1
EXHIBIT 4.4.8
EXECUTION COPY
================================================================================
AMENDED AND RESTATED TRUST AGREEMENT
among
TRIAD FINANCIAL SPECIAL PURPOSE CORPORATION II
TRIAD FINANCIAL CORPORATION
WILMINGTON TRUST COMPANY
OWNER TRUSTEE
and
ASSET BACKED SECURITIES CORPORATION
Dated as of November 1, 1998
================================================================================
2
TABLE OF CONTENTS
Page
RECITALS................................................................................................ 1
ARTICLE I. DEFINITIONS................................................................................. 1
Section 1.1. Capitalized Terms................................................................ 1
Section 1.2. Usage of Terms................................................................... 3
Section 1.2. Material Adverse Effect.......................................................... 3
ARTICLE II. ORGANIZATION............................................................................... 4
Section 2.1. Name............................................................................. 4
Section 2.2. Office........................................................................... 4
Section 2.3. Purposes and Powers.............................................................. 4
Section 2.4. Appointment of Owner Trustee..................................................... 5
Section 2.5. Initial Capital Contribution of Trust Property................................... 5
Section 2.6. Declaration of Trust............................................................. 5
Section 2.7. No Liability of Certificateholder................................................ 6
Section 2.8. Title to Trust Property.......................................................... 6
Section 2.9. Situs of Trust................................................................... 6
Section 2.10. Representations and Warranties of ABSC.......................................... 6
Section 2.11. Representations and Warranties of TFSPC II...................................... 8
Section 2.12. Federal Income Tax Allocations.................................................. 9
Section 2.13. Covenants of ABSC.............................................................. 10
Section 2.14. Covenants of the Holders....................................................... 10
ARTICLE III. CERTIFICATES AND TRANSFER OF INTERESTS................................................... 11
Section 3.1. Initial Ownership............................................................... 11
i
3
Section 3.2. The Certificates................................................................ 12
Section 3.3. Authentication of Certificates.................................................. 12
Section 3.4. Registration of Transfer and Exchange of Certificates........................... 12
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates............................... 14
Section 3.6. Persons Deemed Certificateholder(s)............................................. 14
Section 3.7. Access to List of Certificateholder(s)' Names and Addresses..................... 14
Section 3.8. Maintenance of Office or Agency................................................. 15
Section 3.9. Disposition Only With Consent of Insurer........................................ 15
Section 3.9. ERISA Restrictions.............................................................. 15
ARTICLE IV. VOTING RIGHTS AND OTHER ACTIONS........................................................... 15
Section 4.1. Prior Notice to Holders with Respect to Certain Matters......................... 15
Section 4.2. Action by Certificateholder(s) with Respect to Certain Matters.................. 16
Section 4.3. Action by Certificateholder(s) with Respect to Bankruptcy....................... 16
Section 4.4. Restrictions on Certificateholder(s)' Power..................................... 16
Section 4.5. Majority Control................................................................ 17
ARTICLE V. CERTAIN DUTIES............................................................................. 17
Section 5.1. Accounting and Records to the Noteholders, Certificateholder(s), the Internal
Revenue Service and Others.................................................................... 18
Section 5.2. Signature on Returns; Tax Matters Partner....................................... 18
Section 5.3. Payments to Certificateholders.................................................. 18
ARTICLE VI. AUTHORITY AND DUTIES OF OWNER TRUSTEE..................................................... 18
Section 6.1. General Authority............................................................... 19
Section 6.2. General Duties.................................................................. 19
Section 6.3. Action upon Instruction......................................................... 19
Section 6.4. No Duties Except as Specified in this Agreement or in Instructions.............. 20
ii
4
Section 6.5. No Action Except under Specified Documents or Instructions...................... 20
Section 6.6. Restrictions.................................................................... 21
ARTICLE VII. CONCERNING THE OWNER TRUSTEE.................................................... 21
Section 7.1. Acceptance of Trusts and Duties................................................. 21
Section 7.2 Furnishing of Documents.......................................................... 22
Section 7.3. Representations and Warranties.................................................. 22
Section 7.4. Reliance; Advice of Counsel..................................................... 23
Section 7.5 Not Acting in Individual Capacity................................................ 23
Section 7.6. Owner Trustee Not Liable for Certificates or Receivables........................ 24
Section 7.7. Payments from Trust Property.................................................... 24
Section 7.8. Doing Business in Other Jurisdictions........................................... 24
ARTICLE VIII. COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE....................................... 25
Section 8.1. Owner Trustee's Fees and Expenses............................................... 25
Section 8.2. Indemnification................................................................. 25
Section 8.3. Payments to the Owner Trustee................................................... 25
Section 8.4. Non-recourse Obligations........................................................ 25
ARTICLE IX. TERMINATION OF TRUST AGREEMENT............................................................ 25
Section 9.1. Termination of Trust Agreement.................................................. 25
ARTICLE X. SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES..................................... 27
Section 10.1 Eligibility Requirements for Owner Trustee...................................... 27
Section 10.2 Resignation or Removal of Owner Trustee......................................... 27
Section 10.3 Successor Owner Trustee......................................................... 28
Section 10.4 Merger or Consolidation of Owner Trustee........................................ 28
Section 10.5. Appointment of Co-Trustee or Separate Trustee.................................. 29
iii
5
ARTICLE XI. MISCELLANEOUS............................................................................. 30
Section 11.1 Supplements and Amendments...................................................... 30
Section 11.2. No Legal Title to Trust Property in Certificateholder(s)....................... 31
Section 11.3. Limitations on Rights of Others................................................ 31
Section 11.4. Notices........................................................................ 32
Section 11.5. Severability................................................................... 32
Section 11.6. Separate Counterparts.......................................................... 32
Section 11.7. Assignments.................................................................... 33
Section 11.8. No Petition.................................................................... 33
Section 11.9. Bankruptcy Matters............................................................. 33
Section 11.10. No Recourse................................................................... 33
Section 11.11. Headings...................................................................... 33
Section 11.12. Governing Law................................................................. 34
Section 11.13. Servicer...................................................................... 34
Exhibit A Form of Certificate.................................................................. 1
Exhibit B Form of Certificate of Trust......................................................... 1
iv
6
AMENDED AND RESTATED TRUST AGREEMENT, dated as of November 1,
1998, among TRIAD FINANCIAL CORPORATION, a California corporation ("Triad"),
TRIAD FINANCIAL SPECIAL PURPOSE CORPORATION II, a Delaware corporation, as
Holder of the Certificate ("TFSPC II"), ASSET BACKED SECURITIES CORPORATION, a
Delaware corporation, as depositor, ("ABSC"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as Owner Trustee. This Trust Agreement amends and
restates in its entirety the trust agreement (the "Original Trust Agreement")
entered into among Triad, TFSPC II, ABSC and Wilmington Trust Company, dated as
of November 1, 1998.
RECITALS
WHEREAS, pursuant to the Original Trust Agreement, a business
trust was created under Chapter 38 of Title 12 of the Delaware Code, 12 Del.C
ss. 3801, et seq. (the "Business Trust Statute") named Triad Auto Receivables
Owner Trust 1998-4 (the "Trust");
WHEREAS, Triad, TFSPC II, ABSC and Wilmington Trust Company
desire to amend and restate the Original Agreement as provided in this Amended
and Restated Trust Agreement and to continue the Trust as a business trust under
the Business Trust Statute and that this Trust Agreement constitute the
governing instrument of such business trust; and
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Capitalized Terms. Capitalized terms used but
not defined herein shall have the meanings set forth in the Sale and Servicing
Agreement (as defined below). For all purposes of this Agreement, the following
terms shall have the meanings set forth below:
"ABSC" shall mean Asset Backed Securities Corporation, a
Delaware corporation, as depositor.
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time in accordance with the terms
hereof.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.10.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code ss. 3801 et. seq., as the same may be amended
from time to time.
"Certificate" shall mean a certificate evidencing the
beneficial interest of a Certificateholder in the Issuer, substantially in the
form of Exhibit A.
7
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Issuer pursuant to Section 3810(a) of
the Business Trust Statute.
"Certificate Percentage Interest" shall mean with respect to
any Certificate, the percentage interest of ownership in the Issuer represented
thereby as set forth on the face thereof.
"Certificate Register" and "Certificate Registrar" shall mean
the register mentioned in and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or at such other address
as the Owner Trustee may designate by notice to the Certificateholder(s), the
Insurer and Triad, or the principal corporate trust office of any successor
Owner Trustee (the address of which the successor owner trustee will notify the
Certificateholder(s), the Insurer and Triad).
"Equity Interests" shall have the meaning assigned to such
term in Section 2.11.
"ERISA" shall have the meaning assigned to such term in
Section 3.10.
"Expenses" shall have the meaning assigned to such term in
Section 8.1.
"Governmental Authority" shall mean any court or federal or
state regulatory body, administrative agency or other tribunal or other
governmental instrumentality.
"Holder" or "Certificateholder" shall mean the Person in whose
name a Certificate is registered on the Certificate Register.
"Initial Certificate Balance" shall have the meaning assigned
to such term in Section 2.5.
"Instructing Party" shall mean the Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or the Holders of
Certificates evidencing not less than a majority of the Certificate Percentage
Interest (if an Insurer Default shall have occurred and be continuing).
"Insurer" shall mean Financial Security Assurance Inc., or its
successor in interest.
"Issuer" shall mean the Trust established by this Agreement.
"Original Trust Agreement" shall mean the Trust Agreement
among Triad, ABSC, TFSPC II and the Owner Trustee, dated as of November 1, 1998.
"Owner Trustee" shall mean Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
2
8
"Related Documents" shall mean this Agreement, the Indenture,
the Sale and Servicing Agreement, the Certificate of Trust, the Notes, the
Receivables Purchase Agreement, the Insurance Agreement, the Reserve Account
Agreement, the Indemnification Agreement, the Premium Letter, the Underwriting
Agreement, and the other agreements executed in connection with the Closing. The
Related Documents executed by any party are referred to herein as "such party's
Related Documents," "its Related Documents" or by a similar expression.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement, dated as of November 1, 1998, among the Issuer, ABSC,
Triad, in its individual capacity and as Servicer, and The Chase Manhattan Bank,
as Indenture Trustee and Backup Servicer, as the same may be amended or
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"TFSPC II" shall mean Triad Financial Special Purpose
Corporation II, a Delaware corporation, as Certificateholder.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean Triad Auto Receivables Owner Trust 1998-4,
a Delaware business trust.
Section 1.2. Usage of Terms. With respect to all terms used
in this Agreement, the singular includes the plural and the plural includes the
singular, words importing one gender include the other gender, references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form, references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement, references to Persons include their permitted successors and assigns,
and the terms "include" or "including" mean "include without limitation" or
"including without limitation."
Section 1.3. Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given event,
action, course of conduct or set of facts or circumstances could or would have a
material adverse effect on the Noteholders or Certificateholders (or any similar
or analogous determination), such determination shall be made without taking
into account the funds available from claims under the Note Policy.
ARTICLE II.
ORGANIZATION
Section 2.1. Name. There is hereby formed a trust to be
known as "Triad Auto Receivables Owner Trust 1998-4", in which name the Owner
Trustee may conduct the business of the Issuer, make and execute contracts and
other instruments on behalf of the Issuer and xxx and be sued on behalf of the
Issuer.
3
9
Section 2.2. Office. The office of the Issuer shall be (a)in
care of the Owner Trustee at the Corporate Trust Office or at such other address
in Delaware as the Owner Trustee may designate by written notice to the
Certificateholder(s), the Insurer and Triad or (b) at the principal corporate
trust office of any successor Owner Trustee (the address of which the successor
Owner Trustee will notify the Certificateholder(s), the Insurer and Triad).
Section 2.3. Purposes and Powers. (a) The purpose of the
Issuer is, and the Issuer shall have the power and authority, to engage in the
following activities:
(i) to acquire from time to time the Trust Property;
(ii) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell, transfer and
exchange the Notes and the Certificates and to pay interest on and
principal of the Notes and distributions on the Certificates;
(iii) with the proceeds of the sale of the Notes, to fund
the Pre-Funding Account and the Capitalized Interest Account, to pay
the organizational, start-up and transactional expenses of the Issuer
and to pay the balance to ABSC pursuant to the Sale and Servicing
Agreement;
(iv) to assign, grant, transfer, pledge, mortgage and
convey the Trust Property to the Indenture Trustee pursuant to the
Indenture for the benefit of the Insurer and the Noteholders and to
hold, manage and distribute to the Certificateholders pursuant to the
terms of the Sale and Servicing Agreement any portion of the Trust
Property released from the Lien of, and remitted to the Issuer pursuant
to, the Indenture and the Sale and Servicing Agreement;
(v) to enter into and perform its obligations under the
Related Documents to which it is a party;
(vi) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vii) subject to compliance with the Related Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Property and the making of distributions to
the Certificateholder(s) and the Noteholders.
(b) The Issuer is hereby authorized to engage in the foregoing
activities. The Issuer shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the Related Documents.
Section 2.4. Appointment of Owner Trustee. ABSC hereby
appoints the Owner Trustee as trustee of the Issuer effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee by execution hereof accepts such appointment.
4
10
Section 2.5. Initial Capital Contribution of Trust Property.
ABSC hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $10 (the "Initial Certificate
Balance"). The Owner Trustee hereby acknowledges receipt in trust from ABSC, as
of the date hereof, of the foregoing contribution, which shall constitute the
initial Trust Property and shall be deposited into the Collection Account.
Section 2.6. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the use and benefit of the Holders, subject to
the obligations of the Issuer under the Related Documents. The Issuer shall
constitute a business trust under the Business Trust Statute, and this Agreement
shall constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, until the Certificates are held by more than one person or the Trust
is recharacterized as a separate entity, the Trust will be disregarded as an
entity separate from its beneficial owner and the Notes will be treated as debt
of the Certificateholder. If the Certificates are held by more than one person
or the Trust is recharacterized as a separate entity, it is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Issuer
shall be treated as a partnership with the assets of the partnership being the
Trust Property, the partners of the partnership being the Certificateholders and
the Notes being debt of the partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, until the Certificates are
held by more than one person or the Trust is recharacterized as a separate
entity, the Trust will not file or cause to be filed annual or other necessary
returns, reports and other forms characterizing the Issuer as a partnership for
income and franchise tax purposes. Consistent with the foregoing, neither the
Trust, the Owner Trustee nor any officers, manager, agent , Certificateholder,
holder of other Equity Interests or members of the Trust shall have the power to
elect for purposes of federal, state or local laws to treat the Trust as an
association taxable as a corporation (including the election under Treasury
Regulations section 301.7701-3(c)). Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and, to the
extent not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of the Issuer. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
Section 2.7. No Liability of Certificateholder. To the
fullest extent permitted by law, no Certificateholder shall have any personal
liability for any liability or obligation of the Issuer.
Section 2.8. Title to Trust Property.
(a) Legal title to all the Trust Property shall be vested at
all times in the Issuer as a separate legal entity except where applicable law
in any jurisdiction requires title to any part of the Trust Property to be
vested in a trustee or trustees, in which case title shall be deemed to be
vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the case
may be.
(b) The Holders shall not have legal title to any part of
the Trust Property. The Holders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title or interest by any Certificateholder of its beneficial or other ownership
interest in the Trust Property shall operate to terminate this Agreement or the
trusts
5
11
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the Trust Property.
Section 2.9. Situs of Trust. The Issuer shall be located and
administered in the State of Delaware. The Issuer's assets shall be segregated.
All bank accounts maintained by the Owner Trustee on behalf of the Issuer shall
be located in the State of Delaware. Payments shall be received by the Issuer
only in Delaware and payments will be made by the Issuer only from Delaware. The
Issuer shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee, the
Servicer or any agent of the Issuer from having employees within or without the
State of Delaware. The only office of the Issuer shall be at the Corporate Trust
Office in Delaware.
Section 2.10. Representations and Warranties of ABSC. ABSC
makes the following representations and warranties upon which the Owner Trustee
relies in accepting the Trust Property in trust and issuing the Certificates and
upon which the Insurer relies in issuing the Note Policy:
(a) Organization and Good Standing. It is duly organized and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power, authority and legal right to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times and now
has power, authority and legal right to acquire and own the Receivables and to
enter into and perform its obligations under this Agreement and its Related
Documents.
(b) Due Qualification. It is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business and the performance of its obligations
under this Agreement and the Related Documents requires or shall require such
qualifications, licenses or approvals, except where the failure to have such
qualifications, licenses or approvals will not have a material adverse effect on
the interest of the Trust or the Insurer in the Receivables or on it's ability
to perform its obligations under this Agreement and the Related Documents, or
its ability to enforce the Receivables and the other property in the Trust
Property.
(c) Power and Authority. It has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry out
its and their terms. It has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer and it has
duly authorized such sale and assignment and deposit to the Issuer by all
necessary corporate action and the execution, delivery and performance of this
Agreement and its Related Documents have been duly authorized by all necessary
corporate action.
(d) No Consent Required. No consent, license, approval,
authorization or order of, or registration, declaration or filing with, any
Governmental Authority or other Person is required to be made in connection with
the execution, delivery or performance of this Agreement or its Related
Documents or the consummation of the transactions contemplated hereby or
thereby, except such as have been duly made, effected or obtained.
6
12
(e) No Violation. The execution, delivery and performance by
it of this Agreement and its Related Documents, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof, do not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time)
a default under, its certificate of incorporation or bylaws, or any indenture,
agreement, mortgage, deed of trust, license or other instrument to which it is a
party or by which it or its properties are bound, (ii) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, or (iii)
violate any law, order, rule or regulation applicable to it of any Governmental
Authority having jurisdiction over it or any of its properties.
(f) Binding Obligations. Its Related Documents, when duly
executed and delivered by the other parties thereto, shall constitute legal,
valid and binding obligations of it enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) No Proceedings. There are no proceedings or
investigations pending or, to the best of its knowledge, threatened against it
before any Governmental Authority having jurisdiction over it or its properties
(i) asserting the invalidity of any of the Related Documents, (ii) seeking to
prevent the issuance of the Certificates or the Notes or the consummation of any
of the transactions contemplated by the Related Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material
adverse effect on the performance by it of its obligations under, or the
validity or enforceability of, any of the Related Documents or (iv) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Certificates or the Notes or seeking to impose any excise,
franchise, transfer or similar tax upon the Certificates or the Notes or the
sale and assignment of the Receivables under the Related Documents.
Section 2.11. Representations and Warranties of TFSPC II.
(a) Organization and Good Standing. It is duly organized and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power, authority and legal right to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times and now
has power, authority and legal right to acquire and own the Certificates and to
enter into and perform its obligations under this Agreement and its Related
Documents.
(b) Due Qualification. It is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business and the performance of its obligations
under this Agreement and the Related Documents requires or shall require such
qualifications, licenses or approvals, except where the failure to have such
qualifications, licenses or approvals will not have a material adverse effect on
the interest of the Trust or the Insurer in the Receivables or on the it's
ability to perform its obligations under this Agreement and the Related
Documents.
7
13
(c) Power and Authority. It has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry out
its and their terms. It has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer and it has
duly authorized such sale and assignment and deposit to the Issuer by all
necessary corporate action and the execution, delivery and performance of this
Agreement and its Related Documents have been duly authorized by all necessary
corporate action.
(d) No Consent Required. No consent, license, approval,
authorization or order of, or registration, declaration or filing with, any
Governmental Authority or other Person is required to be made in connection with
the execution, delivery or performance of this Agreement or its Related
Documents or the consummation of the transactions contemplated hereby or
thereby, except such as have been duly made, effected or obtained.
(e) No Violation. The execution, delivery and performance by
it of this Agreement and its Related Documents, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof, do not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time)
a default under, its certificate of incorporation or bylaws, or any indenture,
agreement, mortgage, deed of trust, license or other instrument to which it is a
party or by which it or its properties are bound, (ii) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, or (iii)
violate any law, order, rule or regulation applicable to it of any Governmental
Authority having jurisdiction over it or any of its properties.
(f) Binding Obligations. Its Related Documents, when duly
executed and delivered by the other parties thereto, shall constitute legal,
valid and binding obligations of it enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best of its knowledge, threatened against it before any
Governmental Authority having jurisdiction over it or its properties (i)
asserting the invalidity of any of the Related Documents, (ii) seeking to
prevent the issuance of the Certificates or the Notes or the consummation of any
of the transactions contemplated by the Related Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material
adverse effect on the performance by it of its obligations under, or the
validity or enforceability of, any of the Related Documents or (iv) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Certificates or the Notes or seeking to impose any excise,
franchise, transfer or similar tax upon the Certificates or the Notes or the
sale and assignment of the Receivables under the Related Documents.
Section 2.12. Federal Income Tax Allocations. If
Certificates are held by more than one person or the Trust is recharacterized as
a separate entity, interest payments on the Certificates (or other interests in
the Trust treated as equity in the Trust for applicable tax purposes ("Equity
Interests"), including interest on amounts previously due on the Certificates or
8
14
Equity Interests but not yet distributed) shall be treated as "guaranteed
payments" under Section 707(c) of the Code. Net income of the Issuer for any
month as determined for Federal income tax purposes (and each item of income,
gain, loss and deduction entering into the computation thereof) shall be
allocated:
(a) among the Certificateholders and Equity Interest holders
as of the close of business on the last day of such month, in proportion to
their ownership of principal amount of Certificates and Equity Interests on such
date, an amount of net income up to the sum of: (i) the portion of the market
discount on the Receivables accrued during such month that is allocable to the
excess, if any, of the initial Certificate Balance over their initial aggregate
issue price, (ii) Certificateholders' and Equity Interest holders' prepayment
premium, if any, payable for such month, (iii) any other amounts of income
payable to the Certificateholders or Equity Interest holders for such month; and
such sum of amounts specified in clauses (i) through (iii) of this sentence
shall be reduced by any amortization by the Trust of premium on Receivables that
corresponds to any excess of the issue price of Certificates or Equity Interests
over their principal amount, and
(b) to the Certificateholders and Equity Interest holders as
of the close of business on the last day of such month, in proportion to their
ownership of principal amount of Certificates and Equity Interests on such date,
and other holders of interests in the Reserve Account, to the extent of any
remaining net income, in accordance with their respective interests therein.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a), subsequent net income shall first be allocated to make
up such shortfall before being allocated as provided in the preceding sentence.
Net losses of the Trust, if any, for any month as determined for Federal income
tax purposes (and each item of income, gain, loss and deduction entering into
the computation thereof) shall be allocated to TFSPC II (or other holders of
interests in the Reserve Account) to the extent TFSPC II (or such holders) are
reasonably expected to bear the economic burden of such net losses, and any
remaining net losses shall be allocated among the remaining Certificateholders
and Equity Interest holders as of the close of business on the last day of such
month in proportion to their ownership of principal amount of Certificates and
Equity Interests on such day. TFSPC II is authorized to modify the allocations
in this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to TFSPC II or
to the Certificateholders or Equity Interest holders, or as otherwise required
by the Code. Notwithstanding anything provided in this Section 2.11, if the
Certificates are held solely by one person or the Trust has not been
recharacterized as a separate entity, the application of this Section 2.11 shall
be disregarded.
Section 2.13. Covenants of ABSC. ABSC agrees and covenants for
the benefit of each Holder, the Insurer and the Owner Trustee, during the term
of this Agreement, and to the fullest extent permitted by applicable law, that:
(a) it shall not, for any reason, institute proceedings for
the Issuer to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Issuer, or file
a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Issuer, or
consent to the
9
15
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Issuer or a substantial part of the property of the
Issuer or cause or permit the Issuer to make any assignment for the benefit of
creditors, or admit in writing the inability of the Issuer to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Issuer or take any action in furtherance of any such action; and
(b) it shall not, for any reason, prior to the end of the
Funding Period withdraw or attempt to withdraw from this Agreement, dissolve,
institute proceedings for it to be adjudicated a bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against it,
or file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of it or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due, or declare or effect a moratorium on
its debt or take any action in furtherance of any such action.
(c) Covenants of the Holders. This undertaking is made for the
benefit of the Issuer, the Owner Trustee, the Insurer and all other Holders
present and future. Each Holder agrees:
(d) to be bound by the terms and conditions of the
Certificates of which such Holder is the owner and of this Agreement, including
any supplements or amendments hereto, and to perform the obligations of a Holder
as set forth therein or herein, in all respects as if it were a signatory
hereto;
(e) to hereby appoint TFSPC II as such Holder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of the Issuer and agree that, if requested by the Issuer, it will sign
such federal income tax information return in its capacity as holder of an
interest in the Issuer. Each Holder also hereby agrees that in its tax returns
it will not take any position inconsistent with those taken in any tax returns
filed by the Issuer;
(f) if such Holder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales on Form
1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within thirty (30) days of the date of the transfer;
(g) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Issuer or TFSPC II
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Issuer or TFSPC II or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Issuer or TFSPC II or a substantial part of its property, or
cause or permit the Issuer or TFSPC II to make any assignment for the benefit of
its creditors, or admit in writing its inability to pay its debts generally as
they become due, or declare or effect a moratorium on its debt or take any
action in furtherance of any such action; and
10
16
(h) it shall obtain from each counterparty to each Related
Document to which it or the Issuer is a party and each other agreement entered
into on or after the date hereof to which it or the Issuer is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the Issuer, any bankruptcy,
reorganization, arrangement, insolvenc or liquidation proceedings or similar
proceedings under the laws of the United States.
ARTICLE III.
CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.1. Initial Ownership. Upon the formation of the
Issuer by the contribution by ABSC pursuant to Section 2.5 and prior to the
issuance of the Certificates pursuant to Section 3.2, ABSC shall be the sole
initial beneficiary of the Issuer.
Section 3.2. The Certificates. In consideration of payment
of the sum of $74,778.86 to the Trust and upon the written order of ABSC, the
Certificates shall be initially issued to TFSPC II in a Certificate Percentage
Interest of 100%. The Certificates shall be executed on behalf of the Issuer by
manual or facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Issuer shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
Section 3.3. Authentication of Certificates. Concurrently
with the initial sale of the Receivables to the Issuer pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Certificates in an
aggregate Certificate Percentage Interest equal to 100% to be executed on behalf
of the Issuer, authenticated and delivered to or upon the written order of ABSC,
signed by its chairman of the board, its president or any vice president, its
treasurer or any assistant treasurer without further corporate action by ABSC,
in authorized denominations. No Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Owner Trustee by manual
signature. Such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 3.4. Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
11
17
exchanges of Certificates as herein provided. Wilmington Trust Company shall be
the initial Certificate Registrar.
The Certificate Registrar shall provide the Indenture Trustee
with a list of the names and addresses of the Certificateholder(s) on the
Closing Date. Upon any transfers of Certificates, the Certificate Registrar
shall notify the Servicer, the Insurer and the Indenture Trustee of the name and
address of the transferee in writing, by facsimile, on the day of such transfer.
Upon surrender for registration of transfer of any Certificate
at the office or agency maintained pursuant to Section 3.8, the Owner Trustee
shall execute, authenticate and deliver (or shall cause its authenticating agent
to authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
class and aggregate Certificate Percentage Interest dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of a Holder, Certificates may be exchanged for other Certificates of the same
class in authorized denominations of a like aggregate amount upon surrender of
the Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securitie Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by the
Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
Notwithstanding the preceding provisions of this Section 3.4,
the Owner Trustee shall not be required to make, and the Certificate Registrar
shall not be required to register, transfers or exchanges of Certificates for a
period of fifteen (15) days preceding the due date for any payment with respect
to the Certificates.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held pursuant to
the Reserve Account Agreement or prior to the release of such monies pursuant to
Section 4.6(b) of the Sale and Servicing Agreement, such monies being held in
trust for the benefit of the Noteholders and the Insurer. Notwithstanding the
foregoing, in the event that it i ever determined that the monies held in the
Reserve Account constitute a pledge of collateral, then the provisions of the
Sale and Servicing Agreement and the Reserve
12
18
Account Agreement shall be considered to constitute a security agreement and
TFSPC II and the Certificateholders hereby grant to the Collateral Agent for the
benefit of the Noteholders and the Insurer a first priority perfected security
interest in such amounts, to be applied as set forth in Section 3.03 of the
Reserve Account Agreement. In addition, each Certificateholder, by acceptance of
its Certificate, hereby appoints TFSPC II as its agent to pledge a first
priority perfected security interest in the Reserve Account, and any amounts
held therein from time to time to the Collateral Agent for the benefit of the
Indenture Trustee and the Insurer pursuant to the Reserve Account Agreement and
agrees to execute and deliver such instruments of conveyance, assignment, grant
and confirmation, as well as any financing statements, in each case the Insurer
shall consider reasonably necessary in order to perfect the Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Reserve
Account Agreement).
Section 3.5. Legending of Certificates. Each Certificate
shall bear a legend in substantially the following form:
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION.
Section 3.6. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar, the Owner Trustee and
(unless an Insurer Default shall have occurred and be continuing) the Insurer,
such security or indemnity as may be reasonabl required by them to save each of
them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Issuer shall execute and the Owner Trustee, or the Owner Trustee's
authenticating agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like class, tenor and Certificate Percentage Interest. In connection with the
issuance of any new Certificate under this Section 3.5, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any replacement Certificate issued pursuant to this Section 3.6 shall constitute
conclusive evidence of an ownership interest in the Issuer, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 3.7. Persons Deemed Certificateholder(s). Every
Person by virtue of becoming a Certificateholder in accordance with this
Agreement shall be deemed to be bound by the terms of this Agreement. Prior to
due presentation of a Certificate for registration of transfer, the Owner
Trustee, the Certificate Registrar, and the Insurer and any agent of the Owner
Trustee, the Certificate Registrar and the Insurer, may treat the Person in
whose name any Certificate shall be registered in the Certificate Register as
the owner of such Certificate for the purpose of receiving distributions
pursuant to the Sale and Servicing Agreement and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar, the
Insurer or any
13
19
agent of the Owner Trustee, the Certificate Registrar or the Insurer shall be
bound by any notice to the contrary.
Section 3.8. Access to List of Certificateholder(s)' Names
and Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, ABSC, TFSPC II or (unless an Insurer Default shall have occurred and
be continuing), the Insurer, within fifteen (15) days after receipt by the Owner
Trustee of a request therefor from such Person in writing, a list of the names
and addresses of the Certificateholder(s) as of the most recent Record Date. If
three or more Holders of Certificates or one or more Holders of Certificates
evidencing not less than a Certificate Percentage Interest equal to 25% apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholder(s) with respect to their
rights under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five (5) Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholder(s). Each Holder or
Owner, by receiving and holding a Certificate, shall be deemed to have agreed
not to hold any of Triad, TFSPC II, the Servicer, the Owner Trustee, the Insurer
or any agent thereof accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
Section 3.9. Maintenance of Office or Agency. The Owner
Trustee shall maintain in Wilmington, Delaware, an office or offices or agency
or agencies where Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Owner Trustee in
respect of the Certificates and the Related Documents may be served. The Owner
Trustee initially designates its Corporate Trust Office for such purposes. The
Owner Trustee shall give prompt written notice to Triad, the
Certificateholder(s) and (unless an Insurer Default shall have occurred and be
continuing) the Insurer of any change in the location of the Certificate
Register or any such office or agency.
Section 3.10. Disposition Only With Consent of Insurer. The
Certificate is only transferable (i) to an Affiliate of Triad Financial
Corporation whose stock has been pledged to the Insurer or (ii) to another
entity with the prior written consent of the Insurer in its sole discretion and,
in each case in accordance with the restrictions set forth in Section 2.6(m) of
the Insurance Agreement. The Owner Trustee shall cause any Certificate issued to
contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE, EXCEPT UNDER THE
LIMITED CONDITIONS SPECIFIED IN THE TRUST AGREEMENT".
Section 3.11. ERISA Restrictions. No Certificateholder may
transfer its interest in or to any Certificate to or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended "ERISA")) that is subject to the
provisions of Title 1 of ERISA, (ii) a plan described in Section 4975(e)(1) of
the Code, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding its beneficial ownership interest in its Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
14
20
ARTICLE IV.
VOTING RIGHTS AND OTHER ACTIONS
Section 4.1. Prior Notice to Holders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
any of the actions set forth below unless at least thirty (30) days before the
taking of such action, the Owner Trustee shall have notified the
Certificateholder(s) and the Insurer in writing of the proposed action and the
Instructing Party (pursuant to Section 4.5, if applicable) shall have notified
the Owner Trustee in writing that such Certificateholder(s) have consented
thereto:
(a) the election by the Issuer to file an amendment to
the Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Certificateholders);
(b) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is not required
and such amendment would not materially and adversely affect the interests of
the Certificateholder(s); or
(d) the amendment, change or modification of the Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially and adversely
affect the interests of the Certificateholder(s).
The Owner Trustee shall notify the Certificateholder(s) in writing of any
appointment of a successor Note Registrar, Indenture Trustee or Certificate
Registrar within five Business Days thereof.
Section 4.2. Action by Certificateholder(s) with Respect to
Certain Matters. The Owner Trustee shall not have the power, except upon the
direction of the Insurer or, in the event that an Insurer Default shall have
occurred and be continuing, the Certificateholder(s) in accordance with the
Related Documents, to (a) remove the Servicer under the Sale and Servicing
Agreement or (b) except as expressly provided in the Related Documents, sell the
Receivables after the termination of the Indenture. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Insurer or the Certificateholder(s) pursuant to Section 4.5, as
the case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee by the Certificateholder(s).
Section 4.3. Action by Certificateholder(s) with Respect to
Bankruptcy. To the fullest extent permitted by applicable law, the Owner Trustee
shall not have the power to, and shall not, commence any proceeding or other
actions contemplated by Section 2.13(a) relating to the Issuer.
Section 4.4. Restrictions on Certificateholder(s)' Power.
15
21
(a) No Certificateholder(s) shall direct the Owner Trustee
to take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Issuer or the Owner Trustee under this
Agreement or any of the Related Documents or would be contrary to Section 2.3 or
otherwise contrary to law nor shall the Owner Trustee be obligated to follow any
such direction, if given.
(b) No Certificateholder shall have any right by virtue or
by availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement or any Related Document, unless: (i) the Certificateholder(s) are the
Instructing Party pursuant to Section 6.3 and shall previously have given to the
Owner Trustee a written notice of default and of the continuance thereof, as
provided in this Agreement; (ii) Certificateholder(s) evidencing not less than a
Certificate Percentage Interest equal to 25% shall have made written request to
the Owner Trustee to institute such action, suit or proceeding in its own name
as Owner Trustee under this Agreement and shall have offered to the Owner
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby; (iii) the Owner Trustee, for
thirty (30) days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; and (iv) during such thirty (30) day period no request or waiver
inconsistent with such written request has been given to the Owner Trustee
pursuant to and in compliance with this Section 4.4(b) or Section 6.3; provided,
however, that each Certificateholder hereby agrees with every other
Certificateholder and the Owner Trustee that no one or more Holders shall have
any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of this Agreement to affect, disturb or prejudice the rights
of any other Holders, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner provided in this Agreement and for the equal, ratable and common
benefit of all Certificateholder(s). For the protection and enforcement of the
provisions of this Section 4.4, each and every Certificateholder and the Owner
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 4.5. Majority Control. No Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Issuer except as expressly provided in this Agreement. Except
as expressly provided herein, any action that may be taken by the
Certificateholder(s) under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority of the Certificate Percentage
Interest. Except as expressly provided herein, any written notice of the
Certificateholder(s) delivered pursuant to this Agreement shall be effective if
signed by Certificateholder(s) evidencing not less than a majority of the
Certificate Percentage Interest at the time of the delivery of such notice.
Section 4.6. Rights of Insurer. Notwithstanding anything to
the contrary in the Related Documents, without the prior written consent of the
Insurer (so long as no Insurer Default shall have occurred and be continuing),
the Owner Trustee shall not (i) remove the Servicer, (ii) initiate any claim,
suit or proceeding by the Issuer or compromise any claim, suit or proceeding
brought by or against the Issuer, other than with respect to the enforcement of
any Receivable or any rights of the Issuer thereunder, (iii) authorize the
merger or consolidation of the Issuer with or into any other business trust or
other entity (other than in accordance with Section 3.10 of the Indenture), (iv)
amend the Certificate of Trust.
16
22
ARTICLE V.
CERTAIN DUTIES
Section 5.1. Accounting and Records to the Noteholders,
Certificateholder(s), the Internal Revenue Service and Others. Subject to
Section 2.6 of this Agreement, Triad shall: (a) maintain (or cause to be
maintained) the books of the Issuer on a calendar year basis on the accrual
method of accounting (including the allocations, net income and net loss under
Section 2.11); (b) prepare and deliver (or cause to be delivered) to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1) to
enable each Certificateholder to prepare its federal and state income tax
returns; (c) prepare and file or cause to be filed such tax returns relating to
the Issuer (including a partnership information return, Form 1065), and direct
the Owner Trustee or the Servicer, as the case may be, to make such elections as
may from time to time be required or appropriate under any applicable state or
federal statute or rule or regulation thereunder so as to maintain the Issuer's
characterization as a partnership for federal income tax purposes; and (d)
collect or cause to be collected any withholding tax as required under the Code
with respect to income or distributions to Certificateholder(s) and the
appropriate forms relating thereto. Subject to Section 2.6, the Owner Trustee
shall make all elections pursuant to this Section 5.1 as directed by Triad. The
Owner Trustee shall sign all tax information returns filed pursuant to this
Section 5.1 and any other returns as may be required by law, and in doing so
shall rely entirely upon, and shall have no liability for information provided
by, or calculations provided by, Triad or the Servicer, as the case may be. The
Owner Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Receivables. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
Section 5.2. Signature on Returns; Tax Matters Partner.
(a) Notwithstanding the provisions of Section 5.1 and
subject to Section 2.6, the Owner Trustee shall sign on behalf of the Issuer the
tax returns of the Issuer, if any, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by TFSPC II.
(b) Subject to Section 2.6, TFSPC II shall be the "tax
matters partner" of the Issuer pursuant to the Code.
Section 5.3. Payments to Certificateholders. On each Payment
Date, the Indenture Trustee will distribute to the Certificateholder(s) as of
the related Determination Date each such Certificateholder's Certificate
Percentage Interest in the amount to be distributed on such Payment Date
pursuant to Section 4.6(b)(x) of the Sale and Servicing Agreement by wire
transfer or check mailed to such Certificateholder.
17
23
ARTICLE VI.
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1. General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Related Documents to which
the Issuer is named as a party and each certificate or other document attached
as an exhibit to or contemplated by the Related Documents to which the Issuer is
named as a party and any amendment thereto, in each case in such form as ABSC
shall approve as evidenced conclusively by the Owner Trustee's execution
thereof, and on behalf of the Issuer to direct the Indenture Trustee to
authenticate and deliver the Notes in the aggregate principal amount of
$100,000,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Issuer pursuant to
the Related Documents. The Owner Trustee is further authorized from time to time
to take such action as the Instructing Party recommends with respect to the
Related Documents so long as such activities are consistent with the terms of
the Related Documents.
Section 6.2. General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the term of this Agreement and to administer the
Issuer in the interest of the Holders, subject to the Related Documents to which
the Issuer is a party and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Related
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement or TFSPC II has agreed in this Agreement to perform any act or to
discharge any duty of the Owner Trustee hereunder or under any Related Document,
and the Owner Trustee shall not be liable for the default or failure of the
Servicer, TFSPC II to carry out any of their obligations under the Sale and
Servicing Agreement or this Agreement, respectively, except with respect to
obligations redelegated back to the Owner Trustee.
Section 6.3. Action upon Instruction. (a) Subject to
Article IV, the Instructing Party shall have the exclusive right to direct the
actions of the Owner Trustee in the management of the Issuer, so long as such
instructions are not inconsistent with the express terms set forth herein or in
any Related Document. The Instructing Party shall not instruct the Owner Trustee
in a manner inconsistent with this Agreement or the Related Documents.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Related Document, other than its express duties,
if the Owner Trustee shall have reasonably determined, or shall have been
advised by counsel, that such action is likely to result in liability on the
part of the Owner Trustee or is contrary to the terms hereof or of any Related
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Related Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of
18
24
such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten (10) days of delivery of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, as it shall deem to be in the best
interests of the Certificateholder(s), and shall have no liability to any Person
for such action or inaction.
(d) If the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Related Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or if this Agreement permits any determination by
the Owner Trustee or is silent or is incomplete as to the course of action that
the Owner Trustee is required to take with respect to a particular set of facts,
the Owner Trustee may give notice (in such form as shall be appropriate under
the circumstances) to the Instructing Party requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received (so long as the same is not
manifestly inconsistent with this Agreement or a Related Document), the Owner
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the Owner Trustee shall not have received appropriate instruction
within ten (10) days of delivery of such notice (or within such shorter period
of time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, as it shall deem to be in the best interests of the
Certificateholder(s), and shall have no liability to any Person for such action
or inaction.
Section 6.4. No Duties Except as Specified in this Agreement
or in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Property, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any Related Document, document or written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Related Document against
the Owner Trustee. The Owner Trustee nevertheless agrees that it will, at its
own cost and expense, promptly take all action as may be necessary to discharge
any Liens on any part of the Trust Property that result from actions by, or
claims against, the Owner Trustee (solely in its individual capacity and that
are not related to the ownership or the administration of the Trust Property.
Section 6.5. No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Property or take any action on the
part of the Issuer except (a) in accordance with the powers granted to and the
authority conferred upon the Owner Trustee pursuant to this Agreement, (b) in
accordance with the Related Documents and (c) in accordance with any document or
instruction conforming with and delivered to the Owner Trustee pursuant to
Section 6.3.
Section 6.6. Restrictions. The Owner Trustee shall not take
any action that, to the actual knowledge of a Responsible Officer the Owner
Trustee, would result in the Issuer's becoming taxable as a corporation for
federal income tax purposes or for the purposes of any
19
25
applicable state tax on corporations. The Certificateholder(s) shall not direct
the Owner Trustee to take action that would violate the provisions of this
Section 6.6.
ARTICLE VII.
CONCERNING THE OWNER TRUSTEE
Section 7.1. Acceptance of Trusts and Duties. The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Trust Property upon the terms of the Related Documents
and this Agreement. The Owner Trustee (in its individual or trust capacities)
shall not be answerable or accountable hereunder or under any Related Document
under any circumstances, except (i) for its own willful misconduct, bad faith or
negligence (other than errors in judgment), (ii) in the case of the inaccuracy
of any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4, (iv) for taxes, fees or other charges on,
based on or measured by, any fees, commissions or compensation received by the
Owner Trustee or (v) for any investments issued by the Owner Trustee or any
branch or affiliate thereof in its commercial capacity. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee (in its individual or trust capacities)
shall not be liable for any error of judgment made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee (in its individual or trust capacities)
shall not be liable with respect to any action taken or omitted to be taken by
it in accordance with the instructions (not inconsistent with this Agreement or
any Related Document) of the Instructing Party, the Servicer or any
Certificateholder;
(c) no provision of this Agreement or any Related Document
shall require the Owner Trustee (in its individual or trust capacities) to
expend or risk funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder or under any Related
Document if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;
(d) the Owner Trustee (in its individual or trust capacities)
shall not be responsible for or in respect of the validity or sufficiency of
this Agreement or for the due execution hereof by TFSPC II, Triad or ABSC or for
the form, character, genuineness, sufficiency, value or validity of any of the
Trust Property or for or in respect of the validity or sufficiency of the
Related Documents, other than the certificate of authentication on the
Certificates, and the Owner Trustee shall i no event assume or incur any
liability, duty or obligation to Triad or ABSC, the Insurer, the Indenture
Trustee, any Noteholder or to any Certificateholder, other than as expressly
provided for herein and in the Related Documents;
20
26
(e) the Owner Trustee (in its individual or trust capacities)
shall not be liable for the default or misconduct of Triad, TFSPC II, ABSC, the
Insurer, the Indenture Trustee, or the Servicer under any of the Related
Documents or otherwise, and the Owner Trustee shall have no obligation or
liability to perform the obligations under this Agreement or the Related
Documents that are required to be performed by Triad, TFSPC II, or ABSC under
this Agreement, the Indenture Trustee under the Indenture or the Servicer under
the Sale and Servicing Agreement; and
(f) the Owner Trustee (in its individual or trust capacities)
shall be under no obligation to exercise any of the rights or powers vested in
it by this Agreement, other than its express duties, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Related Document, at the request, order or direction of the
Instructing Party or any of the Certificateholder(s), unless such Instructing
Party or Certificateholder(s) have offered to the Owner Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities that may reasonably be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Related Document shall not be construed
as a duty, and the Owner Trustee (in its individual or trust capacities) shall
not be answerable for other than its negligence (other than errors in judgment),
bad faith or willful misconduct in the performance of any such act.
Section 7.2. Furnishing of Documents. The Owner Trustee
shall furnish to the Certificateholder(s), promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Owner Trustee under the Related Documents.
Section 7.3. Representations and Warranties. The Owner
Trustee hereby represents and warrants in its individual capacity to Triad, the
Holders and the Insurer (which shall have relied on such representations and
warranties in issuing the Note Policy), that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation or any
judgment or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.
21
27
(d) This Agreement has been duly authorized, executed and
delivered by it and constitutes a legal, valid and binding obligation of it,
enforceable against it, in accordance with its terms.
(e) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental agency or
commission of the State of Delaware is required by or with respect to it for the
valid execution and delivery of this Agreement, or for the validity or
enforceability thereof, other than the filing of the Certificate of Trust.
Section 7.4. Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate signed by the president or any vice president or by
the treasurer, secretary or other authorized officers of the relevant party, as
to such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee (with respect to acts or omissions of attorneys that are not employees
of the Owner Trustee) shall not be liable for the conduct or misconduct of such
attorneys if such attorneys shall have been selected by the Owner Trustee with
reasonable care, and (ii) may consult with counsel, accountants and other
skilled persons to be selected with reasonable care and employed by it. The
Owner Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and according to such opinion not
contrary to this Agreement or any Related Document.
Section 7.5. Not Acting in Individual Capacity. Except
as provided in this Article VII, in accepting the trusts hereby created, the
Owner Trustee acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Related Document shall
look only to the Trust Property for payment or satisfaction thereof.
Section 7.6. Owner Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of TFSPC II and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, any Related
Document, the Certificates (other than the signature and countersignature of the
Owner Trustee on the
22
28
Certificates), the Notes (other than the signature of the Owner Trustee on the
Notes) or any Receivable or related documents (other than enforceability against
the Owner Trustee). The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
any Receivable, or the perfection and priority of any security interest created
by any Receivable in any Financed Vehicle or (except as required by the
Indenture) the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust Property or its ability to generate the
payments to be distributed to Certificateholder(s) under this Agreement or the
Noteholders under the Indenture, including: the existence, condition and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable on any computer
or other record thereof; the validity of the assignment of any Receivable to the
Issuer or of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by ABSC, TFSPC II,
the Servicer or any other Person with any warranty or representation made under
any Related Document or in any related document or the accuracy of any such
warranty or representation or any action of the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.7. Payments from Trust Property. All payments
to be made by the Owner Trustee under this Agreement or any of the Related
Documents to which the Issuer or the Owner Trustee is a party shall be made only
from the income and proceeds of the Trust Property, only to the extent not
otherwise directed to be made by the Indenture Trustee and only to the extent
that the Owner Trustee shall have received income or proceeds from the Trust
Property to make such payments in accordance with the terms hereof. Wilmington
Trust Company or any successor thereto, in its individual capacity, shall not be
liable for any amounts payable under this Agreement or any of the Related
Documents to which the Issuer or the Owner Trustee is a party, except any
expenses arising from or resulting from any of the matters described in the
third sentence of Section 7.1.
Section 7.8. Doing Business in Other Jurisdictions.
Notwithstanding anything contained herein to the contrary, neither Wilmington
Trust Company or any successor thereto, nor the Owner Trustee shall be required
to take any action in any jurisdiction other than in the State of Delaware if
the taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5, (a) require the consent or
approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; or (b) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee as the case may be, contemplated hereby.
ARTICLE VIII.
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
Section 8.1. Owner Trustee's Fees and Expenses. The
Owner Trustee shall receive as compensation for its services hereunder such fees
as have been separately agreed upon
23
29
between the Servicer and the Owner Trustee, and the Owner Trustee shall be
entitled to be reimbursed by the Issuer or TFSPC II for its other reasonable
expenses hereunder, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights
and its duties hereunder and under the Related Documents ("Expenses"). The Owner
Trustee shall also be entitled to be reimbursed by TFSPC II for any
organizational expenses of the Issuer.
Section 8.2. Indemnification. Triad shall defend,
indemnify and hold harmless the Owner Trustee to the extent provided in Section
8.1 of the Sale and Servicing Agreement, as dated the date hereof and
incorporated herein by reference.
Section 8.3. Payments to the Owner Trustee. Any amounts
paid to the Owner Trustee pursuant to this Article VIII shall be deemed not to
be a part of the Trust Property immediately after such payment.
Section 8.4. Non-recourse Obligations. Notwithstanding
anything in this Agreement or any Related Document, the Owner Trustee agrees in
its individual capacity and in its capacity as Owner Trustee for the Issuer that
all obligations of the Issuer to the Owner Trustee individually or as Owner
Trustee for the Issuer shall be recourse to the Trust Property only and
specifically shall not be recourse to the assets of any Holder.
ARTICLE IX.
TERMINATION OF TRUST AGREEMENT
Section 9.1. Termination of Trust Agreement. (a) The
Issuer shall dissolve and this Agreement shall terminate and be of no further
force or effect upon the latest of (i) the maturity or other liquidation of the
last Receivable (including the purchase by the Servicer at its option of the
Receivables and other Trust Property of the Issuer as described in Section 10.1
of the Sale and Servicing Agreement) and the subsequent distribution of amounts
in respect of such Receivables as provided in the Related Documents, (ii) the
payment to Certificateholders and Noteholders of all amounts required to be paid
to them pursuant to this Agreement, the Indenture and the Sale and Servicing
Agreement and the payment to the Insurer of all amounts payable or reimburseable
to it pursuant to the Sale and Servicing Agreement, (iii) the expiration of the
Note Policy in accordance with its terms, or (iv) payment to the Insurer of all
amounts due to the Insurer under the Insurance Agreement; provided, however,
that the rights to indemnification under Section 8.1 and the rights under
Section 10.1 shall survive the dissolution of the Issuer. The Servicer shall
promptly notify the Owner Trustee and the Insurer of any prospective termination
or dissolution pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, shall not (x) operate
to terminate this Agreement or dissolve the Issuer, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the affairs of the Issuer or Trust Property nor (z) otherwise
affect the rights, obligations and liabilities of the parties hereto.
24
30
(b) Except as provided in Section 9.1(a), neither Triad, ABSC
nor any Certificateholder shall be entitled to revoke the trust created hereby
or otherwise dissolve the Issuer.
(c) Notice of any dissolution of the Issuer, specifying the
Payment Date upon which the Certificateholder(s) shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholder(s) mailed within five (5) Business Days of receipt of notice
of such termination from the Servicer given pursuant to Section 10.1(c) of the
Sale and Servicing Agreement, stating (i) the Payment Date upon or with respect
to which final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Indenture Trustee therein
designated, (ii) the amount of any such final payment, (iii) that the Record
Date otherwise applicable to such Payment Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Indenture Trustee therein specified and (iv) that no amount will thereafter
be payable under the Certificates. The Owner Trustee shall give such notice to
the Certificate Registrar (if other than the Owner Trustee) and the Indenture
Trustee at the time such notice is given to Certificateholder(s). Upon
presentation and surrender of the Certificates, the Indenture Trustee shall
cause to be distributed to Certificateholder(s) amounts distributable on such
Payment Date pursuant to Section 4.6(b)(x) of the Sale and Servicing Agreement.
In the event that all of the Certificateholder(s) shall not
surrender their Certificates for cancellation within two months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholder(s) to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholder(s) concerning surrender of their Certificates,
and the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds held by the Issuer after exhaustion
of such remedies shall be distributed, subject to applicable escheat laws, by
the Owner Trustee to TFSPC II and Holders shall look solely to TFSPC II for
payment.
(d) Any funds held by the Issuer after funds for final
payment have been distributed or set aside for payment shall be distributed by
the Owner Trustee to TFSPC II.
(e) Upon the winding up of the Issuer and its termination,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation: (a) satisfying the
provisions of Section 3807(a) of the
25
31
Business Trust Statute; (b) authorized to exercise corporate trust powers; (c)
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and (iv) acceptable
to the Insurer in its reasonable discretion, so long as an Insurer Default shall
not have occurred be continuing. If such corporation shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.1, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Owner Trustee shall cease
to be eligible in accordance with the provisions of this Section 10.1, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.2.
Section 10.2. Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to TFSPC II, the Insurer and the
Servicer. Upon receiving such notice of resignation, TFSPC II shall, with the
prior written consent of the Insurer, promptly appoint a successor Owner Trustee
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee, provided that TFSPC II shall have received written confirmation from
each of the Rating Agencies that the proposed appointment will not result in an
increased capital charge to the Insurer by either of the Rating Agencies. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within thirty (30) days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by TFSPC II or any other entity authorized to make such
request, or if at any time the Owner Trustee shall be legally unable to act, or
shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or
of its property shall be appointed, or any public officer shall take charge or
control of the Owner Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then such requesting party may
remove the Owner Trustee. If TFSPC II shall remove the Owner Trustee under the
authority of the immediately preceding sentence, TFSPC II, with the prior
written consent of the Insurer, shall promptly appoint a successor Owner Trustee
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed, one copy to the Insurer and
one copy to the successor Owner Trustee and all fees owed to the outgoing Owner
Trustee shall be paid.
Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section 10.2 shall not become effective until acceptance of appointment by
the successor Owner Trustee pursuant to Section 10.3 and payment of all fees and
expenses owed to the outgoing Owner Trustee. The successor Owner Trustee shall
provide notice of such resignation or removal of the Owner Trustee each of the
Rating Agencies.
Section 10.3. Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to TFSPC II, the Servicer, the Insurer and to its predecessor Owner
Trustee an instrument accepting such
26
32
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement. TFSPC II
and the predecessor Owner Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Owner Trustee all such rights, powers,
duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the successor Owner Trustee shall mail notice of the
successor of such Owner Trustee to all Certificateholder(s), the Indenture
Trustee, and the Rating Agencies. If the Servicer shall fail to mail such notice
within ten (10) days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 10.4. Merger or Consolidation of Owner Trustee.
Any corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing (other than the filing of an amendment to the
Certificate of Trust with the Secretary of State) of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 10.5. Appointment of Co-Trustee or Separate
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Property or any Financed Vehicle may at the time be
located, the Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Instructing Party to act as co-trustee,
jointly with the Owner Trustee, or separate trustee or separate trustees, of all
or any part of the Trust Property, and to vest in such Person, in such capacity,
such title to the Issuer, or any part thereof, and, subject to the other
provisions of this Section 10.5, such powers, duties, obligations, rights and
trusts as the Servicer and the Owner Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment within
fifteen (15) days after the receipt by it of a request so to do, the Owner
Trustee, subject, unless an Insurer Default shall have occurred and be
continuing, to the approval of the Insurer (which approval shall not be
unreasonably withheld), shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.1 and no
27
33
notice of the appointment of any co-trustee or separate trustee shal be required
pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Issuer or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Section 10.5. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Servicer and the Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to th extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Supplements and Amendments. (a) This
Agreement may be amended by Triad, TFSPC II, ABSC and the Owner Trustee, with
the prior written consent of the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) and with prior
28
34
written notice to the Rating Agencies, without the consent of any of the
Noteholders or any other Certificateholder(s): (i) to cure any ambiguity or
defect; or (ii) to correct or supplement any provisions in thi Agreement;
provided, however, that such action under this clause (ii) shall not, as
evidenced by an Opinion of Counsel (which may be based upon a certificate of the
Servicer) delivered to the Owner Trustee and the Rating Agency adversely affect
in any material respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time
with the prior written consent of the Insurer (so long as an Insurer Default
shall not have occurred and be continuing) by Triad, TFSPC II, ABSC and the
Owner Trustee, with prior written notice to the Rating Agencies and with the
consent of the Holders of Notes evidencing not less than the Note Majority and
the consent of the Certificateholder(s) evidencing not less than a majority
Certificate Percentage Interest (which consent of any Holder of a Certificate or
Note given pursuant to this Section 11.1(b) or pursuant to any other provision
of this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Certificate or Note and of any Certificate or Note issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Certificate or Note) for the
purpose of adding any provisions to or changing in an manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholder(s); provided, however, that, the Rating
Agency Condition shall have been satisfied with respect to any such amendment
prior to the execution thereof; and provided, further, that, subject to the
express rights of the Insurer under the Related Documents, no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
th timing of, collections of payments on Receivables, payments that shall be
required to be made on any Certificate or Note, or yield on the Certificates or
the Class A Interest Rate, or (ii) reduce the aforesaid percentage required to
consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all Certificates and Notes then outstanding.
Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Noteholders, the Indenture
Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of
Certificateholder(s), the Noteholders or the Indenture Trustee pursuant to this
Section 11.1(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholder(s) or Noteholders provided for in this Agreement or in any
other Related Document) and of evidencing the authorization of the execution
thereof by Certificateholder(s) or Noteholders shall be subject to such
reasonable requirements as the Owner Trustee may prescribe. Promptly after the
execution of any amendment to the Certificate of Trust, the Owner Trustee shall
cause the filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Section 11.1 and that all conditions precedent
to the execution and delivery of such amendment have been satisfied. The
29
35
Owner Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
Section 11.2. No Legal Title to Trust Property in
Certificateholder(s). The Certificateholder(s) shall not have legal title to any
part of the Trust Property. The Certificateholder(s) shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholder(s) to and in
their ownership interest in the Trust Property shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Trust Property.
Section 11.3. Limitations on Rights of Others. The
provisions of this Agreement are solely for the benefit of the Owner Trustee (in
its individual and trust capacities), Triad, TFSPC II, ABSC, the
Certificateholder(s), the Servicer, the Indenture Trustee and, to the extent
expressly provided herein, the Insurer, the Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Property or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 11.4. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt: (i)
if to the Trust or the Owner Trustee, addressed to the Corporate Trust Office
with a copy to Triad; (ii) if to ABSC, addressed to Asset Backed Securities
Corporation, 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Secretary; (iii)
if to Triad, addressed to Triad Financial Corporation, 0000 Xxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000; (iv) if to TFSPC II, addressed to Triad
Financial Special Purpose Corporation II, 0000 Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000, and (v) if to the Insurer, addressed to
Insurer, Financial Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Surveillance Department, Telex No.: (000) 000-0000,
Confirmation: (000) 000-0000, Telecopy Nos.: (000) 000-0000, (000) 000-0000 (in
each case in which notice or other communication to Financial Security refers to
an Event of Default, a claim on the Note Policy or with respect to which failure
on the part of Financial Security to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other communication shall
also be sent to the attention of the General Counsel and the Head-Financial
Guaranty Group "URGENT MATERIAL ENCLOSED"); or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificate holder receives
such notice.
30
36
Section 11.5. Severability. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 11.6. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.7. Assignments. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Insurer for so long as an Insurer Default shall not have occurred and be
continuing. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement which confer rights upon the Insurer shall be for
the benefit of and run directly to the Insurer, and the Insurer shall be
entitled to rely on and enforce such covenants and agreements, subject, however,
to the limitations on such rights provided in this Agreement and the Related
Documents. The Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee.
Section 11.8. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against ABSC or
TFSPC II, or join in any institution against ABSC or TFSPC II of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates, the
Notes, this Agreement or any of the Related Documents.
Section 11.9. Bankruptcy Matters. To the fullest extent
permitted by law, no Certificateholder or any party to this Agreement shall take
any action to cause the Issuer to dissolve in whole or in part or file a
voluntary petition or otherwise initiate proceedings to have the Issuer
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Issuer, or file a petition seeking or
consenting to reorganization or relief of the Issuer as debtor under any
applicable federal or state law relating to bankruptcy, insolvency or other
relief for debtors with respect to the Issuer; or seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, liquidator (or other similar official) of the Issuer or of all or any
substantial part of the properties and assets of the Issuer, or cause the Issuer
to make any general assignment for the benefit of creditors of the Issuer or
take an action in furtherance of any of the above actions unless each
Certificateholder and the Indenture Trustee shall have provided its written
consent.
Section 11.10. No Recourse. Each Certificateholder by
accepting a Certificate acknowledges that such Certificateholder's Certificates
represent beneficial interests in the Issuer only and do not represent interests
in or obligations of Triad, the Servicer, TFSPC II, ABSC, the Owner Trustee, the
Insurer, the Indenture Trustee or any Affiliate thereof and no
31
37
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated i this Agreement, the Certificates or the
Related Documents.
Section 11.11. Headings. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
Section 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.13. Servicer. The Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Issuer
all such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer or Owner Trustee to prepare, file or deliver
pursuant to the Related Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Servicer a limited power of attorney appointing the
Servicer the Issuer's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
32
38
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
-----------------------------
Name:
------------------------
Title:
------------------------
TRIAD FINANCIAL SPECIAL PURPOSE
CORPORATION II, as Holder of the
Certificate
By:
-----------------------------
Name:
------------------------
Title:
------------------------
TRIAD FINANCIAL CORPORATION, as Servicer
By:
-----------------------------
Name:
------------------------
Title:
------------------------
ASSET BACKED SECURITIES
CORPORATION, as Company
By:
-----------------------------
Name:
------------------------
Title:
------------------------
39
EXHIBIT A
___% Certificate Percentage Interest
NUMBER
R-
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT UNDER THE LIMITED CIRCUMSTANCES
SPECIFIED IN THE TRUST AGREEMENT.
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Issuer, as defined below, the property of which includes a pool of motor vehicle
retail installment contracts secured by new or used automobiles or light-duty
trucks and sold by Triad Financial Corporation, a California corporation
("Triad" or in its capacity as Servicer under the Sale and Servicing Agreement
(as defined below), the "Servicer") to Asset Backed Securities Corporation, a
Delaware corporation ("ABSC"), and by ABSC to the Issuer.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR
OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION
MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION.
THIS CERTIFICATE MAY NOT BE PURCHASED BY EMPLOYEE BENEFIT PLANS THAT ARE SUBJECT
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
PERSONS USING ASSETS OF SUCH PLANS.
(THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF TRIAD, THE
SERVICER, ABSC OR ANY AFFILIATE THEREOF, EXCEPT TO THE LIMITED EXTENT DESCRIBED
BELOW.)
------------------
* [To be inserted on the Certificate to be held by TFSPC II.
40
THIS CERTIFIES THAT ____________________ is the registered
owner of a ___% Certificate Percentage Interest that is a nonassessable,
fully-paid, beneficial ownership interest in certain distributions of Triad Auto
Receivables Owner Trust 1998-4 (the "Issuer") formed by ABSC.
The Issuer was created pursuant to a Trust Agreement, dated as
of November 1, 1998 (the "Trust Agreement"), between Triad, TFSPC II, ABSC and
Wilmington Trust Company, as owner trustee (the "Owner Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Asset Backed Certificates" (herein called the "Certificates").
Also issued under the Indenture, dated as of November 1, 1998, between the
Issuer, The Chase Manhattan Bank, as Indenture Trustee (the "Indenture
Trustee"), is one class of Notes designated as "Class A Asset Backed Notes" (the
"Class A Notes" or the "Notes"). This Certificate is issued under and is subject
to the terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property subject to the Trust
Agreement includes a pool of motor vehicle retail installment contracts secured
by new and used automobiles and light-duty trucks (the "Receivables"), all
monies received thereunder or in respect thereof on or after the Cutoff Date,
security interests in the vehicles financed thereby, certain bank accounts and
the proceeds thereof, proceeds from claims on certain insurance policies and
certain other rights under the Trust Agreement and the Sale and Servicing
Agreement, dated as of November 1, 1998 (the "Sale and Servicing Agreement"),
between Triad, ABSC and the Indenture Trustee, all right to and interest of ABSC
in and to the Receivables Purchase Agreement, dated as of November 1, 1998,
between Triad and ABSC, and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the
17th day of each month (or, if such 17th day is not a Business Day, the next
Business Day) (the "Payment Date"), commencing on December 17, 1998, to the
Person in whose name this Certificate is registered at the close of business on
the Business Day preceding such Payment Date (the "Record Date"), such
Certificateholder's Certificate Percentage Interest in the amount to be
distributed to Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this
Certificate, specifically acknowledges that it has no right to or interest in
any monies at any time held pursuant to the Reserve Account Agreement or prior
to the release of such monies pursuant to Section 4.6(b)(x) of the Sale and
Servicing Agreement, such monies being held in trust for the benefit of the
Noteholders and the Insurer. Notwithstanding the foregoing, in the event that it
is ever determined that the monies held in the Reserve Account constitute a
pledge of collateral, then the
A-2
41
provisions of the Sale and Servicing Agreement and the Reserve Account Agreement
shall be considered to constitute a security agreement and the holder this
Certificate hereby grants to the Collateral Agent for the benefit of the
Noteholders and the Insurer a first priority perfected security interest in such
amounts, to be applied as set forth in Section 3.03 of the Reserve Account
Agreement. In addition, each Certificateholder, by acceptance of its
Certificate, hereby appoints TFSPC II as its agent to pledge a first priority
perfected security interest in the Reserve Account, and any amounts held therein
from time to time to the Collateral Agent for the benefit of the Indenture
Trustee and the Insurer pursuant to the Reserve Account Agreement and agrees to
execute and deliver such instruments of conveyance, assignment, grant, and
confirmation, as well as any financing statements, in each case as the Insurer
shall consider reasonably necessary in order to perfect the Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Reserve
Account Agreement).
It is the intent of Triad, the Servicer, ABSC and the
Certificateholders that, for purposes of all applicable federal and state income
taxes, until the Certificates are held by more than one person or the Trust is
recharacterized as a separate entity, the Trust will be disregarded as an entity
separate from its owner. If the Certificates are held by more than one person or
the Trust is recharacterized as a separate entity, it is the intent of TFSPC II,
the Servicer and the Certificateholder that, for purposes of all applicable
federal and state income taxes, the Issuer will be treated as a partnership and
the Certificateholders (including TFSPC II) will be treated as partners in that
partnership. TFSPC II and any other Certificateholders by acceptance of a
Certificate, agree to treat, and to take no action inconsistent with such
treatment of, the Certificates for such tax purposes.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Issuer or TFSPC II, or join in any institution against the Issuer or
TFSPC II of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Related
Documents.
Distributions on this Certificate will be made on behalf of
the Owner Trustee by the Indenture Trustee as provided in the Sale and Servicing
Agreement by wire transfer or check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise provided
in the Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the City of Wilmington, State of Delaware.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the
A-3
42
holder hereof to any benefit under the Trust Agreement or the Sale and Servicing
Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-4
43
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer
and not in its individual capacity, has caused this Certificate to be duly
executed.
TRIAD AUTO RECEIVABLES OWNER
TRUST 1998-4
By: Wilmington Trust Company, not in its
individual capacity, but solely
as Owner Trustee
Dated: December 15, 1998 By:
------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
Wilmington Trust Company, Wilmington Trust Company,
as Owner Trustee or as Owner Trustee
By: By:
----------------------- ----------------------
Authenticating Agent
By:
----------------------
A-5
44
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, Triad, the Servicer, TFSPC II, the Owner Trustee or any Affiliates
of any of them and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated herein or in the Trust
Agreement, the Sale and Servicing Agreement or the Related Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Receivables, all as more specifically set forth herein and in the
Trust Agreement and the Sale and Servicing Agreement. A copy of each of the Sale
and Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Seller, and at such other places,
if any, designated by the Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of Triad and the rights of the Certificateholder(s) under the Trust
Agreement at any time by Triad, ABSC and the Owner Trustee with the consent of
Holders of Certificates evidencing not less than a majority of the outstanding
Certificate Percentage Interest of the Certificates. Any such consent by the
holder of this Certificate shall be conclusiv and binding on such holder and on
all future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Trust Agreement also permits
the amendment thereof, in certain limited circumstances, without the consent of
the holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the City of Wilmington, State of Delaware, accompanied
by a written instrument of transfer in form satisfactory to the Owner Trustee
and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations evidencing the same aggregate interest
in the Issuer will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is Wilmington Trust
Company.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates in authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and
any agent of the Owner Trust, the Certificate Registrar or the Insurer may treat
the person in whose name this Certificate is registered as the owner hereof for
all purposes, and none of the Owner Trustee, the
A-6
45
Certificate Registrar, the Insurer, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Sale and Servicing Agreement and the Trust created by the
Trust Agreement shall terminate upon the payment to Certificateholder(s) and
Noteholders of all amounts required to be paid to them pursuant to the Trust
Agreement and the Sale and Servicing Agreement. The Servicer of the Receivables
may at its option purchase Receivables and other property of the Issuer at a
price specified in the Sale and Servicing Agreement, and such purchase of the
Receivables and other property of the Issuer will effect early retirement of the
Certificates; provided, however, such right of purchase is exercisable, subject
to certain restrictions, only as of the last day of any Collection Period as of
which the Aggregate Principal Balance has declined to less than 10% of the
Original Pool Balance.
The Certificates may not be purchased by (a) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of
the Code or (c) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding this Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements
of Triad, TFSPC II or the Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Receivable or related document.
A-7
46
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
Signature Guaranteed:
-----------------------
* NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears on the face of
the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature
must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Certificate Registrar, which
requirements include membership or participation in STAMP or
such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-8
47
EXHIBIT B
FORM OF
CERTIFICATE OF TRUST OF
TRIAD AUTO RECEIVABLES OWNER TRUST 1998-4
This Certificate of Trust of Triad Auto Receivables Owner
Trust 1998-4 (the "Trust"), dated as of November 1, 1998, is being duly executed
and filed by Wilmington Trust Company, a Delaware banking corp., to form a
business trust under the Delaware Business Trust Act (12 Del, Code, ss. 3801 et
seq.).
1. Owner Name. The name of the business trust formed
hereby is "Triad Auto Receivables Owner Trust 1998-4."
2. Trustee. The name and principal place of business of
the trustee of the Trust in the State of Delaware is 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000.
3. Effective Date. This Certificate of Trust will be
effective December __, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
-------------------------
Name:
---------------------
Title:
--------------------
B-1
