody's;
(v) securities of money market funds rated in the highest investment
category by Standard & Poor's or Moody's; and
(vi) such other investment grade investments as shall be acceptable
to any applicable Rating Agency and to the holders of at least 75% in aggregate
Outstanding principal amount of the Notes of each affected Series, upon prior
written approval.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Event of Administrator Termination: as specified in the designated
Servicing Agreement.
Event of Default: as defined in Section 6.01, as supplemented with
respect to any Series.
Event of Servicing Termination: as specified in the designated
Servicing Agreement.
Exchange Act: the Securities Exchange Act of 1934, as amended.
6
Financed Vehicle: a new or used automobile, van or light-duty truck,
the purchase of which the Obligor financed with an Auto Loan.
GAAP: generally accepted accounting principles as in effect in the
United States, consistently applied, as of the date of such application.
Global Note: a Note that evidences all or part of the Notes of any
Series and bears such legend as may be specified as contemplated by Section 2.01
for such Notes.
Grant: grant, bargain, sell, convey, assign, transfer, mortgage,
pledge, create and grant a security interest in and right of set-off against,
deposit, set over and confirm. The Grant of the Trust Estate effected by this
Indenture shall include all rights, powers, and options (but none of the
obligations) of the Company with respect thereto, including, without limitation,
the immediate and continuing right to claim for, collect, receive, and give
receipts for Payments in respect of the Auto Loans and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
judicial proceedings in the name of the Company or otherwise, and generally to
do and receive anything that the Company is or may be entitled to do or receive
thereunder or with respect thereto.
Governmental Authority: the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
Holder: a Person in whose name a Note is registered in the Note
Register.
Indenture: this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular Series of Notes
established as contemplated by Section 2.01.
Insurance Policies: the insurance policies, if any issued by each of
the Insurers to AutoBond (the benefits of which have been assigned to the Trust
Estate as security for the Notes of a designated Series) and listed on Schedule
2 (as modified from time to time), in the case of the Variable Funding Notes,
and otherwise as specified with respect to a Series.
Insurers: each of the insurance companies named in the Insurance
Policies.
Intended Tax Characterization: as specified in Section 4.04(b).
Interest Payment Date: as specified with respect to a Series.
Interest Payments: as defined in Section 2.01(d).
7
Issuance Date: as specified with respect to a Series.
Liquidated Receivable: as specified with respect to a Series.
List of Receivables: a list containing the Required Information with
respect to each Receivable delivered to the Trustee, the Series to which such
Receivable is allocated and certified by a duly authorized officer of the
Company, which is attached hereto as Schedule 1 (as supplemented from time to
time).
Loan Documents: with respect to an Auto Loan (a) the fully executed
original retail installment loan contract and security agreement evidencing such
Auto Loan, including the assignment to AutoBond, (b) the original confirmation
of title, copy of the application for title or letter of guaranty from the
applicable Dealer, as the case may be, for the related Financed Vehicle, (c) a
copy of the credit application, and (d) a copy of an executed agreement to
provide insurance signed by the Obligor, a binder in respect thereof or the
original confirmation of payment of premiums required under the VSI Policy.
Loan File: with respect to any Auto Loan, the original retail
installment loan contract and security agreement evidencing the Auto Loan and
originals or copies of such other documents and instruments relating to such
Auto Loan and the security interest on the selected Financed Vehicle as
specified in the Credit and Collection Policies.
Lockbox: the lockbox established and maintained pursuant to the
Lockbox Operations Agreement.
Lockbox Account: the account at the Lockbox Bank designated for
AutoBond Master Funding Corporation V and any Series and maintained pursuant to
the Lockbox Operations Agreement.
Lockbox Bank: as designated with respect to a Series.
Lockbox Operations Agreement: the agreement so designated with
respect to a Series.
Maturity: with respect to any installment of principal of or
interest on any Note, the date on which such installment is due and payable as
therein or herein provided, whether at the Stated Maturity, by declaration of
acceleration, or otherwise.
Monthly Trustee Fee: for any Payment Date with respect to a Series,
an amount equal to the sum of (A) the product of (i) the aggregate Unpaid
Principal Balance of Receivables allocated to such Series at the beginning of
the related Due Period, (ii) the Trustee Fee Rate and (iii) 1/12, plus (B)
amounts payable to the Trustee under Section 7.06 but not paid by the
Administrator.
Moody's: Moody's Investors Service, Inc. and any successors thereto.
8
Net Payoff Balance: in respect of any Precomputed Receivables, the
net payoff less any accrued but unpaid late charges.
Net Principal Balance: with respect to any Precomputed Receivable,
the Net Payoff Balance as of the due date of the last full Scheduled Payment, or
if more recent, the due date of the last periodic payment of principal thereon.
Noteholder: at any time, any Person in whose name a Note is
registered in the Note Register.
Note Rate: the weighted-average interest rate with respect to the
Notes of a Series.
Note Register: as defined in Section 2.03.
Notes: as set forth in the Recitals to this Indenture.
Obligor: with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
Officer's Certificate: with respect to any Person, a certificate
signed by the Chairman of the Board, Vice Chairman of the Board, the President,
a Vice President, the Treasurer, the Secretary, an Assistant Secretary, or the
manager of such Person.
Opinion of Counsel: a written opinion, which shall be satisfactory
in form and substance to the Trustee, of counsel who may, except as otherwise
expressly provided in this Indenture, be inside or outside counsel for the
Company and who shall be satisfactory to the Trustee and any applicable Rating
Agencies.
Original Principal Balance: the Net Principal Balance of a
Precomputed Receivable and otherwise the outstanding Principal Balance of a
Receivable, in each case as of the related Cut-Off Date prior to its assignment
to the Trust Estate.
Originator: any Person, from which AutoBond acquires Auto Loans.
Outstanding: with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore irrevocably deposited with the Trustee in
trust for the holders of such Notes; and
9
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Trustee is presented that any such Notes are held by a Person in whose
hands the Note is a valid obligation; provided, however, that in determining
whether the holders of the requisite percentage of the Outstanding Principal
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent, or waiver hereunder, Notes owned by the Company or any
Affiliate of the Company shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, or
waiver, only Notes that a Responsible Officer of the Trustee actually knows to
be so owned shall be so disregarded.
Outstanding Principal Amount: the aggregate unpaid principal amount
of the Notes of any Series Outstanding at any time.
Paying Agent: the Trustee, unless otherwise specified for a Series.
Payment Date: the 15th day (or, if such day is not a Business Day,
the next succeeding Business Day) of each month, commencing as so designated
with respect to a Series and ending with the Stated Maturity of such Series.
Payments: for any Receivable for any Due Period, all amounts
received with respect to such Receivable during such Due Period, including,
without limitation, payments (including prepayments) from the relevant Obligor
(including principal, interest, late fees and other charges), payments from
Dealers and warranty rebates, proceeds from any insurance policy, including the
Insurance Policies (other than proceeds applied to the restoration or repair, or
in certain circumstances, replacement, of the related Financed Vehicle),
including amounts which constitute Recoveries on Receivables.
Percentage: means, with respect to a particular Note within a Class,
the percentage obtained by dividing the outstanding principal amount of the
related Note by the aggregate Outstanding Principal Amount of all Notes in such
Class, or with respect to Notes of a Class within a Series, the percentage
obtained by dividing the aggregate outstanding principal amount of the related
Notes of such Class, by the aggregate Outstanding Principal Amounts of such
Series.
Person: any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
Precomputed Receivable: any Auto Loan under which earned interest
(which may be referred to in the Auto Loan as the add-on finance charge) and
principal is determined according to the sum of periodic balances or the sum of
monthly balances or the sum of the digits or any equivalent method commonly
referred to as the "Rule of 78s".
Predecessor Notes: with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the
10
purpose of this definition, any Note authenticated and delivered under Section
2.04 in lieu of a lost, destroyed or stolen Note (or a mutilated Note
surrendered to the Trustee) shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note (or a mutilated Note surrendered to the Trustee).
Principal: with respect to a Note, the amount designated as such.
Principal Balance: of an Auto Loan means, on any date of
determination, the Original Principal Balance minus that portion of all payments
made on or prior to such date allocable to principal; provided that, for every
Due Period following the Due Period with respect to which an Auto Loan is
repurchased by the Administrator in accordance with the provisions of Section
11.03 or as to which the Net Unrealized Amount equals the Unpaid Principal
Balance, the Principal Balance shall be deemed to be zero.
Principal Charge-offs: with respect to any Due Period, the aggregate
Net Unrealized Amount experienced for Auto Loans which have become Liquidated
Receivables during such Due Period.
Principal Payments: as defined in Section 2.01(c).
Rating Agency: any nationally recognized statistical organization
rating the Notes of any Series at the request of the Company as specified in the
related Supplement.
Receivable: a fixed rate fully amortizing closed-end consumer
installment Auto Loan (upon which interest is calculated based upon either a
simple interest basis or the Rule of 78s) arising from the sale of a Financed
Vehicle and assigned to the Trustee by the Company as part of the Trust Estate,
and includes, without limitation, (a) the related Assignment, (b) all security
interests or liens and property subject thereto from time to time purporting to
secure payment by the Obligor thereunder, including, without limitation, the
Financed Vehicle, AutoBond's or an Originator's rights under the related Dealer
Agreement, AutoBond's rights under an Automobile Loan Sale Agreement and the
Company's rights under the Sale Agreement, (c) all guarantees, indemnities and
warranties, proceeds of insurance policies (including the Insurance Policies),
certificates of title or other title documentation and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Auto Loan, (d) all collections and all related Loan Documents,
Loan Files and records with respect to the foregoing, and (e) all proceeds of
any of the foregoing.
Record Date: with respect to any Payment Date, the last day of the
calendar month immediately preceding such Payment Date.
Records: all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Collection Agent, the Servicer or by or on behalf of the
Company with respect to Receivables and the related Obligors.
11
Recoveries on Receivables: for any Due Period, all amounts received
by the Servicer, the Administrator, the Company or the Trustee on behalf of the
Trust Estate during such Due Period with respect to (a) Defaulted Receivables
from any source, including, without limitation, net proceeds from the
repossession and liquidation of Financed Vehicles and proceeds of insurance
(including insurance maintained by Obligors and the Insurance Policies), and (b)
the Repurchase Price of Receivables repurchased by AutoBond pursuant to Section
11.03.
Reimbursable Administrator Expenses: with respect to any Payment
Date, all reasonable and customary out-of-pocket fees and expenses of third
parties incurred by the Administrator (including fees and expenses of the
Trustee paid by the Administrator under Section 7.06 or otherwise, and expenses
related to financing statements and titles required to be paid by the
Administrator) in connection with their respective repossession and liquidation
activities, including, without limitation, fees of attorneys, appraisers, third
party collateral managers and others (who shall have been retained by the
Administrator, in accordance with the Servicing Agreement) for the Due Period
immediately preceding such Payment Date, but not including expenses paid net of
recoveries.
Related Documents: with respect to any Series each Sale Assignment,
each Collateral Assignment, any Automobile Loan Sale Agreement, the Sale
Agreement, each Acquisition Agreement, the Insurance Policies, the Servicing
Agreement and all documents and instruments required to be delivered hereunder
or thereunder.
Repurchase Price: specified with respect to each Series.
Required Information: with respect to a Receivable as of the related
Cut-Off Date, (a) the name of the Obligor and a description of the Financed
Vehicle, (b) the Original Principal Balance and original term, (c) the maturity
date of such Receivable, (d) the APR, (e) the state of origination, (f) the
dollar amount and the number of Scheduled Payments and (g) whether such
Receivable calculates interest based upon a simple interest basis or the Rule of
78s.
Sale Agreement: the Loan Sale and Contribution Agreement, dated as
of June 9, 1998 between AutoBond and the Company, providing for the sale or
contribution of the Receivables to the Company.
Sale Assignment: each assignment executed by AutoBond or an
Affiliate in favor of the Company from time to time pursuant to the Sale
Agreement conveying Receivables to the Company.
Scheduled Payment: a payment due on an Auto Loan in accordance with
its terms.
Series: each Series of Notes designated as such pursuant to this
Indenture.
Securities Act: the Securities Act of 1933, as amended.
Servicer: the servicer designated as such, under the Servicing
Agreement and any successor thereto in accordance with this Indenture and the
Servicing Agreement.
12
Servicer Duties: specified in Section 2.04(a) of the Servicing
Agreement.
Servicer Order: a written order or request delivered to the Trustee
and signed in the name of the Servicer by an Authorized Officer.
Servicing Agreement: as designated with respect to a Series.
Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
Stated Maturity: the date on which the entire remaining unpaid
Outstanding Principal Amount of a Class of Notes is due and payable.
Subservicer: any Person with whom the Servicer enters into a
Subservicing Agreement.
Subservicing Agreement: any written contract between the Servicer
and any Subservicer, relating to servicing and collection of Receivables, in
such form as has been approved pursuant to the Servicing Agreement.
Subsidiary: as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
Successor Servicer: specified in Section 2.13(a) of the Servicing
Agreement.
Target Reserve Percentage: as so designated with respect to a
Series.
Tax or Taxes: all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, profits, withholding,
excise, property, sales, use, occupation and franchise taxes (including, in each
such case, any interest, penalties or additions attributable to or imposed on or
with respect to any such taxes, charges, fees or other assessments) imposed by
the United States, any state or political subdivision thereof, any foreign
government or any other jurisdiction or taxing authority.
Title Document: with respect to any Auto Loan and the related
Financed Vehicle, either (a) the certificate of title for, or other evidence of
a security interest in (including, without limitation, dealer guaranty or proof
of application for notice of lien), such Financed Vehicle or (b) with respect to
any jurisdiction in which the certificate of title or other evidence of
ownership is not issued to the holder of a lien, evidence of the security
interest in the Financed Vehicle, in each case issued by the department of motor
vehicles or other appropriate Governmental Authority in the jurisdiction in
which such Financed Vehicle or the Obligor is located.
Transfer: as specified in Section 4.02(a).
13
Transfer Notice: as specified in Section 4.02(b).
Transferred Assets: the Receivables, all monies due or paid in
respect of the Receivables after the related Cut-off Date, all rights under each
Insurance Policy in respect of the Receivables (but not the obligation to make
any payment thereunder to the Insurer or for taxes on premiums paid or payable
thereon), all rights of the Company under the Servicing Agreement, each Sale
Assignment and the Sale Agreement, including AutoBond's assigned rights under
the Dealer Agreements and any Automobile Loan Sale Agreement, all documents
contained in the Loan Files relating to the Receivables, all monies due or to
become due and all amounts received with respect thereto and all related rights
and benefits (but not obligations) and all proceeds of the foregoing.
Trust Accounts: the Collection Account, the Cash Reserve Account and
any other account so designated with respect to such Series.
Trust Estate: all money, instruments and other property and rights
subject to the lien of this Indenture, including all proceeds thereof.
Trustee: the Person named as the "Trustee" in the first paragraph of
this instrument or in an indenture supplemental hereto with respect to a Series,
in each case until a successor Person shall have become the Trustee pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Person; provided, that the provisions of Section 7.07, as
applicable to any Person at any time serving as Trustee hereunder, shall survive
the termination of such Person's status as Trustee hereunder and the succession
of any other Person to such status.
Trustee Fee Rate: 0.05% per annum.
UCC: the Uniform Commercial Code as in effect in the relevant state.
Unpaid Principal Balance: with respect to any Auto Loan as of any
Determination Date, (a) for an Auto Loan bearing interest calculable on a simple
interest basis, the unpaid principal amount for such Auto Loan or (b) for a
Precomputed Receivable, the Net Principal Balance, in each case as of the end of
the most recent Due Period; provided that, for any Auto Loan where the Net
Unrealized Amount equals the Unpaid Principal Balance, such Unpaid Principal
Balance shall thereafter equal zero (other than for purposes of calculating the
Repurchase Price, Net Unrealized Amounts and other items designated for such
Series).
VSI Policy: any Vendor's Single Interest Insurance Policy issued by
an Insurer, as listed on Schedule 2 (as modified from time to time) and
delivered to the Trustee, insuring against risk of physical damage on the
Financed Vehicles, and designated as applicable for a particular Series.
14
SECTION 1.02 Compliance Certificates and Opinions.
Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by the Company to the Trustee to take
any action under any provision of this Indenture, other than any request that
(a) the Trustee authenticate the Notes specified in such request, (b) the
Trustee invest moneys in any of the Trust Accounts pursuant to the written
directions specified in such request, or (c) the Trustee pay moneys due and
payable to the Company hereunder to the Company's assignee specified in such
request, the Trustee shall require the Company to furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of satisfaction of the
conditions precedent thereto is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
SECTION 1.03 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company delivered to
the Trustee may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such officer's certificate or
opinion and any Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company as to such factual matters unless such
officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any Opinion of Counsel may be based on the written opinion of
other counsel, in which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Company shall
deliver any document as a condition of
15
the granting of such application, or as evidence of compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Company to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Trustee's right to rely
upon the truth and accuracy of any statement or opinion contained in any such
document as provided in Section 7.01(b).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default, Event of
Administrator Termination or Event of Servicing Termination is a condition
precedent to the taking of any action by the Trustee at the request or direction
of the Company, then, notwithstanding that the satisfaction of such condition is
a condition precedent to the Company's right to make such request or direction,
the Trustee shall be protected in acting in accordance with such request or
direction if it does not have knowledge of the occurrence and continuation of
such Default or Event of Default, Event of Administrator Termination or Event of
Servicing Termination. For all purposes of this Indenture, the Trustee shall not
be deemed to have knowledge of any Default or Event of Default, Event of
Administrator Termination or Event of Servicing Termination nor shall the
Trustee have any duty to monitor or investigate to determine whether a default
has occurred (other than an Event of Default of the kind described in Section
6.01(a)), Event of Administrator Termination or Event of Servicing Termination
unless a Responsible Officer of the Trustee shall have actual knowledge thereof
or shall have been notified in writing thereof by the Company, the Servicer, or
any Noteholder.
SECTION 1.04 Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 7.01) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
16
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the holder of any Note shall bind every future holder of
the same Note and the holder of every Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder and the revisions
pursuant hereto for the benefit of such Noteholder; provided that nothing
contained in this Section 1.04(d) shall be deemed to confer upon the Trustee any
duty or power to vote on behalf of the Noteholders with respect to any matter on
which the Noteholders have a right to vote pursuant to the terms of this
Indenture.
SECTION 1.05 Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any
event, or the mailing of any report to Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy to each Noteholder
affected by such event or to whom such report is required to be mailed, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to Noteholders
is mailed, neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed, to any particular Noteholder shall affect the
sufficiency of such notice or report with respect to other Noteholders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
(b) In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.05(a), of any event or any report to
Noteholders when such notice or report is required to be delivered pursuant to
any provision of this Indenture, then such notification or delivery as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.
SECTION 1.06 Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 1.07 Successors and Assigns.
17
All covenants and agreements in this Indenture by each of the
Company, the Administrator or the Trustee shall bind its respective successors
and permitted assigns, whether so expressed or not.
SECTION 1.08 GOVERNING LAW.
THIS TRUST INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. UNLESS MADE
APPLICABLE IN A SUPPLEMENT HERETO, THIS TRUST INDENTURE IS NOT SUBJECT TO THE
TRUST INDENTURE ACT OF 1939 AND SHALL NOT BE GOVERNED THEREBY AND CONSTRUED IN
ACCORDANCE THEREWITH.
SECTION 1.09 Legal Holidays.
In any case where any Payment Date or the Stated Maturity or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) such payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such Payment Date, Stated Maturity, or other date on which principal of
or interest on any Note is proposed to be paid, provided that no interest shall
accrue for the period from and after such Payment Date, Stated Maturity, or any
other date on which principal of or interest on any Note is proposed to be paid,
as the case may be, until such next succeeding Business Day.
SECTION 1.10 Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 1.11 Inspection.
The Company agrees that, on reasonable prior notice, it will permit
the representatives of the Trustee or any Noteholder holding Notes evidencing at
least 25% of the Outstanding Principal Amount of the Notes of any Series, during
the Company's normal business hours, to examine all of the books of account,
records, reports and other papers of the Company, to make copies thereof and
extracts therefrom, and to discuss its affairs, finances and accounts with its
officers, employees and independent accountants (and by this provision the
Company hereby authorizes its accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing or evaluating the
financial condition or affairs of the Company or the performance of and
compliance with the covenants and undertakings of the Company and the
Administrator in this Indenture, the Sale Agreement and the Servicing Agreement
or any of the other documents referred to herein or therein. Any expense
incident to the exercise by the Trustee at any time or any Noteholder during the
continuance of any Default or Event of Default,
18
of any right under this Section 1.11 shall be borne by the Company. Nothing
contained herein shall be construed as a duty of the Trustee to perform such
inspection.
SECTION 1.12 Survival of Representations and Warranties.
The representations, warranties and certifications of the Company
made in this Indenture or in any certificate or other writing delivered by the
Company pursuant hereto shall survive the authentication and delivery of the
Notes hereunder.
SECTION 1.13 Security Forms.
The Notes of each Series shall be in such form as shall be
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. If the form of Notes of any Series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 2.03 for the
authentication and delivery of such Notes.
The definitive Notes shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Notes, as evidenced by their execution of such
Notes.
ARTICLE 2.
THE NOTES
SECTION 2.01 General Provisions.
(a) Amount Unlimited; Issuable in Series; Denominations. The
aggregate principal amount of Notes which may be authenticated and delivered
under this Indenture is unlimited.
The Notes may be issued in one or more Series. Pursuant to an
Exchange permitted under Section 13.06, there shall be established in one or
more indentures supplemental hereto, prior to the issuance of Notes of any
Series (other than the Variable Funding Notes established pursuant to Article
13):
(i) the title of the Notes of the Series (which shall distinguish
the Notes of the Series from Notes of any other Series) and the
designation of each Class, if any, within such Series;
19
(ii) any limit upon the aggregate principal amount of the Notes of
the Series which may be authenticated and delivered under this Indenture
(except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes of the Series
pursuant to Sections 2.04, 2.05 or 9.05 and except for any Notes which,
pursuant to Section 2.02, are deemed never to have been authenticated and
delivered hereunder);
(iii) the Person to whom any interest or principal on a Note of the
Series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Notes) is registered at the close of
business on the Record Date for such interest;
(iv) the Payment Date or Dates on which the principal of any Notes
of the Series is payable and the amount of principal payable on such date
or dates;
(v) the rate or rates at which any Notes of the Series shall bear
interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable;
(vi) the designation of the Lockbox Account and Trust Accounts
specific to such Series;
(vii) the designation of Trust Assets allocable to such Series and
the Cutoff Date or Dates applicable thereto;
(viii) any form of credit enhancement, including surety bonds,
letters of credit, derivative contracts, guarantees or cash reserve
accounts applicable to such Series (as required by the applicable Rating
Agencies);
(ix) the priority of payments to Noteholders of such Series and to
the Trustee, the Servicer, the Collection Agent, any providers of credit
enhancement, liquidity or hedging contracts, the Company and any other
party with an interest in the proceeds of the allocated Trust Assets;
(x) the applicable Servicing Agreement and the Servicer and
Collection Agent thereunder, if other than AutoBond;
(xi) the Trustee;
(xii) representations and warranties of the Company with respect to
the allocated Trust Assets, as customarily required for such Series;
(xiii) the place or places where the principal of and any premium
and interest on any Notes of the Series shall be payable;
20
(xiv) if other than denominations of $100,000 and any integral
multiple of $1,000 in excess thereof, the denominations in which any Notes
of the Series shall be issuable;
(xv) the forms of the Notes of such Series;
(xvi) if applicable, that any Notes of the Series shall be issuable
in whole or in part in the form of one or more Global Notes and, in such
case, the respective Depositaries for such Global Notes, the form of any
legend or legends which shall be borne by any such Global Security and any
circumstances in which any such Global Security may be exchanged in whole
or in part for Notes registered, and any transfer of such Global Security
in whole or in part may be registered, in the name or names of Persons
other than the Depositary for such Global Security or a nominee thereof;
(xvii) any addition to or change in the Events of Default which
applies to any Notes of the Series and any change in the right of the
Trustee or the requisite Holders of such Notes to declare the principal
amount thereof due and payable pursuant to Section 6.02 or to liquidate
all or a portion of the Trust Estate (in each case, only to the extent
customarily required for such a Series);
(xviii) any addition to or change in the covenants which applies to
Notes of the Series (in each case, only to the extent customarily required
for such a Series); and
(xix) any other terms of the Series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.02).
(b) Denominations. The Notes of each Series shall be issuable only
in registered form without coupons and only in such denominations as shall be
specified as contemplated by Section 2.01(a).
(c) Principal Payments; Clean-up Call. For each Payment Date,
payments of principal (the "Principal Payments") on the Notes will be made in
accordance with Sections 3.04 or 6.06, as applicable. Except as otherwise
provided in Section 6.02, no part of the principal of any Note shall be paid
prior to the Payment Date on which such principal is due in accordance with the
preceding provisions of this Section 2.01(b), except that, upon the
Administrator's direction, the Company may redeem the Notes of any Series in
their entirety, without premium, as of any Payment Date on which the sum of the
Outstanding Principal Amount of the Notes of such Series is less than or equal
to ten percent (10%) of the initial Outstanding Principal Amount of the Notes of
such Series (after giving effect to all Principal Payments on such Payment
Date). The Administrator will give notice of any such redemption to each
Noteholder and the Trustee at least 30 days before the Payment Date fixed for
such prepayment by certified mail return receipt requested, hand delivery or
overnight courier. Notice of such prepayment having been so given, the remaining
unpaid principal as of the Payment Date fixed for prepayment together with all
21
interest accrued and unpaid to such Payment Date, shall become due and payable
on such Payment Date.
(d) Interest Payments. For each Payment Date, the interest due and
payable (the "Interest Payments") with respect to any Series of Notes will be
the interest that has accrued on the Notes during the previous Due Period, plus
unpaid interest from prior Due Periods, at the designated interest rates.
Interest Payments will be made in accordance with Sections 3.04 and 6.06, as
applicable. Interest will be calculated as designated with respect to a Series.
SECTION 2.02 Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the Company by
its Chairman, President or Vice Chairman.
(b) Any Note bearing the signature of an individual who was at the
time of execution thereof a proper officer of the Company shall bind the
Company, notwithstanding that such individual ceases to hold such office prior
to the authentication and delivery of such Note or did not hold such office at
the date of such Note.
(c) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Each Note shall be dated the date of
its authentication.
(d) The Notes may from time to time be executed by the Company and
delivered to the Trustee for authentication together with a Company Request to
the Trustee directing the authentication and delivery of such Notes and
thereupon the same shall be authenticated and delivered by the Trustee in
accordance with such Company Request.
SECTION 2.03 Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust Office
a register (the "Note Register") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
No transfer of any Note may be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act and an
effective registration or a qualification under applicable state securities
laws, or is made in a transaction that does not require such registration or
qualification because the transfer satisfies one of the following: (i) such
transfer is in compliance with Rule 144A under the Securities Act, to a person
who the transferor reasonably believes is a Qualified Institutional Buyer (as
defined in Rule 144A) that is purchasing for its own account or for the account
of a Qualified Institutional Buyer and to whom
22
notice is given that such transfer is being made in reliance upon Rule 144A
under the Securities Act as certified by such transferee in a letter in the form
of Exhibit D hereto; (ii) after the appropriate holding period, such transfer is
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 under the Securities Act; (iii) such transfer is to a transferee who is
an accredited investor in a transaction exempt from the registration
requirements of the Securities Act, in each case in accordance with any
applicable securities laws of any State of the United States or (iv) such
transfer is otherwise exempt from the registration requirements of the
Securities Act. The Trustee will require, in order to assure compliance with
such laws, that the Noteholder's prospective transferee referred to in the
preceding clauses (iii) or (iv) deliver an investment letter certifying to the
Company and the Trustee as to the facts surrounding such transfer in the form of
Exhibit E hereto. Except in the case of a transfer of Notes to a transferee
referred to in the preceding clause (i) or, in general, a transfer that is to be
made after two years from the Issuance Date, the Administrator shall require an
opinion of counsel satisfactory to it to the effect that such transfer may be
made pursuant to an exemption from the Securities Act without such registration
(which opinion of counsel shall not be an expense of the Trustee, the
Administrator or the Company). None of the Company, the Administrator or the
Trustee is obligated to register or qualify the Notes under the Securities Act
or any other securities law or to take any action not otherwise required under
this Indenture to permit the transfer of any Note without registration.
Neither the Trustee nor the Note Registrar shall effect the
registration of transfer of any Note, if after giving effect to such transfer,
the Notes of such Series would be held by more than ninety-eight Noteholders.
(b) Subject to Section 2.03(a), upon surrender for registration of
transfer of any Note at the office of the Company designated pursuant to Section
8.02 for such purpose, the Company shall execute and the Trustee upon request
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate original principal amount.
(c) Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer
or exchange of Notes, but the Company or the Trustee may require payment by the
transferor of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Notes, other than exchanges pursuant to Section 9.05 not involving any
transfer.
(e) The Administrator agrees to cause the Company, and the Company
agrees, to provide such information as required under Rule 144A under the Act so
as to allow resales of Notes to Qualified Institutional Buyers in accordance
herewith.
23
SECTION 2.04 Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefore a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless then, in the absence of actual notice
to the Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Company in its discretion may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this Section,
the Company or the Trustee may require the payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed as
a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section 2.04 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
(f) The provisions of this Section 2.04 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.05 Payment of Interest and Principal; Rights Preserved.
(a) Any installment of interest or principal, payable on any Note
that is punctually paid or duly provided for by or on behalf of the Company on
the applicable Payment Date shall be paid to the Person in whose name such Note
was registered at the close of business on the Record Date for such Payment Date
by check mailed to the address specified in the Note Register, or upon the
request of a holder of more than $1,000,000 original principal amount of Notes,
by wire transfer of federal funds to the account and number specified in the
Note Register, in each case on such Record Date for such Person (which shall be,
as to each original purchaser of the Notes, the account and number specified by
such purchaser to the Trustee in writing, or, if no such account or number is so
specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date).
24
(b) All reductions in the principal amount of a Note effected by
payments of installments of principal made on any Payment Date shall be binding
upon all holders of such Note and of any Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof, whether or not
such payment is noted on such Note. All payments on the Notes shall be paid
without any requirement of presentment but each holder of any Note shall be
deemed to agree, by its acceptance of the same, to surrender such Note at the
Corporate Trust Office against payment of the final installment of principal of
such Note.
SECTION 2.06 Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee, and any agent of the Company or the Trustee may treat the
registered Noteholder as the owner of such Note for the purpose of receiving
payment of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee, nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION 2.07 Cancellation.
All Notes surrendered for registration of transfer or exchange or
following final payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it. The
Company may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes held by the Trustee may be
disposed of in the normal course of its business or as directed by a Company
Order.
SECTION 2.08 Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. In the event the Trustee no longer serves as the Note Registrar,
the Company (or any other obligor upon the Notes) shall furnish to the Trustee
at least five Business Days before each interest payment date (and in all events
in intervals of not more than 6 months) and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Noteholders.
SECTION 2.09 Treasury Notes.
In determining whether the Noteholders of the required Outstanding
Principal Amount of the Notes have concurred in any direction, waiver or
consent, Notes held or redeemed by the Company or any other obligor upon the
Notes or held by an Affiliate of the Company shall be considered as though not
outstanding, except that for the purposes of determining whether the
25
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a corporate trust officer of the Trustee knows are so owned
shall be so disregarded.
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS
SECTION 3.01 Trust Accounts; Investments by Trustee.
(a) On or before the Issuance Date for any Series, the Trustee shall
establish in the name of the Trustee for the benefit of the Noteholders of such
Series and the Company to the extent of their interests therein as provided in
this Indenture and in the Servicing Agreement, the Trust Accounts designated for
such Series, which accounts shall be Eligible Accounts maintained at the
Corporate Trust Office.
Subject to the further provisions of this Section 3.01(a), the Trustee shall,
upon receipt or upon transfer from another account, as the case may be, deposit
into such accounts all amounts received by it which are required to be deposited
therein in accordance with the provisions of this Indenture. All such amounts
and all investments made with such amounts, including all income and other gain
from such investments, shall be held by the Trustee in such accounts as part of
the Trust Estate as herein provided, subject to withdrawal by the Trustee in
accordance with, and for the purposes specified in the provisions of, this
Indenture.
(b) The Trustee shall hold in trust but shall not be required to
deposit in any account specified pursuant to Section 3.01(a) any payment
received by it until such time as the Trustee shall have identified to its
reasonable satisfaction the nature of such payment and, on the basis thereof,
the proper account or accounts into which such payment is to be deposited. In
determining into which of the accounts, if any, referred to above any amount
received by the Trustee is to be deposited, the Trustee may conclusively rely
(in the absence of bad faith on the part of the Trustee) on the advice of the
Administrator. Unless the Trustee is advised differently in writing by the
Administrator, the Trustee shall assume that any amount remitted to it is to be
deposited into the designated Collection Account pursuant to Section 3.03. The
Trustee may establish from time to time such deadline or deadlines as it shall
determine are reasonable or necessary in the administration of the Trust Estate
after which all amounts received or collected by the Trustee on any day shall
not be deemed to have been received or collected until the next succeeding
Business Day.
(c) None of the Administrator, the Trustee nor the institution then
acting as Trustee shall have any right of set-off with respect to any Lockbox
Account or any Trust Account, or any investment therein.
(d) So long as no Event of Default shall have occurred and be
continuing, all or a portion of the amounts in any Trust Account shall be
invested and reinvested by the Trustee pursuant to an Administrator Order in one
or more Eligible Investments. Subject to the
26
restrictions on the maturity of investments set forth in Section 3.01(f), each
such Administrator Order may authorize the Trustee to make the specific Eligible
Investments set forth therein, to make Eligible Investments from time to time
consistent with the general instructions set forth therein, or to make specific
Eligible Investments pursuant to instructions received in writing or by
telegraph or facsimile transmission from the employees or agents of the
Administrator, as the case may be, identified therein, in each case in such
amounts as such Administrator Order shall specify.
(e) In the event that either (i) the Administrator shall have failed
to give investment directions to the Trustee by 9:30 A.M., New York City time on
any Business Day on which there may be uninvested cash or (ii) an Event of
Default shall be continuing, the Trustee shall promptly invest and reinvest the
funds then in the designated Trust Account to the fullest extent practicable in
one or more Eligible Investments, in accordance with Section 3.02(d). All
investments made by the Trustee shall mature no later than the maturity date
therefore permitted by Section 3.01(f) unless the Trustee shall have received
written confirmation from each Rating Agency that the liquidation of such
Eligible Investments prior to their respective maturity dates will not result in
the reduction or withdrawal of such Rating Agency's then-current rating of the
Notes of such Series.
(f) No investment of any amount held in any Trust Account shall
mature later than the Deposit Date preceding the Payment Date which is scheduled
to occur immediately following the date of investment. All income or other gains
(net of losses) from the investment of moneys deposited in any Trust Account
shall be deposited by the Trustee in such account immediately upon receipt.
(g) Any investment of any funds in any Trust Account and any sale of
any investment held in such accounts, shall be made under the following terms
and conditions:
(i) each such investment shall be made in the name of the Trustee or
in the name of a nominee of the Trustee, in each case in such manner as
shall be necessary to maintain the identity of such investments as assets
of the Trust Estate;
(ii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Trustee or its agent and the Trustee
shall have sole possession of such instrument, and all income on such
investment; and
(iii) the proceeds of any sale of an investment shall be remitted by
the purchaser thereof directly to the Trustee for deposit in the account
in which such investment was held.
(h) If any amounts are needed for disbursement from any Trust
Account and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of an Administrator Order for the
liquidation of investments held therein in an amount sufficient to provide the
required funds, the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such accounts.
27
(i) The Trustee shall not in any way be held liable by reason of any
insufficiency in any Trust Account resulting from losses on investments made in
accordance with the provisions of this Section 3.01 (but the institution serving
as Trustee shall at all times remain liable for its own debt obligations, if
any, constituting part of such investments). The Trustee shall not be liable for
any investment made by it in accordance with this Section 3.01 on the grounds
that it could have made a more favorable investment or a more favorable
selection for sale of an investment. The Trustee may trade with itself or an
Affiliate in the purchase or sale of Eligible Investments.
SECTION 3.02 Establishment and Administration of the Lockbox and the
Collection Accounts. (a) The Administrator shall cause to be established and
maintained at all times a Lockbox and related Lockbox Account pursuant to the
designated Lockbox Agreement for such Series, of which such Lockbox and Lockbox
Account shall be in the name of, and shall be maintained on behalf of the
Trustee, for the benefit of the allocated Trust Estate. Each Collection Account
shall be an Eligible Account initially established at the office of the Trustee,
bearing a designation clearly indicating that the funds deposited therein are
held solely for the benefit of the Series. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in each Lockbox
Account and each Collection Account and in all proceeds thereof. Each Lockbox
Account and each Collection Account shall be under the sole dominion and control
of the Trustee for the benefit of the Noteholders as their interests appear in
the designated Trust Estate. The Administrator or Servicer agrees to cause the
Lockbox Bank to sweep funds from each Lockbox to the related Lockbox Account on
a daily basis and from each Lockbox Account to the related Collection Account at
least once each week. The Administrator agrees to require, and to cause the
Servicer to require, that all Payments by Obligors on Auto Loans be made to the
Lockbox (and that only Payments on Receivables will be received in the Lockbox
Account and no other funds other than funds in which the Trust Estate has an
interest hereunder will be commingled therein). If, at any time, the Collection
Account ceases to be an Eligible Account, the Administrator and the Trustee
shall within 5 Business Days establish a new Collection Account which shall be
an Eligible Account, transfer any cash and/or any investments to such new
Collection Account and from the date such new Collection Account is established,
it shall be the "Collection Account".
(b) The Administrator shall cause the Servicer to deposit into the
applicable Collection Account, as soon as practicable, but in no event later
than the close of business on the second Business Day after the date of receipt
thereof (i) all amounts representing Payments (net of insufficient fund fees and
overpayment credits), if any, collected by the Servicer or anyone else and (ii)
all Recoveries on Receivables received by the Servicer during such Due Period.
(c) Each of the Administrator and the Company shall immediately
deposit and pay directly into the applicable Lockbox Account any Payments it may
receive, all Recoveries on Receivables and the Repurchase Price of Receivables
repurchased by it pursuant to Section 11.03 hereof, with a written notice to the
Servicer of such remittance.
(d) The Administrator shall direct the Trustee in writing to invest,
and the Trustee shall so invest, the amounts in each Collection Account in
specified Eligible Investments that mature not later than the next succeeding
Deposit Date; provided, that any Eligible Investment as
28
to which the Trustee is the obligor in its individual capacity may mature not
later than such Payment Date. If the Trustee receives no such direction, such
amounts shall be invested in mutual funds maintained by the Trustee (or an
Affiliate of the Trustee), provided such mutual funds constitute Eligible
Investments; and provided, further, that such mutual funds maintain at all times
a net asset value of $1 per share. The Trustee may trade with itself or an
Affiliate in the purchase or sale of Eligible Investments. The Trustee shall not
be liable for any losses suffered on amounts invested hereunder so long as such
investments are Eligible Investments satisfying the timing requirements
specified in the first sentence of this Section 3.02(d).
(e) The Administrator shall instruct the Trustee in writing to make
withdrawals and payments from each Collection Account for the purposes of
carrying out the Administrator's and the Trustee's duties hereunder.
SECTION 3.03 Establishment and Administration of Cash Reserve
Accounts. If so designated with respect to a Series, on or prior to each
Issuance Date, the Administrator shall cause to be established and maintained at
all times a Cash Reserve Account on behalf of and in the name of the Trustee for
the benefit of the Trust Estate allocated to such Series. Each Cash Reserve
Account shall be an Eligible Account initially established at the offices of the
Trustee. If, at any time, the Cash Reserve Account ceases to be an Eligible
Account, the Administrator on behalf of the Trustee shall within 5 Business Days
establish a new Cash Reserve Account which shall be an Eligible Account,
transfer any cash and/or any investments to such new Cash Reserve Account and
from the date such new Cash Reserve Account is established, it shall be the
"Cash Reserve Account" in the name of the Trustee for the benefit of the Trust
Estate. If applicable for such Series, on the Issuance Date, the Company shall
deposit an amount equal to the Initial Cash Reserve Account Deposit into the
Cash Reserve Account which amounts shall be allocated in the manner provided
herein.
(a) The Administrator shall deliver or cause to be delivered to the
Trustee no later than the Business Day following any applicable Determination
Date a written notice (a "Cash Reserve Account Withdrawal Notice") requesting
the withdrawal and application of funds in each Cash Reserve Account in
accordance with the terms of the designated Series, and the Trustee shall so
withdraw and allocate such funds.
(b) Funds on deposit in the Cash Reserve Account shall be invested
in accordance with Section 3.01.
SECTION 3.04 Distributions.
(a) Distributions from that portion of Trust Assets allocated to
such Series will be made by the Trustee in accordance with the terms of such
Series.
(b) On the first Business Day following the Payment Date on which
all Noteholders of a given Series have been paid in full, all amounts held in
the applicable Trust Accounts, if any, shall be disbursed to the Company and all
interests of the Trust Estate in all Receivables allocated to such Series which
have an outstanding balance shall be reconveyed by the Trustee to the Company.
Such disbursement and reconveyance shall constitute the final
29
payment to which the Company is entitled with respect to its Company Interest
pursuant to the terms of this Indenture.
SECTION 3.05 Reports to Noteholders. On each Payment Date,
concurrently with the distribution or allocation to the Noteholders, the Trustee
shall furnish to the Noteholders (with a copy to each Rating Agency), a report
(which the Administrator covenants to timely prepare and deliver to the Trustee
at least one Business Day prior to such Payment Date) prepared by the
Administrator substantially in the form designated for such Series. Such report
shall include a certification (i) that the information contained in such report
is accurate, (ii) that no Event of Administrator Termination, or event that with
notice or lapse of time or both would become an Event of Administrator
Termination, has occurred, or if an Event of Administrator Termination or such
event has occurred and is continuing, specifying the Event of Administrator
Termination or such event and its status and (iii) that the representations and
warranties of the Administrator contained in the Servicing Agreement are true
and correct as though made on and as of the date of such certificate.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall have no duty or obligation with respect to the information
provided via the monthly computer tape or diskette, including, without
limitation, to verify, monitor or otherwise supervise or administer the
performance of the Servicer or the Administrator.
SECTION 3.06 Returned Payments. If the principal amount of any Note
or any other amount payable under any Note (including interest) shall have been
reduced by any distribution or allocation of any portion of collections or other
Payments on Receivables, and thereafter such distribution or allocation is
rescinded or must otherwise be returned by or on behalf of the recipient thereof
to the Company, the Trust Estate or any other creditor of the Company for any
reason, such principal or other amount distributed or allocated in respect of
such Note shall be increased by the amount of such distribution or allocation to
the extent so returned, all as though such distribution or allocation had not
been made.
ARTICLE 4.
THE TRUST ESTATE
SECTION 4.01 Acceptance by Trustee and Agreement to Act as
Custodian. (a) Pursuant to each Collateral Assignment, the Trustee will
acknowledge the conveyance of the Transferred Assets and the receipt of Loan
Documents and other Transferred Assets conveyed by the Company pursuant to such
Collateral Assignment and the Trustee will hold such Receivables, the Loan
Documents and all other Trust Assets comprising the Trust Estate, to the extent
allocated to a Series, in trust for the benefit of the Noteholders of such
Series subject to the terms and provisions hereof.
(b) The Trustee shall perform its duties under this Section 4.01 and
hereunder on behalf of the Trust Estate and for the benefit of the Noteholders
in accordance with the terms of this Indenture and applicable law and, in each
case, taking into account its other obligations hereunder, but without regard
to:
30
(i) any relationship that the Trustee or any Affiliate of the
Trustee may have with the related Obligor;
(ii) the ownership of any Note by the Trustee or any Affiliate of
the Trustee;
(iii) the Trustee's right to receive compensation for its services
hereunder or with respect to any particular transaction; or
(iv) the ownership, or holding in trust for others, by the Trustee
of any other automobile loans or property.
(v) The Trustee shall promptly report to the Administrator, each
Rating Agency and the Noteholders any failure by it to hold the Loan
Documents as herein provided and shall promptly take appropriate action to
remedy any such failure but shall be liable therefor only to the extent
(i) any such failure is caused by the acts or omissions of the Trustee and
(ii) such remedial action is or was at the time of such failure otherwise
within its capabilities or control. As custodian, the Trustee shall have
and perform the following powers and duties:
(A) hold the Loan Documents for the benefit of the Noteholders
of the allocated Series, maintain accurate records pertaining to
each Receivable to enable it to comply with the terms and conditions
of this Indenture, and maintain a current inventory thereof;
(B) implement policies and procedures in accordance with the
Trustee's normal business practices with respect to custody of the
Loan Documents so that the integrity and physical possession of the
Loan Documents will be maintained; and
(C) attend to all details in connection with maintaining
custody of the Loan Documents on behalf of the Trust Estate.
(vi) In acting as custodian of the Loan Documents and as Trustee
hereunder, the Trustee agrees further that it does not and will not have
or assert any interest in the Trust Assets in its individual capacity.
Promptly upon the Trustee's receipt thereof, the Trustee on behalf of the
Trust Estate shall mark the Loan Documents and its master data processing
records to reflect that the Trust Estate has been assigned the Receivables
and that such Receivables have been allocated to a particular Series as
provided herein and in the applicable supplemental indenture.
(vii) The Trustee agrees to maintain the related Loan Documents at
its office located in Glen Allen, Virginia or at such other offices of the
Trustee or its agent as shall from time to time be identified by prior
written notice to the Administrator and the Noteholders; provided that
prior to relocating any Loan Documents at any of such other offices, the
Trustee shall have obtained an Opinion of Counsel as to the Trustee's
31
perfected security interest in the Auto Loans. Subject to the foregoing,
the Trustee may temporarily move individual Loan Documents or any portion
thereof without notice as necessary to conduct collection and other
servicing activities.
SECTION 4.02 Subsequent Transfers. (a) On each Assignment Date the
Company shall request that the Trust Estate acquire and the Trust Estate shall
so acquire Receivables (each, a "Transfer") from the Company on the terms and
subject to the conditions of this Indenture; provided, however, that the
conditions specified in Section 4.03 shall have been satisfied; and provided,
further, that the Administrator may cause the Company to contribute (i), if
applicable, Receivables that satisfy Section 11.02(a) to the Trust Estate as
allocated to a Series on any Payment Date and (ii) funds for deposit in a Cash
Reserve Account at any time.
(b) On any Business Day which is an Assignment Date after the
Issuance Date for a Series, the Company shall give the Administrator, the
Trustee and the Servicer written notice of each Transfer (in each case, a
"Transfer Notice") specifying the Unpaid Principal Balance of each Receivable
transferred thereby to the Trust Estate on such Assignment Date. The
Administrator shall independently confirm and hereby represents and warrants as
to, and the Trustee may, without any duty to make any independent investigation
with respect thereto, rely on, the facts set forth in such Transfer Notice.
(c) On each Assignment Date following its delivery of a Transfer
Notice, the Company will complete, execute and deliver a Collateral Assignment
to the Administrator and the Trustee. The Administrator and the Trustee, as
custodian for and on behalf of the Trust Estate, shall thereupon execute such
Collateral Assignment and deliver executed copies thereof to each other and to
the Company and the Noteholders.
(d) Following delivery of a duly executed Collateral Assignment,
subject to the satisfaction of the conditions set forth in Sections 4.02(a) and
4.03, all Receivables specified in such Collateral Assignment (including all
Payments allocable to principal and interest received after the related Cut-off
Date) will be assigned to the Trustee on behalf of the Trust Estate and such
Receivables shall become Trust Assets and part of the Trust Estate, as allocated
to a particular Series.
SECTION 4.03 Conditions Precedent to All Transfers.
Each Transfer shall be subject to the conditions precedent that:
(a) On the related Assignment Date (including the initial Transfer
on the date hereof), the Company (with respect to itself and the Receivables)
and the Administrator shall have certified and are deemed to have represented
and warranted hereunder and shall so represent and warrant in the related
Collateral Assignment that:
(i) the representations and warranties (A) of the Company and
AutoBond set forth in Sections 11.01 and 11.02 hereof and (B) of the
Administrator set forth in the applicable Servicing Agreement, are true
and correct on and as of such date, before and after giving effect to such
Transfer, as though made on and as of such date;
32
(ii) no event has occurred, or would result from such Transfer or
from the application of the proceeds therefrom, which constitutes an Event
of Default or would constitute an Event of Default but for the requirement
that notice be given or time elapse or both;
(iii) each of the Company and AutoBond is in material compliance
with each of its covenants set forth herein and in all Related Documents;
(iv) no event has occurred which constitutes an Event of Servicing
Termination or would constitute an Event of Servicing Termination but for
the requirement that notice be given or time elapse or both; and
(v) no event has occurred which constitutes an Event of
Administrator Termination or would constitute an Event of Administrator
Termination but for the requirement that notice be given or time elapse or
both.
(b) The Company shall have delivered to the Trustee (with a copy to
each Rating Agency and the Noteholders of the applicable Series) as custodian
for and on behalf of the Trust Estate an executed copy of the related Collateral
Assignment and an Officer's Certificate stating and representing and warranting
(and hereby represents and warrants) that all conditions precedent to the
effectiveness thereof as specified herein shall have been satisfied;
(c) The Trustee shall have confirmed receipt of the Loan Documents
with respect to the Receivables subject to such Transfer; and
(d) No Responsible Officer of the Trustee has actual knowledge that
any conditions to such Transfer have not been fulfilled and no Noteholder shall
have notified the Trustee of the same, and the Trustee shall have received such
other documents, opinions, certificates and instruments as any Noteholder or the
Trustee may request.
SECTION 4.04 Grant of Security Interest; Tax Treatment. (a) For
purposes of legal form and the Intended Tax Characterization, it is the
intention of the parties hereto that this Indenture and each related Collateral
Assignment shall constitute a security agreement under applicable law, and that
the Company has granted to the Trustee on behalf of the Trust Estate for the
benefit of the Noteholders, the Company and other creditors of the Trust Estate,
a first priority perfected security interest in all of the Company's right,
title and interest in, to and under the Transferred Assets and the other Trust
Assets. The Trustee shall treat the Trust Estate as a security device for tax
purposes and shall not file tax returns or obtain an employer identification
number on behalf of the Trust Estate; provided, however, that if any Class of
Notes is recharacterized as equity interests in the Trust Estate for tax
purposes, the parties hereto agree to treat the Trust Estate (for tax purposes
only) as a partnership under the New York Uniform Partnership Act in which the
Company was a general partner and each such recharacterized Noteholder was a
limited partner. The provisions of this Indenture shall be construed in
furtherance of the foregoing intended tax treatment. The conveyance by the
Company of the Transferred Assets to the Trustee on behalf of the Trust Estate
on each Assignment Date shall not
33
constitute and are not intended to result in an assumption by the Trustee or any
Noteholder (other than the Company or any Affiliate of any obligations at the
Trust Estate or of the Company) of any obligation of the Company or the
Administrator to the Obligors, the insurers under any insurance policies
including the VSI Policies, or any other Person in connection with the
Transferred Assets.
(b) It is the intention of the parties hereto that, with respect to
all Taxes, the Notes will be treated as indebtedness of the Company to the
Noteholders secured by the Transferred Assets (the "Intended Tax
Characterization"). The Company, the Administrator and the Trustee, by entering
into this Agreement, and each Noteholder by the purchase of a Note, agree to
report such transactions for purposes of all Taxes in a manner consistent with
the Intended Tax Characterization.
(c) The Company and the Administrator shall take no action
inconsistent with the Trustee's interest in the Transferred Assets and shall
indicate or shall cause to be indicated in its books and records held on its
behalf that each Receivable and the other Transferred Assets has been assigned
to the Trustee on behalf of the Trust Estate and the Noteholders.
SECTION 4.05 Further Action Evidencing Assignments. (a) The Company
and the Administrator each agrees that, from time to time, at its respective
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Administrator, the Servicer or the Trustee or Noteholders of a Series
with a Percentage greater than 50% may reasonably request, in order to perfect,
protect or more fully evidence the security interest in the Transferred Assets
allocated to such Series or to enable the Trustee to exercise or enforce any of
its rights hereunder, and under any Collateral Assignment. Without limiting the
generality of the foregoing, the Company will, without the necessity of a
request and upon the request of the Administrator or the Trustee, execute and
file (or cause to be executed and filed) such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate including, without
limitation, recording and filing UCC-1 financing statements, amendments or
continuation statements with the office of the Secretary of State of the state
of Nevada (and other locations): (i) each Assignment Date, and (ii) prior to the
effective date of any change of the name, identity or structure or relocation of
its chief executive office or any change that would or could affect the
perfection pursuant to any financing statement or continuation statement or
assignment previously filed or make any UCC-1 or continuation statement
previously filed pursuant to this Agreement seriously misleading within the
meaning of applicable provisions of the UCC (and the Company shall give the
Trustee at least 10 Business Days prior notice of any circumstance in (ii)
before the same occurs). The Company shall deliver promptly to the Trustee
file-stamped copies of any such filing.
(b) (i) The Company hereby grants to each of the Administrator and
the Trustee a power of attorney to execute all documents on behalf of the
Company as may be necessary or desirable to effectuate the foregoing and (ii)
AutoBond hereby grants to the Trustee a power of attorney to execute all
documents on behalf of AutoBond as may be necessary or desirable to effectuate
the foregoing; provided, however, that such grant shall not create a duty on the
Trustee
34
to file, prepare, record or monitor or any responsibility for the contents or
adequacy of any such documents.
ARTICLE 5.
SERVICING OF TRUST ASSETS
SECTION 5.01 Appointment of Servicer. For each Series hereunder,
there shall be designated a Servicing Agreement for the servicing,
administration and collection of the Receivables and the Trustee shall enforce
the provisions thereof on behalf of the Noteholders.
SECTION 5.02 Appointment of Administrator; Monthly Administration
Fee. (a) AutoBond agrees to act as the Administrator under this Indenture and
the Noteholders by their acceptance of Notes consent to AutoBond acting as
Administrator subject to the terms and conditions hereof. AutoBond shall cease
to act as the Administrator hereunder with respect to any Series, in each case
after the determination of the Trustee or the holders of more than 50% of the
principal amount of the affected Notes upon the occurrence of an Event of
Administrator Termination under the related Servicing Agreement, whereupon the
Trustee shall assume the Administrator's duties hereunder (but not including
collection agent duties under the Servicing Agreement and the duties specified
in Section 5.03(a)(i)-(vi), which shall remain duties of AutoBond until a
successor to such duties is appointed) as additional Trustee duties. The
Administrator shall have no right to voluntarily resign from its duties and
obligations hereunder.
(b) The Administrator shall conduct the duties specified herein and
as specified in each Servicing Agreement (together, the "Administrator Duties")
in accordance with (i) customary and prudent business practices for the
performance of similar activities, all applicable laws, rules and regulations
and contracts with respect to it, its business and properties and all
Receivables, Insurance Policies, and other Trust Assets with respect thereto
and, (ii) to the extent consistent with the foregoing, in the same manner in
which, and the same care, skill, prudence and diligence with which, it performs
similar management and administrative services for its own account or on behalf
of other Persons giving due consideration to customary and prudent business
practices.
(c) As compensation for its services hereunder and under the
Servicing Agreement, subject to the terms and conditions hereof and thereof, the
Trustee shall remit to the Administrator such fees as may be designated from
time to time in respect of a particular Series.
SECTION 5.03 Duties and Responsibilities of the Administrator. (a)
In addition to the other duties specified in this Indenture and in the Servicing
Agreement, the Administrator Duties shall, on behalf of the Trust Estate,
consist of: (i) administering collections on the Receivables; (ii) arranging for
and administering repossessions of the Financed Vehicles related to the
Receivables; (iii) disposing of each Financed Vehicle related to a Receivable
whether following repossession or otherwise; (iv) maximizing collections of
Receivables, and filing of insurance claims under and in accordance with the
Insurance Policies (if any) with respect to each Auto Loan affected by a
repossession or otherwise; (v) delivering to the Trustee and to any
35
Noteholder with a Percentage of at least 50% in respect of a Series upon the
request of such Noteholder the List of Receivables allocated to such Series as
amended from time to time, on each Assignment Date; and (vi) formulating the
Credit and Collection Policies, from time to time.
(b) Other than in connection with its duty as Collection Agent or
Servicer to effect liquidations of Financed Vehicles and its obligation to make
repurchases of Receivables hereunder, AutoBond shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon or written respect to, any Receivable (or any right
to receive income in respect thereof), or any Collection Account.
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01 Events of Default.
"Event of Default," wherever used herein with respect to Notes of
any Series, means any one of the following:
(a) (i) default in the making of Principal Payments or Interest
Payments in respect of any Note of that Series when such become due and payable,
and continuance of such default for one Business Day; or (ii) failure to make
any deposit when due hereunder or under the applicable Servicing Agreement and
continuance of such default for one Business Day; or
(b) failure of AutoBond to repurchase pursuant to Section 11.03 any
Auto Loans allocated to such Series, and such failure continues for 30 days; or
(c) default in the performance, or breach, of any covenant of the
Company or the Administrator in this Indenture and applicable to such Series
(other than a covenant dealing with a default in the performance of which or the
breach of which is specifically dealt with elsewhere in this Section 6.01) and
continuance of such default or breach for a period of 30 days after the earliest
of (i) any officer of the Company or the Administrator first acquiring knowledge
thereof, (ii) the Trustee's giving written notice thereof to the Company or
(iii) the holders of a majority of the then Outstanding Principal Amount of the
Notes of such Series giving written notice thereof to the Company and the
Trustee; or
(d) if any representation or warranty of the Company or the
Administrator made in this Indenture and applicable to such Series shall prove
to be incorrect in any material respect as of the time when the same shall have
been made, and such breach is not remedied within 30 days after notice of breach
from the Trustee or the holders of a majority of Outstanding Principal Amount of
the Notes of such Series; provided, however, that a breach of any representation
or warranty made by the Company or the Administrator in Section 11.02 with
respect to any of the Auto Loans or the interests in the Financed Vehicles shall
not constitute an Event of Default if the Company or the Administrator
repurchases such Receivables in accordance with Section 11.03(a); or
36
(e) the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or similar official of the Company or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the Company's failure to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action; or
(g) an Event of Administrator Termination under the Servicing
Agreement applicable to such Series shall have occurred and be continuing; or
(h) any Transfer shall for any reason (other than pursuant to the
terms hereof) cease to create a valid and perfected first priority security
interest (within the meaning of the UCC) in the Auto Loans taken as a whole and
the related security and collections with respect thereto in favor of the
Trustee on behalf of the Trust Estate, or the applicable Note shall for any
reason cease to be entitled to the benefits of security interest (within the
meaning of the UCC) in the Receivables and related security and other
Transferred Assets allocated to such Series, to the extent of such Note's
purported interest therein; or
(i) AutoBond shall at any time cease to own, directly or indirectly,
at least 100% of the outstanding shares of common stock of the Company; or
(j) a judgment or judgments aggregating in excess of $250,000 shall
be entered against the Company and shall not be paid, stayed or dismissed within
30 days thereof; or
(k) any other Event of Default provided with respect to Notes of
that Series.
37
SECTION 6.02 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default of the kind specified in Section 6.01(e)
or Section 6.01(f) occurs, the unpaid principal amount of the Notes of each
Series shall automatically become due and payable at par together with all
accrued and unpaid interest thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company. If an Event
of Default (other than an Event of Default of the kind described in Section 6.01
(e) or Section 6.01(f)) with respect to Notes of any Series occurs and is
continuing, then and in every such case the Trustee shall, if so directed by the
holders of Notes evidencing at least 66-2/3% of the then Outstanding Principal
Amount of the most senior Class of such Series (or if the Notes of such Class
are no longer Outstanding, the holders of Notes evidencing at least 66-2/3% of
the then Outstanding Principal Amount of the next most senior Class, and so on),
or the holders of at least 66-2/3% of the then Outstanding Principal Amount of
Notes of such Series may, declare the unpaid principal amount of all the Notes
of such Series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Noteholders), and upon any such
declaration such principal amount shall become immediately due and payable
together with all accrued and unpaid interest thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company.
(b) At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the holders of
a like percentage of Notes of such Series by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all Principal Payments on any Notes of such Series which
have become due otherwise than by such declaration of acceleration
and interest thereon from the date when the same first became due
until the date of payment or deposit at the appropriate Note
Interest Rate plus two percent (2%) per annum,
(B) all Interest Payments due with respect to any Notes of
such Series and, to the extent that payment of such interest is
lawful, interest upon overdue interest from the date when the same
first became due until the date of payment or deposit at a rate per
annum equal to the appropriate Note Interest Rates, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements, and advances of
each of the Trustee, the Servicer and the Administrator, its agents
and counsel;
and
(ii) all Events of Default with respect to Notes of that Series,
other than the non-payment of the Outstanding Principal Amount of the
Notes of such Series which
38
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 6.03 Remedies.
(a) If an Event of Default with respect to Notes of any Series
occurs and is continuing of which a Responsible Officer has actual knowledge,
the Trustee shall immediately give notice to each Noteholder of such Series as
set forth in Section 7.02 and shall solicit such Noteholders for advice. The
Trustee shall then take such action as so directed by the holders of at least
66-2/3% of the Outstanding Principal Amount of the Notes of such Series, subject
to the provisions of this Indenture.
(b) Following any acceleration of the Notes of any Series, the
Trustee shall have all of the rights, powers and remedies with respect to the
Trust Estate allocated to such Series as are available to secured parties under
the UCC or other applicable law, subject to subsection (d) below. Such rights,
powers and remedies may be exercised by the Trustee in its own name as trustee
of an express trust.
(c) (i) If an Event of Default specified in Section 6.01(a) occurs
and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the
whole amount of principal and interest remaining unpaid with respect to
the affected Series of Notes.
(ii) If an Event of Default occurs and is continuing, the Trustee
may in its discretion, and at the instruction of an aggregate Percentage
of greater than 50% of the Noteholders of each affected Series shall,
proceed to protect and enforce its rights and the rights of the
Noteholders of such Series by such appropriate judicial or other
proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy. The Trustee
shall notify the Company, the Administrator, the Servicer, the Noteholders
of such Series and each applicable Rating Agency of any such action.
(d) If (i) the Trustee shall have received instructions within 90
days from the date notice pursuant to Section 6.03(a) is first given from
holders of each Class of Notes of such Series evidencing more than 50% of the
aggregate unpaid principal amount of such Class of Notes, to the effect that
such Persons approve of or request the liquidation of the Trust Assets allocated
to such Series and do not wish to continue such Trust Estate pursuant to the
terms of this Indenture or (ii) upon an Event of Default set forth in Section
6.01(e) or (f), the Trust Estate allocated to such Series shall be terminated
and, the Trustee shall to the extent lawful, promptly sell, dispose of or
otherwise liquidate the Trust Assets allocated to such Series in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids; provided, however, that, upon an Event of
Default set forth in Section 6.01(e) or (f), to the
39
extent holders of the Notes evidencing more than 50% of the aggregate principal
amount of each Class of Notes of such Series notify the Trustee that they wish
to reconstitute the Trust Estate, such liquidation shall not occur and the
parties hereto agree that the Trust Estate allocated to such Series shall be
reconstituted pursuant to a new indenture or amendment hereto on applicable
terms identical hereto. The Trustee may obtain a prior determination from any
such conservator, receiver or liquidator of the Company that the terms and
manner of any proposed sale, disposition or liquidation are commercially
reasonable.
SECTION 6.04 Trustee May File Proofs of Claim. (a) In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company, or any other obligor upon the Notes, or the
property of the Company, or such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes or any amounts owing on
the Receivables or the other Trust Assets and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee and any predecessor Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel) and of the
Noteholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee and to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee and any predecessor Trustee under Section
7.06.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, agreement, adjustment or composition
affecting the Notes or the rights of any Noteholder thereof or affecting the
Receivables or the other Trust Assets or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Agreement, the Notes, the Receivables
or the other Trust Assets may be prosecuted and enforced by the Trustee without
the possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provisions for the payment of the reasonable compensation,
expenses,
40
disbursements and advances of the Trustee and any predecessor Trustee, their
agents and counsel, be for the benefit of the Noteholders in respect of which
such judgment has been recovered, and pursuant to the priorities contemplated by
Section 3.04.
SECTION 6.06 Application of Money Collected. Any money collected by
the Trustee pursuant to this Article 6 shall be deposited in the applicable
Collection Account or Accounts for disbursement in accordance with the
provisions of Article 3.
SECTION 6.07 Limitation on Suits. No Noteholder of any Series shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture or for any other remedy hereunder, unless:
(a) there is a continuing Event of Default with respect to such
Series and such Noteholder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) within 30 days after notice, the Noteholders holding an
aggregate Percentage of greater than 50% of such Series shall not have objected
to such Noteholder's written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(c) such Noteholder or Noteholders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(d) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Noteholders of at least
66-2/3% in aggregate principal amount of the Outstanding Notes of such Series;
it being understood and intended that no one or more of such Noteholders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Noteholders, or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided and for the ratable benefit of all such Noteholders.
It is further understood and intended that so long as any portion of the Notes
remains Outstanding, AutoBond shall not have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture (other than
for the enforcement of Section 3.04) or for the appointment of a receiver or
trustee (including without limitation a proceeding under the Bankruptcy Code),
or for any other remedy hereunder. Nothing in this Section 6.07 shall be
construed as limiting the rights of otherwise qualified Noteholders to petition
a court for the removal of a Trustee pursuant to Section 7.09 hereof.
SECTION 6.08 Unconditional Right of Noteholders to Receive Principal
and Interest.
41
Notwithstanding any other provision in this Indenture, other than
the provisions hereof limiting the right to recover amounts due on the Notes to
recoveries from the property of the allocated Trust Estate, the holder of any
Note shall have the absolute and unconditional right to receive payment of the
principal of and interest on such Note on the Maturities for such payments,
including the Stated Maturity, and such right shall not be impaired without the
consent of such Noteholder.
SECTION 6.09 Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Noteholder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders
continue as though no such proceeding had been instituted.
SECTION 6.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph of
Section 2.04, no right or remedy herein conferred upon or reserved to the
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 6.12 Control by Noteholders.
Except as may otherwise be provided in this Indenture, until such
time as the conditions specified in Sections 10.01(a)(i) and (ii) have been
satisfied in full, the holders of at least 66-2/3% of the then Outstanding
Principal Amount of the Notes of any Series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Notes of such Series. Notwithstanding the foregoing,
42
(i) no such direction shall be in conflict with any rule of law or
with this Indenture;
(ii) the Trustee shall not be required to follow any such direction
which the Trustee reasonably believes might result in any personal
liability on the part of the Trustee for which the Trustee is not
adequately indemnified; and
(iii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with any such direction; provided that
the Trustee shall give notice of any such action to each Noteholder of
such Series.
SECTION 6.13 Waiver of Events of Default.
(a) The holders of at least 66-2/3% of the then Outstanding
Principal Amount of the Notes of any Series may, by one or more instruments in
writing, waive any Event of Default on behalf of all Noteholders of such Series
hereunder and its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or interest on any
Note (which may only be waived by the holder of such Note), or
(ii) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
holder of each Outstanding Note affected (which only may be waived by the
holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by the Company to the Trustee and each Noteholder. Upon any such
waiver, such Event of Default shall cease to exist and shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Event of Default or impair any right consequent
thereon.
SECTION 6.14 Undertaking for Costs.
All parties to this Indenture agree (and each holder of any Note by
its acceptance thereof shall be deemed to have agreed) that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the then Outstanding Principal Amount
of the Notes of any Series, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or interest on
43
any Note on or after the Maturities for such payments, including the Stated
Maturity as applicable.
SECTION 6.15 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted allocated to a Series of
Notes.
SECTION 6.16 Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust Estate
allocated to a Series of Notes pursuant to Section 6.03 shall not be exhausted
by any one or more sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate so allocated shall
have been sold or all amounts payable on the Notes of such Series shall have
been paid. The Trustee may from time to time, upon directions in accordance with
Section 6.12, postpone any public sale by public announcement made at the time
and place of such sale.
(b) To the extent permitted by applicable law, the Trustee shall not
sell to a third party the Trust Estate, or any portion thereof except as
permitted under Section 6.03(d).
(c) In connection with a sale of all or any portion of the Trust
Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale may
hold, retain, and possess and dispose of such property, without further
accountability, and any Noteholder may, in paying the purchase money
therefore, deliver in lieu of cash any Outstanding Notes or claims for
interest thereon for credit in the amount that shall, upon distribution of
the net proceeds of such sale, be payable thereon, and the Notes, in case
the amounts so payable thereon shall be less than the amount due thereon,
shall be returned to the Noteholders after being appropriately stamped to
show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Trust Estate
in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Company to transfer and convey its interest in any
portion of the Trust Estate in connection with a sale thereof, and to take
all action necessary to effect such sale; and
44
(iv) no purchaser or transferee at such a sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(d) The method, manner, time, place and terms of any sale of all or
any portion of the Trust Estate shall be commercially reasonable.
ARTICLE 7.
THE TRUSTEE
SECTION 7.01 Certain Duties. (a) The Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee (including, without limitation, the duties
referred to in each Servicing Agreement during the continuance of an Event of
Servicing Termination, or an Event of Administrator Termination resulting in the
appointment of the Trustee as Successor Servicer under any Servicing Agreement).
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(c) In case an Event of Default, an Event of Servicing Termination
(resulting in the appointment of the Trustee as Successor Servicer under any
Servicing Agreement) or an Event of Administrator Termination (resulting in the
appointment of the Trustee as successor Administrator under any Servicing
Agreement) has occurred and is continuing with respect to any Series, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs; provided, however, that no provision in this
Indenture shall be construed to limit the obligations of the Trustee to provide
notices under Section 7.02.
(d) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(e) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
45
(i) this Section shall not be construed to limit the effect of
Section 7.01(a) and (b);
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it shall be proved that the
Trustee shall have been negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
written direction of the holders of the requisite principal amount of the
outstanding Notes, or in accordance with any written direction delivered
to it under Section 6.02(a), relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
(f) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
(g) The Trustee makes no representations or warranties with respect
to the Trust Assets or the validity or sufficiency of any assignment of the
Receivables to the Company or to the Trust Estate.
SECTION 7.02 Notice of Events of Default. The Trustee shall promptly
(but in any event within five Business Days) notify the applicable Rating
Agencies, the Administrator, the Servicer and the Noteholders of any Series upon
a Responsible Officer obtaining actual knowledge of any event which constitutes
an Event of Default, an Event of Servicing Termination, or an Event of
Administrator Termination or would constitute an Event of Default, an Event of
Servicing Termination, or an Event of Administrator Termination but for the
requirement that notice be given or time elapse or both, in each case with
respect to such Series, unless such default shall have been cured or waived;
provided, further, that this Section 7.02 shall not limit the obligations of the
Trustee to provide notices expressly required by this Indenture.
SECTION 7.03 Certain Matters Affecting the Trustee. Subject to the
provisions of Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) Any request or direction of any Noteholders, the Administrator,
the Company, or the Servicer mentioned herein shall be in writing;
(c) Whenever in the performance of its duties hereunder the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action
46
hereunder, the Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an Officer's Certificate
or Opinion of Counsel;
(d) The Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be deemed authorization in respect of
any action taken, suffered, or omitted by it hereunder in good faith and in
reliance thereon;
(e) Prior to the occurrence of an Event of Default, an Event of
Servicing Termination, or an Event of Administrator Termination, or after the
curing of all Events of Default, Events of Servicing Termination or Events of
Administrator Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by Noteholders of any affected Series holding an
aggregate Percentage of more than 50%; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
reasonable opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid by
the Administrator or, if paid by the Trustee, shall be reimbursed by the
Administrator upon demand; and
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian (which may be Affiliates of the Trustee) and the
Trustee shall not be liable for any acts or omissions of such agents, attorneys
or custodians appointed with due care by it hereunder.
SECTION 7.04 Trustee Not Liable for Notes or Receivables. (a) The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or any Related Document, the Notes (other than the authentication
thereof) or of any Receivable. The Trustee shall not be accountable for the use
or application by the Company of funds paid to the Company in consideration of
conveyance of the Receivables to the Trust Estate.
(b) Except with respect to the Trustee in its capacity as Successor
Servicer pursuant to the Servicing Agreement, the Trustee shall have no
responsibility or liability for or with respect to: the validity of any security
interest in any Financed Vehicle; the existence or validity of any Receivable,
the validity of the assignment of any Receivable to the Trust Estate or of any
intervening assignment; the review of any Receivable, any Loan File or the
Electronic Ledger as defined in the Servicing Agreement, the completeness of any
Loan File, the receipt by it or its custodian of any Receivable or Loan File (it
being understood that the Trustee has not reviewed and does not intend to review
such matters); the performance or enforcement of any Receivable; the compliance
by the Administrator, the Company or the Servicer with any covenant or the
breach by the Administrator or the Company of any warranty or representation
made hereunder or in any related document or the accuracy of any such warranty
or representation; the acts or omissions of the Administrator, the Servicer or
any Obligor or Dealer; or any action of the Administrator or the Servicer taken
in the name of the Trustee.
47
SECTION 7.05 Trustee May Own Notes. The Trustee in its individual or
any other capacity may become the owner or pledgee of Notes with the same rights
as it would have if it were not Trustee.
SECTION 7.06 The Administrator to Pay Trustee's Fees and Expenses.
The Administrator agrees to reimburse the Trustee upon its request for all
agreed-upon third-party expenses, disbursements and advances incurred or made by
the Trustee in its capacity as such in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursement of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith. The
obligations of the Administrator under this Section 7.06 shall survive the
termination of this Indenture and the resignation or removal of the Trustee.
SECTION 7.07 Eligibility Requirements for Trustee. Other than the
initial trustee, the Trustee hereunder shall at all times (a) be a corporation,
depository institution, or trust company organized and doing business under the
laws of the United States of America or any state thereof authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $250,000,000, (b) be subject to supervision or examination by
federal or state authority, (c) be capable of maintaining an Eligible Account
and (d) have a long-term unsecured debt rating of not less than Baa2 from
Moody's and BBB+ from S&P or such other rating as may be acceptable to the
Rating Agencies, and shall be acceptable to Noteholders of each Series with a
Percentage of more than 50%. If such institution publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section 7.07,
the combined capital and surplus of such institution shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.07, the Trustee shall resign
immediately in the manner and with the effect specified in Section 7.08.
SECTION 7.08 Resignation or Removal of Trustee. (a) The Trustee may
at any time resign and be discharged with respect to the Notes of one or more
Series by giving 90 days' written notice thereof to the Administrator, the
Servicer, the Company, the Noteholders of such Series and the Rating Agencies.
Upon receiving such notice of resignation, the Administrator shall promptly
appoint a successor Trustee not objected to by Noteholders of such Series with a
Percentage of more than 50% within 30 days after prior written notice, by
written instrument, in quintuplicate, one counterpart of which instrument shall
be delivered to each of the Company, the Servicer, the successor Trustee and the
predecessor Trustee. A copy of such instrument shall be delivered to the Rating
Agencies. If no successor Trustee shall have been so appointed and have accepted
appointment within 90 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.07 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any
48
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Administrator or Noteholders of each Series with a Percentage greater than 50%
may direct, and the Administrator shall follow such direction and remove the
Trustee. If it removes the Trustee under the authority of the immediately
preceding sentence, the Administrator shall promptly appoint a successor Trustee
not objected to by Noteholders of each Series with a Percentage of more than
50%, within 30 days after prior written notice, by written instrument, in
quintuplicate, one counterpart of which instrument shall be delivered to each of
the Company, the Servicer, the Noteholders, the successor Trustee and the
predecessor Trustee. Copies of such instrument shall also be delivered by the
Administrator to each of the Rating Agencies.
(c) The Trustee may be removed by the Administrator at any time by
giving written notice thereof to the Trustee and each of the holders of the
Notes then outstanding. Such removal by the Administrator will become effective
unless the holders of at least 51% of the principal amount of the Notes of each
Series then outstanding deliver a written statement to the Administrator
opposing such removal within 30 days following receipt of such notice of removal
from the Administrator.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 7.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 7.09.
SECTION 7.09 Successor Trustee. (a) Any successor Trustee appointed
as provided in Section 7.08 shall execute, acknowledge and deliver to each of
the Administrator, the Company, the Servicer, the Noteholders and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to the
successor Trustee or its custodian any related documents and statements held by
it or its custodian hereunder; and the Administrator and the Company and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for the full and certain vesting and
confirmation in the successor Trustee of all such rights, powers, duties and
obligations.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Notes of one or more (but not all) Series, the Company, the
retiring Trustee and each successor Trustee with respect to the Notes of one or
more Series shall execute and deliver an indenture supplemental hereto wherein
each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Notes of that or those Series to
which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Notes, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Notes of
that or those Series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee,
49
and (3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the Trust Estate
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same allocated trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Notes of that or those Series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Notes of that or those Series to which the appointment of such
successor Trustee relates.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in the preceding paragraph.
(c) No successor Trustee shall accept appointment as provided in
this Section 7.09 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 7.07.
(d) Upon acceptance of appointment by a successor Trustee as
provided in this Section 7.09, the Administrator shall mail notice of the
succession of such Trustee hereunder to each Noteholder of each affected Series
at its address as shown in the Note Register and to the Rating Agencies. If the
Administrator fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Company and the Administrator.
SECTION. 7.10 Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 7.07, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
50
ARTICLE 8.
COVENANTS
SECTION 8.01 Payment of Principal and Interest.
The Company will cause the due and punctual payment of the principal
of and interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 8.02 Maintenance of Office or Agency; Chief Executive
Office.
(a) The Company will maintain at the Corporate Trust Office an
office or agency where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands.
(b) The Company will not change the location of its principal place
of business without giving the Trustee and the Rating Agencies at least 30 days'
prior written notice thereof.
SECTION 8.03 Money for Payments to Noteholders to be Held in Trust.
(a) All payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Trust Accounts
pursuant to Section 3.04 or Section 6.06 shall be made on behalf of the Company
by the Trustee, and no amounts so withdrawn from the applicable Collection
Account for payments of Notes shall be paid over to the Company under any
circumstances except as provided in this Section 8.03, in Section 3.04 or
Section 6.06.
(b) In making payments hereunder, the Trustee will hold all sums
held by it for the payment of amounts due with respect to the Notes in trust for
the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided.
(c) Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Noteholders
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will hold all sums held by it for the payment of the principal
of or interest on Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided.
51
(d) Except as required by applicable law, any money held by the
Trustee in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for three years after such amount has become due and payable
to the Noteholder shall be discharged from such trust and, subject to applicable
escheat laws, and so long as no Event of Default has occurred and is continuing,
paid to the Company upon request; otherwise, such amounts shall be redeposited
in the Collection Account as available funds, and such Noteholder shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof (but only to the extent of the amounts so paid to the Company),
and all liability of the Trustee with respect to such trust money shall
thereupon cease.
SECTION 8.04 Corporate Existence; Merger; Consolidation, etc.
(a) The Company will keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Nevada, and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes or any of
the Auto Loans.
(b) The Company shall at all times observe and comply in all
material respects with (i) all laws applicable to it, (ii) all requirements of
law in the declaration and payment of dividends on its capital stock, and (iii)
all requisite and appropriate corporate and other formalities (including without
limitation meetings of the Company's board of directors and, if required by law,
its charter or otherwise, meetings and votes of the shareholders of the Company
to authorize corporate action) in the management of its business and affairs and
the conduct of the transactions contemplated hereby.
(c) The Company shall not issue or register the transfer of any of
its common stock to any Person other than AutoBond or a wholly-owned subsidiary
of AutoBond.
(d) The Company shall not (i) consolidate or merge with or into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any other Person or (ii) commingle its assets with those of any
other Person.
SECTION 8.05 Protection of Trust Estate; Further Assurances.
The Company will from time to time execute and deliver all such
supplements and amendments hereto and all such Financing Statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively the Trust Assets comprising all or any
portion of the Trust Estate;
(ii) maintain or preserve the lien of this Indenture or carry out
more effectively the purposes hereof;
52
(iii) publish notice of, or protect the validity of, any Grant made
or to be made by this Indenture and perfect the security interest
contemplated hereby in favor of the Trustee in each of the Receivables and
all other property included in the Trust Estate; provided, that the
Company shall not be required to cause the recordation of the Trustee's
name as lienholder on the related certificates of title for the Financed
Vehicles so long as no Event of Default has occurred and is continuing;
(iv) enforce or cause the Administrator to enforce any of the
Receivables;
(v) preserve and defend title to the Receivables (including the
right to receive all payments due or to become due thereunder), the
interests in the Financed Vehicles, or other property included in the
Trust Estate and preserve and defend the rights of the Trustee in such
Trust Assets (including the right to receive all payments due or to become
due thereunder) against the claims of all Persons and parties other than
as permitted hereunder; and
(vi) cause the Trustee to be added as an additional named insured on
each of the Insurance Policies.
The Company, upon the Company's failure to do so, hereby designates the Trustee
its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.05; provided,
however, that such designation shall not be deemed to create a duty in the
Trustee to monitor the compliance of the Company with the foregoing covenants,
and provided, further, that the duty of the Trustee to execute any instrument
required pursuant to this Section 8.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure of the Company to comply with
the provisions of this Section 8.05.
SECTION 8.06 Servicing Agreement.
(a) If any Authorized Officer of the Administrator shall have
knowledge of the occurrence of a default under any Servicing Agreement, the
Administrator shall promptly notify the Trustee and the Noteholders of each
affected Series, and shall specify in such notice the action, if any, the
Administrator and the Company is taking in respect of such default. Unless
consented to by the holders of at least 66-2/3% of the then Outstanding
Principal Amount of the Notes of each affected Series, the Company may not waive
any material default under or amend the Servicing Agreement in a manner
materially adverse to the Noteholders of such Series.
SECTION 8.07 Additional Covenants.
(a) The Company will not:
(i) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture;
53
(ii) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes by reason of the payment of any taxes
levied or assessed upon any portion of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture or
any Grant hereby to be impaired, or permit the lien of this Indenture to
be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations under
this Indenture, except as may be expressly permitted hereby, (B) permit
any lien, charge, security interest, mortgage or other encumbrance to be
created on or to extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds thereof
other than the lien of this Indenture, or (C) except as otherwise
contemplated in this Indenture, permit the lien of this Indenture not to
constitute a valid first priority security interest in the Trust Estate.
(b) Notice of Event of Default - immediately upon becoming aware of
the existence of any condition or event which constitutes a Default or an Event
of Default, the Company shall deliver to the Trustee a written notice describing
its nature and period of existence and what action the Company is taking or
proposes to take with respect thereto.
(c) Report on Proceedings - promptly upon the Company's becoming
aware of:
(i) any proposed or pending investigation of it by any governmental
authority or agency; or
(ii) any pending or proposed court or administrative proceeding
which involves or may involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition
(financial or otherwise) of the Company;
the Company shall deliver to the Trustee a written notice specifying the nature
of such investigation or proceeding and what action the Company is taking or
proposes to take with respect thereto and evaluating its merits.
SECTION 8.08 Taxes.
AutoBond shall pay all Taxes of the Company when due and payable or
levied against the Company's assets, properties or income, including any
property that is part of the Trust Estate. AutoBond will not seek reimbursement
from the Company for any such Taxes except to the extent of funds of the Company
which may, consistent with this Indenture, be distributed to AutoBond.
54
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of any Noteholders, the Company, by a
Company Order, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or to better assure, convey
and confirm unto the Trustee any property subject or required to be
subjected to the lien of this Indenture; provided such action pursuant to
this clause (i) shall not adversely affect the interests of the
Noteholders of any Series in any respect; or
(ii) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes of one or more
Series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 7.09; or
(iii) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that such action pursuant
to this Clause (iii) shall not adversely affect the interests of the
Holders of Notes of any Series; or
(iv) to establish a Series permitted upon an exchange under Section
13.06.
(b) The Trustee shall promptly deliver, at least 5 Business Days
prior to the effectiveness thereof, to each Noteholder of an affected Series and
each Rating Agency a copy of any supplemental indenture entered into pursuant to
Section 9.01(a).
SECTION 9.02 Supplemental Indentures with Consent of Noteholders.
(a) With the consent of the holders of not less than 66-2/3% of the
then Outstanding Principal Amount of the Notes of each Series affected by such
supplemental indenture and by Act of said Noteholders delivered to the Company
and the Trustee, the Company, by a Company Order, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Noteholders of
such Series under this Indenture; provided, that no supplemental indenture
shall, without the consent of the holder of each Outstanding Note affected
thereby,
55
(i) change the Stated Maturity of any Note or the Principal Payments
or Interest Payments due or to become due on any Payment Date with respect
to any Note, or change the priority of payment thereof as set forth
herein, or reduce the principal amount thereof or the Note Interest Rate
thereon, or change the place of payment where, or the coin or currency in
which, any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal Amount of
the Notes of any Series, the consent of whose Noteholders is required for
any such supplemental indenture, for any waiver of compliance with
provisions of this Indenture or Events of Default and their consequences,
provided for in this Indenture;
(iii) modify any of the provisions of this Section or Section 6.13
except to increase any percentage or fraction set forth therein or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the holder of each Outstanding Note
affected thereby;
(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as provided in the applicable Servicing Agreement,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive any Noteholder of the security afforded by the lien of
this Indenture;
provided, no such supplemental indenture may modify or change any terms
whatsoever of the Indenture that could be construed as increasing the Company's
or AutoBond's discretion hereunder.
(b) The Trustee shall promptly deliver to each Noteholder of an
affected Series and each Rating Agency a copy of any supplemental indenture
entered into pursuant to Section 9.02(a).
SECTION 9.03 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture (a) pursuant to Section 9.01 of this Indenture or (b)
pursuant to Section 9.02 of this Indenture without the consent of each holder of
the Notes to the execution of the same, or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be, fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any supplemental indenture which affects the Trustee's
own rights, duties, projections, or immunities under this Indenture or
otherwise.
56
SECTION 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 9.05 Reference in Notes to Supplemental Indentures.
Notes of any Series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. New Notes of any Series
so modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes of
such Series.
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.01 Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) 100 days shall have elapsed since either
(A) all Notes theretofore authenticated and delivered (other
than (1) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.04 and (2) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section
8.03(c)) have been delivered to the Trustee for cancellation; or
(B) the final installments of principal on all such Notes not
theretofore delivered to the Trustee for cancellation
(1) have become due and payable, or
(2) will become due and payable at their Stated
Maturity, as applicable, within one year,
57
and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Notes which have become
due and payable) or to the Stated Maturity thereof;
(ii) the Company and the Administrator have paid or caused to be
paid all other sums payable hereunder by the Company and the Administrator
for the benefit of the Noteholders and the Trustee; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
At such time, the Trustee shall deliver to the Company all cash, securities and
other property held by it as part of the Trust Estate other than funds deposited
with the Trustee pursuant to Section 10.01(a)(i)(B), for the payment and
discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Sections 7.07 and
8.11, and, if money shall have been deposited with the Trustee pursuant to
Section 10.01(a)(i)(B), the obligations of the Trustee under Section 10.02 and
Section 8.03(c) shall survive.
(c) The Trustee shall provide prompt written notice to each Rating
Agency of any satisfaction and discharge of this Indenture pursuant to this
Article 10.
SECTION 10.02 Application of Trust Money.
Subject to the provisions of Section 8.03(c), all money deposited
with the Trustee pursuant to Sections 10.01 and 8.03 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
SECTION 10.03 Trust Termination Date. Upon the full application of
(a) moneys deposited pursuant to this Article 10 or (b) proceeds of the Trust
Assets pursuant to Sections 3.04 or 6.06, the Trust Estate created by this
Indenture shall be deemed to have terminated (the "Trust Termination Date").
58
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
SECTION 11.01 Representations and Warranties of the Company. The
Company represents and warrants to the Trustee and the Noteholders, as of each
Issuance Date and on each day until the discharge of this Indenture, as follows:
(a) The Company is a wholly-owned bankruptcy remote subsidiary of
AutoBond Acceptance Corporation and is a corporation duly organized, validly
existing and in good standing under the laws of the state of Nevada and is duly
qualified to do business, and is in good standing in each jurisdiction in which
the nature of its business requires it to be so qualified and which permits such
qualification;
(b) The Company has the power and authority to own and convey all of
its properties and to execute and deliver this Indenture and the Related
Documents and to perform the transactions contemplated hereby and thereby;
(c) The Company is operated in such a manner and is constituted so
that it would not be substantively consolidated in the bankruptcy trust estate
of any Affiliate, such that the separate existence of the Company and any
Affiliate would be disregarded, and to such end:
(i) the Company maintains separate records, books of account and
financial statements from those of AutoBond and each other Affiliate of
AutoBond;
(ii) the Company does not commingle any of its assets or funds with
those of AutoBond or any of the other Affiliates of AutoBond;
(iii) the Company maintains a separate board of directors with at
least two independent directors and observes all separate corporate
formalities, and all decisions with respect to the Company's business and
daily operations have been and shall be independently made by the officers
of the Company pursuant to resolutions of its board of directors;
(iv) other than contributions of capital, payment of dividends and
return of capital, no transactions have been entered into between the
Company and AutoBond Funding or between the Company and any of the other
Affiliates of AutoBond except such transactions as are contemplated by
this Indenture and the Related Documents;
(v) except for such administration and collection and functions as
AutoBond may perform on behalf of the Company and the Trust Estate
pursuant to this Indenture and the Related Documents, the Company acts
solely in its own name and through its own authorized officers and agents
and the Company does not act as agent of AutoBond or any other Person in
any capacity;
59
(vi) except for any funds received from AutoBond Funding (or from
AutoBond indirectly by way of AutoBond Funding) as a capital contribution,
the Company shall not accept for its own account funds from AutoBond or
any of the other Affiliates of AutoBond; and the Company shall not allow
AutoBond or any of the other Affiliates of AutoBond otherwise to supply
funds to, or guarantee any obligation of, the Company;
(vii) the Company shall not guarantee, or otherwise become liable
with respect to, any obligation of AutoBond or any of the other Affiliates
of AutoBond; and
(viii) the Company shall at all times hold itself out to the public
under the Company's own name as a legal entity separate and distinct from
AutoBond and the other Affiliates of AutoBond.
(d) The Company is a special purpose company and has not engaged,
and does not presently engage and shall not engage, in any activity other than
the activities undertaken pursuant to this Agreement and the Related Documents
and contemplated hereby and thereby and activities ancillary or incident
thereto, and has no Debt other than the Notes;
(e) The execution, delivery and performance by the Company of this
Agreement, the Related Documents and the transactions contemplated hereby and
thereby, (i) have been duly authorized by all necessary corporate or other
action on the part of the Company, (ii) do not contravene or cause the Company
to be in default under (A) the Company's certificate of incorporation or bylaws,
(B) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other agreement
or instrument binding on or affecting the Company or its property, (C) any law,
rule, regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Company or its property, and (iii) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
the property of the Company;
(f) This Indenture and the Related Documents have each been duly
executed and delivered on behalf of the Company;
(g) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority or any other party, is required for the due
execution, delivery and performance by the Company of this Agreement or any of
the Related Documents or for the perfection of or the exercise by the Trustee or
the Noteholders of any of their rights or remedies thereunder which have not
been duly obtained;
(h) This Indenture and each other Related Document is the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its respective terms; except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium or other
laws relating to or affecting the rights of creditors generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in law or in equity);
60
(i) There is no pending or threatened action, suit or proceeding,
nor any injunction, writ, restraining order or other order of any nature against
or affecting the Company, its officers or directors, or the property of the
Company, in any court or tribunal, or before any arbitrator of any kind or
before or by any Governmental Authority (i) asserting the invalidity of this
Indenture or any of the Related Documents, (ii) seeking to prevent the sale and
assignment of any Receivable or the consummation of any of the transactions
contemplated thereby, (iii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the Company of this
Indenture or any of the Related Documents or the interests of the Noteholders,
(B) the validity or enforceability of this Indenture or any of the Related
Documents, (C) any Receivable, (D) the Intended Tax Characterization, or (iv)
asserting a claim for payment of money adverse to the Company or the conduct of
its business or which is inconsistent with the due consummation of the
transactions contemplated by this Indenture or any of the Related Documents;
(j) The principal place of business and chief executive office of
the Company are located at the address in Nevada indicated in Section 12.05 and
there are now no, and there have not been any, other locations where the Company
is located (as that term is used in the UCC) or keeps Records except, after the
date of this Indenture, as disclosed in writing to the Trustee and the
Noteholders and the Administrator at least 30 Business Days prior to any such
change;
(k) The legal name of the Company is as set forth in the beginning
of this Indenture and the Company has not changed its name since its formation,
and during such period, the Company did not use, nor does the Company now use
any tradenames, fictitious names, assumed names or "doing business as" names;
(l) The Company does not have any Subsidiaries;
(m) The Company is solvent and will not become insolvent after
giving effect to the transactions contemplated by this Indenture and each of the
Related Documents; the Company's transfers of Transferred Assets to the Trust
Estate have been and will be made for reasonably equivalent value and fair
consideration; and the Company, after giving effect to the transactions
contemplated by this Indenture and each of the Related Documents, will have an
adequate amount of capital to conduct its business in the future; and
(n) The Company has complied in all material respects with all
applicable laws, rules, regulations, and orders with respect to it, its business
and properties and all of the Transferred Assets.
SECTION 11.02 Representations and Warranties as to Each Receivable.
(a) In connection with the establishment of each Series of Notes, each of the
Company and AutoBond will make the representations and warranties designated
with respect to such Series.
(b) The Company and the Administrator each hereby certifies that the
representations and warranties contemplated in this Section 11.02 shall survive
the transfer of the Receivables to the Trust Estate.
61
SECTION 11.03 Repurchases and Transfers. (a) Upon the occurrence of
(i) a breach of any of the representations and warranties set forth in Sections
11.01 and 11.02, without regard to any limitation set forth in such
representation or warranty concerning the knowledge of the Company or the
Administrator as to the facts stated therein, which may, or does materially and
adversely affect the interests of the Trust Estate or the Noteholders in any
Receivable, (ii) a failure of any Loan Documents to contain original documents
as set forth in Section 4.01, if the Trustee is unable, or is adversely affected
in its ability, to enforce the obligations of the related Obligor by reason of
not having possession of such original documentation, or if the original
certificate of title for any Financed Vehicle has not been obtained within 180
days after the applicable Transfer Date, or (iii) a failure to make any filing
or take other action referred to in Section 4.05, the party discovering such
breach shall give prompt written notice to the others. If within 30 days of such
notice, occurrence or discovery referred to in the immediately preceding
sentence, such breach or failure shall remain uncured, the Receivable as to
which the breach or failure relates shall be repurchased or purchased for the
Repurchase Price as follows:
(i) in respect of matters set forth in Sections 4.05, 11.01, and
11.02(a), by the Company;
(ii) in respect of the matters set forth in Section 4.05 or
11.02(a), by AutoBond; and
(iii) the Trustee may demand that AutoBond repurchase Receivables
pursuant to rights assigned under the Sale Agreement
(b) Upon receipt by the Trustee of written certification of the
Administrator to the effect that the Repurchase Price has been deposited in the
Collection Account, the Trustee as custodian on behalf of the Trust shall
contemporaneously therewith release such Receivable and the related Loan Files
to the Company or AutoBond, as the case may be, and the Trustee on behalf of the
Trust Estate shall assign to the Company or AutoBond, as the case may be, all of
the Trust Estate's right, title and interest in such purchased or repurchased
Receivable, and all property and rights conveyed to the Trustee and the Trust
Estate relating thereto (excluding, however, payments previously received under
the Insurance Policies), and the Assignments to the extent such payments relate
to such repurchased or purchased Receivables, without recourse, representation
or warranty. The Trustee and the Company shall execute and deliver to the
Company or AutoBond, as the case may be, an assignment substantially in the form
of Exhibit G. The repurchase and purchase obligations pursuant to this Section
11.03 constitute the sole remedy available to the Trustee and the Noteholders
for a breach of a representation or warranty or agreement of the Company or
AutoBond, set forth in Sections 4.05 and 11.02; provided, that the foregoing
limitation shall not be construed to limit in any manner the right of the
Trustee or the Noteholders to declare an Event of Default to have occurred or to
terminate the responsibilities of the Administrator as Collection Agent or
Servicer under the Servicing Agreement to the extent such breaches also
constitute or contribute to the determination of an Event of Default or an Event
of Administrator Termination. For the purposes of this Agreement, a Receivable
has not been "repurchased" or "purchased" by the Company or AutoBond, as the
case may be, pursuant to this Section 3.03 unless the Repurchase Price therefor
has been deposited into the applicable Collection Account.
62
(c) As used herein, references to the "repurchase" of Auto Loans by
the Company means the release of the lien of this Indenture with respect to such
Auto Loans.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01 Indemnities of the Administrator.
(a) The Administrator agrees to indemnify (i) the Trust Estate from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses (including reasonable attorneys' fees of counsel) arising as a
result of the Administrator's acts or omissions (subject to the administration
standard set forth in Section 5.02(b)) in violation of this Indenture and (ii)
the Trustee, its directors, officers, employees and agents, from, and hold it
harmless against, any and all losses, liabilities, damages, claims, expenses
(including attorney's fees and disbursements), fines or penalties, or judgments
arising out of or in connection with the performance by the Trustee of its
duties hereunder or in connection with the Trust Estate, or the issuance of the
Notes except to the extent the Trustee's own bad faith, willful misconduct or
negligence contributes to the loss, liability, damage, claim or expense.
(b) This Section 12.01 shall survive the termination of this
Indenture or the resignation or removal of the Trustee in respect of rights
accrued prior to such resignation or removal.
SECTION 12.02 Officers' Certificate and Opinion of Counsel as to
Conditions Precedent.
Upon any request or application by the Company (or any other obligor
upon the Notes) to the Trustee to take any action under this Indenture, the
Company (or such other Obligor) shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 12.03) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements set
forth in Section 12.03) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
SECTION 12.03 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
63
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 12.04 Notices. (a) All communications, instructions,
directions and notices to the parties thereto shall be (i) in writing (which may
be by telecopy, followed by delivery of original documentation within one
Business Day), (ii) effective when received and (iii) delivered or mailed first
class mail, postage prepaid to it at the following address:
If to the Company:
AutoBond Master Funding Corporation V
300 South Fourth Street, Suite 620
Las Vegas, Nevada 89101
If to the Administrator:
AutoBond Acceptance Corporation
301 Congress Avenue
Austin, Texas 78701
Attention: William O. Winsauer
Facsimile Number: (512) 472-1548
Telephone Number: (512) 472-3600
If to the Trustee:
Dynex Capital, Inc.
10900 Nuckols Road, Third Floor
Glen Allen, Virginia 23060
Attention: Master Servicing Department
Facsimile Number: (804) 217-5935
Telephone Number: (804) 217-5800
64
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices pursuant hereto to a Noteholder
shall be in writing and delivered or mailed first class mail, postage prepaid or
overnight courier at the address shown in the Note Register. The Trustee agrees
to deliver to each Noteholder upon receipt, all notices and reports that the
Trustee may receive hereunder and under any Servicing Agreement and Related
Documents. Unless otherwise provided herein (including Section 8.11 hereof) the
Trustee may consent to any requests received under such documents or, at its
option, follow the directions of Noteholders with a Percentage of greater than
50% within 30 days after prior written notice to the Noteholders. All notices to
Noteholders (or any Class thereof) shall be sent simultaneously.
SECTION 12.05 Notices and Reports to be Delivered to the Rating
Agencies. On or before the later to occur of each Payment Date and, the Business
Day following its receipt thereof, the Administrator shall promptly deliver to
each of the Rating Agencies the notices, reports and certificates referred to in
Section 3.05.
SECTION 12.06 No Proceedings. The Noteholders, the Administrator and
the Trustee each hereby agrees that it will not, directly or indirectly
institute, or cause to be instituted, against the Company or the Trust Estate
any proceeding of the type referred to in Section 6.01(e) so long as there shall
not have elapsed one year plus one day since the last maturity of the Notes.
ARTICLE 13.
VARIABLE FUNDING NOTES
SECTION 13.01 Designation.
(a) There is hereby created Notes to be issued pursuant to this
Indenture designated as "AutoBond Master Funding Corporation V -- Variable
Funding Notes" (the "Funding Notes"). (b) The Funding Notes shall consist of
Class A Notes and Class B Notes and the forms thereof and of the Trustee's
certificate of authentication shall be as set forth in Exhibits C-1 and C-2
hereto.
The maximum aggregate principal amount of Funding Notes which may be
Outstanding at anytime under the Trust Indenture is limited to $522,500,000, in
the case of the Class A Notes, and $55,000,000, in the case of the Class B
Notes.
The Funding Notes may be issued in minimum denominations of $500,000
and any integral multiple of $1,000 in excess thereof; provided that the
foregoing shall not restrict or prevent the transfer in accordance with Section
2.03 of the Indenture of any Class A or Class B Notes having a remaining
Outstanding Principal Amount of other than an integral multiple of $1,000, or
the issuance of a single Class A or Class B Note with a denomination less than
$500,000.
65
(c) The first Payment Date with respect to the Funding Notes shall
be July 15, 1998.
(d) The Funding Notes shall bear interest at the rate set forth in
the Credit Agreement (as defined in Section 13.02); principal and interest shall
be payable to the Holder in whose name a Funding Note is registered as of the
last day of the month preceding the applicable Payment Date; and principal and
interest shall be payable on the Payment Dates and such other dates as set forth
in the Credit Agreement.
(e) The Trust Assets allocated to the Funding Notes are as set forth
in Schedule 1, as modified from time to time in accordance with this Indenture.
(f) The Issuance Date in respect of the Funding Notes shall be June
9, 1998.
(g) The representations and warranties with respect to the Auto
Loans allocated to such Funding Notes, additional covenants, and conditions
precedent to Advances are set forth in the Credit Agreement.
SECTION 13.02 Certain Definitions.
(a) As used in this Article 13 and with respect to the Funding
Notes, the following terms shall have the following meanings:
"Accounts" shall mean the Lockbox Account, the Loan Purchase Account
and the Collection Account.
"Advances" shall have the meaning specified in the Credit Agreement.
"Automobile" shall mean a new or used automobile, light-duty truck
or van.
"Available Funds" means all funds held in the Lender Collection
Account or the Collection Account (as the case may be) as of the end of any Due
Period.
"Back-up Servicer" means the entity designated by the Initial
Lender.
"Class A Interest" shall mean for any Payment Date, the product of
the Outstanding Principal Amount of the Class A Notes and the Class A Interest
Rate.
"Class A Interest Rate" shall mean the weighted average of the
Interest Rates for Advances allocable to the Class A Notes.
"Class A Principal Payment Amount" shall mean, for any Payment Date,
the product of (i) 95% and (ii) the sum of (a) the amount of all Payments
allocable to principal in respect of the Specified Auto Loans for the related
Due Period, and (b) the Unpaid Principal Balance of any Liquidated Receivable.
66
"Class B Interest" shall mean, for any Payment Date, the product of
the Outstanding Principal Amount of the Class B Notes and the Class B Interest
Rate.
"Class B Interest Rate" means 16% per annum.
"Class B Principal Payment Amount" shall mean, for any Payment Date,
the product of (i) 10% and (ii) the sum of (a) the amount of all Payments
allocable to principal in respect of the Specified Auto Loans for the related
Due Period, and (b) the Unpaid Principal Balance of any Liquidated Receivable.
"Collection Account" shall have the meaning assigned to such term in
Section 13.03 hereof.
"Collection Agent" shall mean AutoBond, as collection agent under
the Servicing Agreement.
"Credit Agreement" means the Credit Agreement, dated as of June 9,
1998 among the Company, AutoBond and the Initial Lender.
"Delinquency Ratio" shall mean, as of any Determination Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
(i) the aggregate Unpaid Principal Balance of Auto Loans which have become
Defaulted Auto Loans as of the end of the most recently ended Due Period minus
(ii) the sum of the aggregate Unpaid Principal Balance of (A) all Auto Loans
against which insurance claims have been filed as of the end of the most
recently ended Due Period and (B) Auto Loans for which the related Financed
Vehicles are subject to repossession as of the end of the most recently ended
Due Period and which are not included in (A), and (b) the denominator of which
equals the aggregate Unpaid Principal Balance of Auto Loans outstanding as of
the end of the most recently ended Due Period, minus the Unpaid Principal
Balance of all Liquidated Receivables.
"Due Period" shall mean, (a) with respect to the initial Due Period,
the month of June, 1998, and (b) thereafter, with respect to any Payment Date,
the period commencing on the first day of the calendar month preceding the
calendar month in which such Payment Date occurs and ending on the last day of
the calendar month preceding the calendar month in which such Payment Date
occurs.
"Exchange" has the meaning set forth in Section 13.
"Funding Date" shall have the meaning set forth in the Credit
Agreement.
"Initial Lender" means Dynex Capital, Inc., its successors and
permitted assigns.
"Interest Period" means the period beginning with a Payment Date (or
in the case of the initial Interest Period, June 9, 1998) to and excluding the
following Payment Date.
67
"Lender Collection Account" means the account so designated in the
name of the Initial Lender at Chase Bank of Texas, National Association.
"Liquidated Receivable" means, as of any date of determination, any
Auto Loan upon the earlier to occur of (a) receipt of all Recoveries on
Receivables reasonably expected to be received in respect thereof and (b) the
date such Auto Loan is more than 180 days contractually past due.
"Loan Acquisition Price" shall have the meaning set forth in the
Credit Agreement.
"Loan Purchase Account" shall have the meaning assigned to such term
in Section 13.03 hereof.
"Lockbox" means the Lockbox established and maintained pursuant to
the Lockbox Agreement.
"Lockbox Account" means the account in the name of the Trustee,
established in respect of the Auto Loans at the Lockbox Bank and maintained
pursuant to the Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Agreement between the Trustee
and the Lockbox Bank, or any successor agreement hereunder, in the form of
Exhibit H.
"Lockbox Bank" means Banc One, Texas, N.A. or any successor
hereunder.
"Monthly Administrator Fee" shall mean, as of any Payment Date, so
long as AutoBond is acting as Administrator hereunder and as Servicer under the
Servicing Agreement, the sum of (a) a fee, payable monthly, equal to the product
of (i) $15.00 and (ii) the total number of Auto Loans included in the Trust
Estate and allocated to the Funding Notes at any time during the immediately
preceding Due Period and (b) Reimbursable Administrator Expenses; provided, that
to the extent that the Servicer assumes the duties of the Collection Agent under
the Servicing Agreement, such fee shall be payable to the Servicer and shall
equal the amount set forth set forth in the preceding clause.
"Monthly Back-up Servicer Fee" means, as of any Payment Date, the
amount so designated in writing by the Initial Lender.
"Monthly Repossession Ratio" shall mean on any Determination Date,
the annualized static pool repossession rate determined by the product of (a) a
fraction (i) the numerator of which is equal to the aggregate Unpaid Principal
Balance of all Auto Loans which have been repossessed from the Cut-Off Date
through the end of the most recent Due Period and (ii) the denominator of which
is the Unpaid Principal Balance of all Auto Loans as of the Cut-Off Date, and
(b) a fraction (i) the numerator of which is 12, and (ii) the denominator of
which is equal to the number of calendar months (rounded up to the nearest
month) which have elapsed from the Cut-Off Date to the most recent Due Period.
68
"Monthly Servicing Fee" means, as of any Payment Date, the Monthly
Administrator Fee.
"Payment Date" shall mean the 15th day of each month (or, if such
day is not a Business Day, the next succeeding Business Day), commencing July
15, 1998, and each other date on which Advances and interest thereon are paid or
payable.
"Reimbursable Administrator Expenses" means, with respect to any
Payment Date, all reasonable and customary out-of-pocket fees and expenses of
third parties incurred by the Collection Agent (including expenses related to
financing statements and titles required to be paid or reimbursed by the
Collection Agent) in connection with their respective repossession activities,
including, without limitation, fees of attorneys, appraisers, third party
collateral managers and others (who shall have been retained by the Collection
Agent, in accordance with the Servicing Agreement) for the Due Period
immediately preceding such Payment Date, but not including expenses paid net of
recoveries.
"Repurchase Price" shall have the meaning set forth in the Credit
Agreement.
"Repossession Ratio" shall mean, on any Determination Date on or
after September 30, 1998, the average of the Monthly Repossession Ratios for the
three immediately preceding calendar months.
"Servicer" means AutoBond, or any successor entity designated as
such under the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of
June 9, 1998 among AutoBond, as Servicer, the Company and the Trustee.
"Specified Auto Loan" shall mean each Auto Loan subject to the Lien
of this Indenture and allocated to the Funding Notes.
SECTION 13.03 Establishment and Maintenance of Lockbox and Trust
Accounts. The Administrator shall cause to be established and maintained at all
times a lockbox and related account (the "Lockbox" and the "Lockbox Account") in
the name of the Trustee. The Administrator agrees to cause the Lockbox Bank to
sweep funds, daily, from the Lockbox Account to the Lender Collection Account if
the Initial Lender is the sole Noteholder (or with the consent of the sole
Noteholder if not the Initial Lender), and otherwise to the Collection Account.
The Administrator agrees to require, and to cause the Servicer to require, that
all payments by Obligors on Specified Auto Loans be made to the Lockbox. Only
payments on Specified Auto Loans will be received in the Collection Account and
no other funds other than funds in which the Trustee has an interest hereunder
will be commingled therein. In addition, concurrently with the execution and
delivery hereof, the Trustee shall establish the following segregated accounts
entitled (a) the "AutoBond Master Funding Corporation V -- Loan Purchase
Account, Dynex Capital, Inc., as Trustee" (the "Loan Purchase Account"); and (b)
the "AutoBond Master Funding Corporation V -- Collection Account, Dynex Capital,
Inc., as Trustee" (the "Funding Notes
69
Collection Account"). The Loan Purchase Account and the Collection Account are
sometimes collectively referred to in this Article 13 as the "Funding Notes
Trust Accounts".
SECTION 13.04 Required Deposits to the Accounts. (a) The Company
shall cause the following amounts to be paid to the Trustee for deposit to the
accounts established pursuant to Section 13.03:
(i) all amounts payable to or for the account of the Company by or
on behalf of the Holders of Funding Notes in respect of Advances shall be
deposited directly in the Loan Purchase Account;
(ii) all amounts representing payments in respect of Specified Auto
Loans (including, without limitation, all Recoveries on Receivables, all
late charges, all payments in respect of the Repurchase Price of Specified
Auto Loans repurchased by AutoBond or the Company in accordance with
Section 11.03 and all proceeds of any Exchange) shall be sent to the
Lockbox Account.
(b) The Trustee acting on behalf of the Holders and the Company
agree (i) that the Trust Accounts shall be maintained in the name of the
Trustee, (ii) that the Trust Accounts shall be subject to the exclusive dominion
of the Trustee, and (iii) that the Trustee shall have the sole right of
withdrawal from the Trust Accounts. The Company, the Holders and AutoBond shall
timely provide written remittance information to the Trustee specifying payment
instructions with respect to amounts payable pursuant to each provision of
Section 13.05. The Trustee shall have no liability to the Company, any Holder or
any other Person for failure to pay funds to any Person in accordance with
Section 13.05 in the absence of timely receipt of such written remittance
instructions or in the event of any errors in such written remittance
instructions.
SECTION 13.05 Application of Funds in the Trust Accounts. (a) If no
Event of Default shall have occurred and be continuing, the Trustee, on each
Business Day, shall apply funds in the Loan Purchase Account pursuant to written
instructions of the Company to pay to AutoBond (for the account of the Company)
an amount equal to the Loan Acquisition Price in respect of all Specified Auto
Loans, if any, to be purchased by the Company on such date on or before 10:00
a.m., New York City time; provided that, with respect to each such Specified
Auto Loan, such amounts shall be payable only if the Trustee has received each
of the Loan Documents with respect to such Specified Auto Loan from AutoBond;
and, if any such funds shall remain unused after being applied for the foregoing
purposes, so long as any Funding Notes remain outstanding the remaining funds
shall be retained in the Loan Purchase Account and continue to be part of the
Trust Estate hereunder, and if so instructed in writing by AutoBond, may be
invested by the Trustee in accordance with Section 3.01 hereof. The Trustee may
liquidate any investment when required to make an Advance as contemplated above.
No investment made pursuant to this section will have a maturity later than one
Business Day prior to the date on which such funds will be needed to make
Advances.
(b) On each Payment Date (other than upon or after the occurrence on
an Acceleration Event) (x) the Initial Lender, if sole Noteholder (or with the
consent of the sole Noteholder if not the Initial Lender), shall disburse the
Available Funds in the Lender Collection
70
Account, or (y) the Trustee, at the written direction of the Administrator,
shall disburse the Available Funds in the Collection Account, in the following
priority:
(i) to the Class A Noteholders, interest in an amount equal to Class
A Interest, plus any accrued and unpaid Class A Interest from prior Due
Periods;
(ii) to the Class B Noteholders, interest in an amount equal to
Class B Interest, plus any accrued and unpaid Class B Interest from prior
Due Periods;
(iii) to the Trustee, the Monthly Trustee Fee, plus any accrued and
unpaid Monthly Trustee Fees with respect to any prior Due Period;
(iv) (A) to the Administrator (or the Trustee, if acting as
successor Servicer and Administrator), the Monthly Administrator Fee, plus
any accrued and unpaid Monthly Administrator Fees with respect to any
prior Due Period and (B) to the Back-up Servicer, the Monthly Back-up
Servicer Fee;
(v) to the Class A Noteholders, in reduction of the Outstanding
Class A Principal Amount, an amount equal to the Class A Principal Payment
Amount;
(vi) to the Class B Noteholders, in reduction of the Outstanding
Class B Principal Amount, an amount equal to the Class B Principal Payment
Amount; and
(vii) the remaining funds, if any, following the distribution in
clauses (i)-(vi) above shall be (A) disbursed pro rata (based upon the
Outstanding Principal Amount of the Class A Notes and the Class B Notes
after giving effect to the disbursements above) to the Class A Noteholders
and the Class B Noteholders as principal payments thereon, until paid in
full, and (B) thereafter shall be disbursed to the Company.
(c) On each Payment Date occurring upon or after the occurrence of
an Event of Default with respect to which the Outstanding Principal Amount of
the Funding Notes has been accelerated in accordance with Section 6.02 of the
Trust Indenture (each, an "Acceleration Event"), the Trustee, at the written
direction of the Administrator (unless such Event of Default affects the
Administrator, in which case the Trustee shall make such determinations), shall
disburse the balance of Available Funds in the following priority:
(i) to the Trustee, the Back-up Servicer and, if other than an
Affiliate of the Company, the Servicer, the Monthly Trustee Fee, the
Monthly Back-up Servicer Fee and the Monthly Administrator Fee,
respectively, plus any accrued and unpaid Monthly Trustee Fees, Monthly
Back-up Servicer Fee and Monthly Administrator Fees;
(ii) to the Class A Noteholders, interest in an amount equal to
Class A Interest, plus any accrued and unpaid Class A Interest;
71
(iii) to the Class B Noteholders, interest in an amount equal to
Class B Interest, plus any accrued and unpaid Class B Interest;
(iv) to the Class A Noteholders, all remaining Available Funds until
the Outstanding Class A Principal Amount has been reduced to zero;
(v) to the Class B Noteholders, an amount equal to all remaining
Available Funds until the Outstanding Class B Principal Amount has been
reduced to zero; and
(vi) the remainder of funds held in the Funding Notes Collection
Account, following the distributions in clauses (i)-(v) above shall be
disbursed to the Company; provided that, all amounts payable to the
Noteholders have been paid in full pursuant to the priorities set forth
above.
SECTION 13.06 Exchanges for New Series.
(a) From time to time, on any Business Day as long as the Funding
Notes are outstanding, and upon 7 days' written notice to the Administrator and
the Trustee, the Initial Lender on behalf of the Noteholders, may elect to
exchange all or a portion of the unpaid Outstanding Principal Amount of the
Funding Notes for one or more new Series of Notes (the "Term Notes") to be
issued in accordance with Section 2.01(a) of this Indenture (each such election,
an "Exchange").
(b) The Company agrees to cause the creation of such Series of Term
Notes under the Indenture and to execute and order the authentication of the
Notes of such Series so long as the terms of such Series of Term Notes do not
materially impair the value under GAAP of the Company's interest in the
Specified Auto Loans.
(c) The Initial Lender may designate the Specified Auto Loans which
will collateralize each Series of Term Notes issued hereunder at the time of an
Exchange.
(d) The Noteholders may sell, pledge or retain some or all of the
Term Notes after such Exchange.
(e) Any payments on the Specified Auto Loans designated as
collateral for a Series of Term Notes in excess of the aggregate principal
amount of and accrued interest on such Term Notes and any prior Funding Notes
from which such Term Notes were created will be for the Company's account.
(f) At the request of the Initial Lender, the Trustee shall release
the Trust Estate to a subsequent transferee (at the direction of the Initial
Lender), which shall issue securities secured by, or representing interests in,
the Trust Estate (as so transferred), on the terms contemplated herein for the
Term Notes. The Initial Lender and the Company shall be entitled to proceeds
from such subsequent issuance in accordance with Section 13.06(d) above.
72
SECTION 13.07 Additional Events of Default; Remedies. (a) In
addition to the Events of Default set forth in Section 6.01, the following
additional Events of Default shall be applicable to the Funding Notes:
(i) the Company or AutoBond shall default in the due and punctual
performance of or compliance with any material covenant, condition or
agreement to be performed or observed by it under the Credit Agreement,
respectively, and any such default shall continue unremedied for a period
of twenty (20) Business Days after an Authorized Officer of the Company or
AutoBond obtains knowledge thereof; or
(ii) any representation, warranty, certification or statement of the
Company or AutoBond made or contained in the Credit Agreement or in any
agreement, instrument, certificate, statement or other writing furnished
in connection herewith or therewith or pursuant hereto or thereto, shall
prove to have been false or inaccurate in any material respect on the date
as of which such representation or warranty was made and any such breach
shall continue unremedied for a period of thirty (30) days after an
Authorized Officer of the Company or AutoBond obtains knowledge thereof;
or
(iii) any Liens on the Trust Assets, other than Permitted Liens,
continue to exist after 5 Business Days' notice from the Initial Lender.
(b) in addition to the remedies set forth in Article 6, upon the
occurrence and continuance of any Event of Default set forth in this Section
13.07 by AutoBond, the Initial Lender may remove AutoBond as Servicer under the
Servicing Agreement and appoint a successor Servicer.
SECTION 13.08 Resignation or Removal of Trustee. Notwithstanding
Section 7.08(a), the Trustee may at any time resign and be discharged with
respect to the Funding Notes by giving 30 days' written notice thereof to the
Administrator, the Company and the Initial Lender. Upon receiving such notice of
resignation, the Administrator shall promptly appoint a successor Trustee not
objected to by Initial Lender within 30 days after prior written notice, by
written instrument, in quintuplicate, one counterpart of which instrument shall
be delivered to each of the Company, the successor Trustee and the predecessor
Trustee.
73
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed as of the day and year first above written.
AUTOBOND MASTER FUNDING CORPORATION V,
as Issuer
By:
--------------------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION,
as Administrator and individually
By:
--------------------------------------------
Name:
Title:
DYNEX CAPITAL, INC.,
not in its individual capacity, but solely as Trustee
By:
--------------------------------------------
Name:
Title:
74
EXHIBIT C-1
FORM OF VARIABLE FUNDING NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS
ACCEPTANCE HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN,
TRUST OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN
INDIVIDUAL RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR ACCOUNT
DESCRIBED ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL BE
COVERED BY A DEPARTMENT OF LABOR CLASS EXEMPTION.
AUTOBOND MASTER FUNDING CORPORATION V
CLASS A VARIABLE FUNDING NOTE
June 9, 1998
New York, New York
FOR VALUE RECEIVED, AutoBond Master Funding Corporation V, a Nevada
corporation (the "Company") hereby promises to pay to Dynex Capital, Inc. (the
"Holder") or its assigns, the principal sum of Five Hundred Twenty-two Million,
Five Hundred Thousand Dollars ($522,500,000.00), in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Indenture referred to below, and to pay
interest on the unpaid principal amount of this Class A Note until paid in full,
at the rates per annum and on the dates provided in the Indenture and the Credit
Agreement, dated as of June 9, 1998 (the "Credit Agreement") among the Company,
AutoBond Acceptance Corporation and the Holder).
The Stated Maturity of this Class A Note is as set forth in the
Credit Agreement.
C-1-1
By its holding of this Class A Note, the Holder shall be deemed to
accept the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein by manual signature, this Class A Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
This Class A Note is one of a duly authorized issue of Class A Notes
of the Company designated as its "Class A Funding Notes" (herein called the
"Notes") limited in aggregate principal amount of $522,500,000.00, issued under
the Trust Indenture, dated as of June 9, 1998 (herein called the "Indenture"),
among the Company, AutoBond Acceptance Corporation ("AutoBond") and Dynex
Capital, Inc., as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
AutoBond, the Trustee and the Holders and of the terms upon which the Notes are
authenticated and delivered. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings set forth in the Indenture.
This Note is secured by the pledge to the Trustee under the
Indenture of the Trust Estate allocated to the Notes and recourse is limited to
the Company and AutoBond as set forth in the Indenture and the Credit Agreement.
The amounts owed under this Note shall not include any recourse to the Trustee
or any affiliates thereof.
In addition to the Notes, the Company may from time to time issue
additional Series of Notes under the Indenture, including in exchange for all or
a portion of the outstanding principal amount of this Note.
If certain Events of Default under the indenture have been declared,
the unpaid principal of the Notes may be declared immediately due and payable in
the manner and with the effect provided in the Indenture. Notice of Note
declaration will be given by mail to Noteholders, as their names and addresses
appear in the Note Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the obligations of the
Company with respect to the payment of principal and interest on this Note shall
terminate.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Noteholders of the percentages
specified in the Indenture at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes, at the time Outstanding, on behalf of all the
Holders, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by he Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
C-1-2
Each Note may be issued only in registered form and only in minimum
denominations of at least $100,000 and integral multiples of $1,000 in excess
thereof; provided that the foregoing shall not restrict or prevent the transfer
in accordance with Section 2.03 of the Indenture of any Note having a remaining
Outstanding Principal Amount of other than an integral multiple of $1,000, or
the issuance of a single Note with a denomination less than $100,000.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note may be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be deemed to be contracts made
under the laws of the State of New York and shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
C-1-3
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual signature of its duly authorized officer.
Dated: June 9, 1998
AUTOBOND MASTER FUNDING CORPORATION V
By:
----------------------------------
C-1-4
Trustee's Certificate of Authentication
This is one of the Funding Notes referred to in the within mentioned Indenture.
,
--------------------------------
as Trustee
By:
----------------------------
Authorized Signatory
C-1-5
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _________________, agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated: ____________________ Signed:
(sign exactly as the name appears on the
other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this Assignment Form, you may
sign a separate "power of attorney" form and then mail the unsigned Note and the
signed "power of attorney" in separate envelopes. For added protection, use
certified or registered mail for a Note.
C-1-6
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Credit
Agreement to the Borrower, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Amount of Interest Date of Paid or Principal Notation
Date of Advance Advance Rate Advance Prepaid amount Made By
- --------------------------------------------------------------------------------
C-1-7
EXHIBIT C-2
FORM OF VARIABLE FUNDING NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS ACCEPTANCE
HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST
OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION 4975(e)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN INDIVIDUAL
RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR ACCOUNT DESCRIBED
ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL BE COVERED BY A
DEPARTMENT OF LABOR CLASS EXEMPTION.
AUTOBOND MASTER FUNDING CORPORATION V
CLASS B VARIABLE FUNDING NOTE
June 9, 1998
New York, New York
FOR VALUE RECEIVED, AutoBond Master Funding Corporation V, a Nevada
corporation (the "Company") hereby promises to pay to Dynex Capital, Inc. (the
"Holder") or its assigns, the principal sum of Fifty-five Million Dollars
($55,000,000.00), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Indenture referred to below, and to pay interest on the unpaid principal
amount of this Class B Note until paid in full, at the rates per annum and on
the dates provided in the Indenture and the Credit Agreement, dated as of June
9, 1998 (the "Credit Agreement") among the Company, AutoBond Acceptance
Corporation and the Holder).
The Stated Maturity of this Class B Note is as set forth in the
Credit Agreement.
By its holding of this Class B Note, the Holder shall be deemed to
accept the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
C-2-1
Unless the certificate of authentication hereon has been executed by
the Trustee referred to herein by manual signature, this Class B Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
This Class B Note is one of a duly authorized issue of Class B Notes
of the Company designated as its "Class B Funding Notes" (herein called the
"Notes") limited in aggregate principal amount of $55,000,000.00, issued under
the Trust Indenture, dated as of June 9, 1998 (herein called the "Indenture"),
among the Company, AutoBond Acceptance Corporation ("AutoBond") and Dynex
Capital, Inc., as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
AutoBond, the Trustee and the Holders and of the terms upon which the Notes are
authenticated and delivered. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings set forth in the Indenture.
This Note is secured by the pledge to the Trustee under the
Indenture of the Trust Estate allocated to the Notes and recourse is limited to
the Company and AutoBond as set forth in the Indenture and the Credit Agreement.
The amounts owed under this Note shall not include any recourse to the Trustee
or any affiliates thereof.
In addition to the Notes, the Company may from time to time issue
additional Series of Notes under the Indenture, including in exchange for all or
a portion of the outstanding principal amount of this Note.
If certain Events of Default under the indenture have been declared,
the unpaid principal of the Notes may be declared immediately due and payable in
the manner and with the effect provided in the Indenture. Notice of Note
declaration will be given by mail to Noteholders, as their names and addresses
appear in the Note Register, as provided in the Indenture. Upon payment of such
principal amount together with all accrued interest, the obligations of the
Company with respect to the payment of principal and interest on this Note shall
terminate.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Noteholders of the percentages
specified in the Indenture at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes, at the time Outstanding, on behalf of all the
Holders, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by he Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
Each Note may be issued only in registered form and only in minimum
denominations of at least $100,000 and integral multiples of $1,000 in excess
thereof; provided that the foregoing shall not restrict or prevent the transfer
in accordance with Section 2.03 of the Indenture of any Note
C-2-2
having a remaining Outstanding Principal Amount of other than an integral
multiple of $1,000, or the issuance of a single Note with a denomination less
than $100,000.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note may be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be deemed to be contracts made
under the laws of the State of New York and shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
C-2-3
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual signature of its duly authorized officer.
Dated: June 9, 1998
AUTOBOND MASTER FUNDING CORPORATION V
By:
-----------------------------------
C-2-4
Trustee's Certificate of Authentication
This is one of the Funding Notes referred to in the within mentioned Indenture.
-------------------------------------
as Trustee
By:
----------------------------------
Authorized Signatory
C-2-5
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _________________, agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated: ____________________ Signed:
(sign exactly as the name appears on the
other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this Assignment Form, you may
sign a separate "power of attorney" form and then mail the unsigned Note and the
signed "power of attorney" in separate envelopes. For added protection, use
certified or registered mail for a Note.
C-2-6
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Credit
Agreement to the Borrower, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Amount of Interest Date of Paid or Principal Notation
Date of Advance Advance Rate Advance Prepaid amount Made By
- --------------------------------------------------------------------------------
C-2-7