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AUTOBOND FUNDING CORPORATION II
(as Borrower),
AUTOBOND ACCEPTANCE CORPORATION
and
DAIWA FINANCE CORPORATION
(as Initial Lender)
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CREDIT AGREEMENT
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Dated as of February 1, 1997
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TABLE OF CONTENTS
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SECTION 1. COMMITMENT
Section 1.1 Advances............................................... 1
Section 1.2 Borrowings; Closings................................... 2
Section 1.3 Notices of Advances.................................... 3
Section 1.4 Use of Proceeds........................................ 3
Section 1.5 Security Agreement..................................... 3
Section 1.6 Increased Costs........................................ 3
Section 1.7 Taxes.................................................. 6
Section 1.8 Definitions............................................ 9
Section 1.9 Term................................................... 9
Section 1.10 Payment Instructions.................................. 9
SECTION 2. REPRESENTATIONS AND WARRANTIES
Section 2.1 General Representations and Warranties of the Borrower. 9
Section 2.2 General Representations and Warranties of AutoBond..... 13
Section 2.3 Representations and Warranties with Respect to the
Specified Auto Loans............................. 17
SECTION 3. CONDITIONS OF OBLIGATION TO MAKE INITIAL
ADVANCE ON INITIAL CLOSING DATE
Section 3.1 Other Agreements....................................... 25
Section 3.2 Opinion of Special Counsel............................. 25
Section 3.3 Opinions of Local Counsel.............................. 25
Section 3.4 Fitch Rating Letter.................................... 25
Section 3.5 Officer's Certificates................................. 25
Section 3.6 Organizational and Other Documents..................... 25
Section 3.7 Financing Statements................................... 26
Section 3.8 Necessary Consents..................................... 26
Section 3.9 Payment of Commitment Fee.............................. 26
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SECTION 4. CONDITIONS OF OBLIGATION TO MAKE
ADVANCES ON ANY CLOSING DATE
Section 4.1 Performance of Obligations; No Old Advances............ 26
Section 4.2 Representations True; No Event of Default.............. 26
Section 4.3 Taxes.................................................. 27
Section 4.4 No Merger or Change in Control......................... 27
Section 4.5 Searches............................................... 27
Section 4.6 Consents and Approvals................................. 27
Section 4.7 Proceedings, Instruments, etc.......................... 27
Section 4.8 Loan Acquisition Agreement; Use of Proceeds............ 27
Section 4.9 Other Documents........................................ 28
Section 4.10 Continuance of a Funding Termination Event or an Event
of Default.......................................... 28
SECTION 5. COVENANTS OF AUTOBOND AND THE BORROWER
WITH RESPECT TO THE SPECIFIED AUTO LOANS
Section 5.1 Additional Covenants.................................. 28
SECTION 6. [Reserved]
SECTION 7. CERTAIN SPECIAL RIGHTS.
Section 7.1 Home Office Payment.................................... 29
Section 7.2 Certain Taxes.......................................... 29
Section 7.3 Substitution of Initial Lender......................... 29
SECTION 8. ADVANCE MATURITY; ADVANCE
PREPAYMENTS.
Section 8.1 Advance Maturity....................................... 30
Section 8.2 Mandatory Prepayments.................................. 30
Section 8.3 Voluntary Prepayments.................................. 31
Section 8.4 Prepayment Notice...................................... 31
SECTION 9. ASSIGNMENTS AND PARTICIPATIONS
Section 9.1 Assignments............................................ 31
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Section 9.2 Participations......................................... 32
SECTION 10. CERTAIN COVENANTS OF THE BORROWER
Section 10.1 Maintenance of Office................................. 33
Section 10.2 Existence............................................. 33
Section 10.3 General Maintenance of Business, Etc.................. 33
Section 10.4 Inspection............................................ 33
Section 10.5 Compliance with Law, etc.............................. 34
Section 10.6 Payment of Taxes and Claims........................... 34
Section 10.7 Limitations on Indebtedness........................... 34
Section 10.8 Restricted Investments................................ 34
Section 10.9 Nature of Business.................................... 34
Section 10.10 Independence......................................... 35
Section 10.11 Other Agreements and Parties......................... 36
Section 10.12 Investment Company Act............................... 36
Section 10.13 Purchases of Auto Loans.............................. 36
Section 10.14 Liens................................................ 37
SECTION 11. CERTAIN COVENANTS OF AUTOBOND
Section 11.1 Existence............................................. 37
Section 11.2 Compliance with Law, etc.............................. 37
Section 11.3 Payment of Taxes and Claims........................... 38
Section 11.4 Inspection............................................ 38
Section 11.5 Consolidation and Merger.............................. 38
Section 11.6 Further Assurances.................................... 38
Section 11.7 Independence.......................................... 38
Section 11.8 Other Agreements and Parties.......................... 40
Section 11.9 Servicing Arrangements................................ 40
Section 11.10 Preservation of Quality of Auto Loans................ 40
SECTION 12. INFORMATION TO BE FURNISHED TO LENDER.
Section 12.1 Information to be Furnished by the Borrower........... 41
Section 12.2 Information to be Furnished by AutoBond............... 41
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SECTION 13. DEFAULTS, REMEDIES AND TERMINATION
Section 13.1 Events of Default; Acceleration of Advances........... 42
Section 13.2 Default Remedies...................................... 45
Section 13.3 Notice of Default..................................... 46
Section 13.4 Annulment of Acceleration of Advances................. 46
SECTION 14. INTERPRETATION OF AGREEMENT AND NOTES
Section 14.1 Definitions........................................... 47
Section 14.2 Accounting Terms...................................... 61
Section 14.3 Governing Law......................................... 61
Section 14.4 Headings.............................................. 61
Section 14.5 Independence of Covenants, etc........................ 61
SECTION 15. INDEMNIFICATION AND FUNDING LOSSES
Section 15.1 Indemnification....................................... 62
Section 15.2 Indemnification with respect to the Specified Auto
Loans............................................... 64
Section 15.3 Funding Losses........................................ 66
SECTION 16. MISCELLANEOUS
Section 16.1 Notices............................................... 66
Section 16.2 Survival.............................................. 67
Section 16.3 Successors and Assigns................................ 67
Section 16.4 Amendment and Waiver.................................. 67
Section 16.5 Counterparts.......................................... 68
Section 16.6 Reproduction of Documents............................. 68
Section 16.7 Consent to Jurisdiction and Venue..................... 68
Section 16.8 No Petition........................................... 69
Section 16.9 Acts of Lender........................................ 69
Section 16.10 Confidentiality...................................... 70
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EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Borrowing Notice
EXHIBIT C Form of Security Agreement
EXHIBIT D Form of Repurchase Assignment
EXHIBIT E Form of Xxxxx Xxxxxxxxxx Opinion
EXHIBIT F Form of Texas Counsel Opinion
EXHIBIT G Form of Nevada Counsel Opinion
EXHIBIT H Form of Collection Agent Statement
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CREDIT AGREEMENT dated as of February 1, 1997 among AutoBond Funding
Corporation II, a Nevada corporation (the "Borrower"), AutoBond Acceptance
Corporation, a Texas corporation ("AutoBond") and Daiwa Finance Corporation (the
"Initial Lender").
The Borrower has requested that the Initial Lender make advances to
it in an aggregate amount not exceeding up to $50,000,000 at any time
outstanding and the Initial Lender is prepared to make such advances upon the
terms and subject to the conditions hereof. Accordingly, the parties hereto
agree as follows:
SECTION 1. COMMITMENT.
SECTION 1.1 ADVANCES. The Initial Lender agrees, on the terms of
this Agreement and subject to the conditions hereof, to make Advances to the
Borrower during the period from and including the date hereof to but not
including March 31, 1998 in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of the Commitment as then in
effect. Subject to the terms of this Agreement, during such period the Borrower
may borrow, repay and re-borrow the amount of the Commitment. Each Advance shall
(a) mature on the related Maturity Date and (b) bear interest from the date
thereof until such Advance shall be paid in accordance with the terms hereof
(whether at maturity, mandatory prepayment, by acceleration or otherwise) at the
per annum rate with respect to each Interest Period at the Interest Rate,
payable on each Interest Payment Date in accordance with the provisions of
Section 6.04 of the Security Agreement. Interest shall be computed on the basis
of the actual number of days in such Interest Period and a three hundred and
sixty day year and on each Interest Payment Date shall equal all unpaid interest
accrued in respect of each prior Interest Period. Each Advance shall bear
interest during any Interest Period during such time as an Event of Default has
occurred and is continuing and to the extent permitted by applicable law on any
overdue installment of interest, at the per annum rate with respect to each
Interest Period equal to the lesser of (x) the Interest Rate plus 2.00% and (y)
11%. If the Borrower shall have paid or agreed to pay any interest on any
Advance in excess of that permitted by law, then it is the express intent of the
parties hereto with respect thereto that (i) to the extent possible given the
term of such Advance, all excess amounts previously paid or to be paid by the
Borrower be applied to reduce the principal amount of such Advance and the
provisions thereof immediately be deemed reformed and the amounts thereafter
collectable thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the then applicable law, but so as to permit
the recovery of the fullest amount otherwise called for thereunder and (ii) to
the extent that the reduction of the principal amount of, and the amounts
collectible under, such Advance and the reformation of the provisions
thereof described in the immediately preceding clause (i) are not possible given
the term of such Advance, such excess amount shall be deemed to have been paid
with respect to such Advance as a result of an error and upon the Lender
obtaining actual knowledge of such error, such amount shall be refunded to the
Borrower. Each Advance shall be subject to mandatory prepayment as set forth in
Section 8.2 hereof. Except as provided in Section 1.7 hereof, all sums payable
by the Borrower under this Credit Agreement and the Advances shall be paid
without counterclaim, set-off, deduction or defense and without abatement,
suspension, deferment, diminution or reduction.
SECTION 1.2 BORROWINGS; CLOSINGS. (a) This Agreement and the other
Program Documents shall be executed and the initial Advance is to be made at a
closing to be held on a date determined to be mutually acceptable to the
Borrower and the Initial Lender, 10:00 A.M., New York City time (the "Initial
Closing Date"), at the offices of Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000. Additional Advances will be made no more frequently
than once each calendar week on the first Business Day of each calendar week
(each, a "Subsequent Closing Date", the Subsequent Closing Dates, together with
the Initial Closing Date, the "Closing Dates," and, either the Initial Closing
Date or a Subsequent Closing Date, a "Closing Date") to the extent the Lender
has received prior notice thereof in accordance with the provisions of Section
1.3 hereof.
(b) The Advances shall be evidenced by a single promissory note (the
"Note") of the Borrower in substantially the form of Exhibit A hereto, dated the
date of the delivery of such Note to the Initial Lender under this Agreement,
payable to the Initial Lender in a principal amount equal to the amount of the
Commitment as in effect from time to time and otherwise duly completed. The date
and amount of each Advance made by the Initial Lender to the Borrower and each
payment made on account of the principal thereof, shall be recorded by the
Initial Lender on its books and, prior to any transfer of the Note, endorsed by
the Initial Lender on the schedule attached to the Note or any continuation
thereof.
(c) The Initial Lender shall be entitled to have the Note
subdivided, by exchange for Notes of lesser denominations or otherwise in
connection with an assignment of all or any portion of the Advances and the Note
pursuant to the terms of this Agreement; provided that in no event may the Note
be subdivided into denominations of less than $500,000.
(d) Each Advance shall be made by wire transfer of immediately
available funds to the Loan Purchase Account.
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SECTION 1.3 NOTICES OF ADVANCES. The Borrower will give notice
substantially in the form of Exhibit B hereto of each Advance (a "Borrowing
Notice") to the Initial Lender and the Collateral Agent, which notice shall be
irrevocable and effective only upon receipt by the Initial Lender and the
Collateral Agent, and which shall specify the date (at least two Business Days
prior to the proposed date of such Advance) upon which such borrowing is to
occur and the amount of such Advance, which amount, unless otherwise agreed to
by the Initial Lender, (a) in the case of the initial Advance, shall not be less
than $1,000,000 and (b) in the case of all other Advances, shall not be greater
than $5,000,000 nor less than the lesser of (i) the Available Facility Amount
and (ii) $1,000,000. Such notice shall be given not later than 12:00 (noon) New
York time on the day which is two (2) Business Days prior to the related Closing
Date. Any notice received by the Initial Lender after 12:00 (noon) New York time
on any Business Day shall be deemed to have been received on the next succeeding
Business Day. On the date specified in such notice, the Initial Lender will,
subject to the conditions set forth and in accordance with the terms of this
Agreement, make an Advance in the aggregate principal amount set forth in such
notice. Notwithstanding the foregoing, if any of the Auto Loans subject to such
Advance were acquired from an Originator other than AutoBond, then AutoBond
shall afford the Initial Lender reasonable opportunity to review such Auto Loans
and related Loan Files in advance of the related Borrowing Notice.
SECTION 1.4 USE OF PROCEEDS. The proceeds of each Advance (net of
expenses and costs) will be used as contemplated by Section 4.8.
SECTION 1.5 SECURITY AGREEMENT. The Advances are to be secured
pursuant to a Security Agreement, dated as of the date hereof (the"Security
Agreement"), among the Borrower, AutoBond and Norwest Bank (Minnesota), N.A., as
Collateral Agent (together with any successors thereto, the "Collateral Agent"),
substantially in the form of Exhibit C (as from time to time amended,
supplemented or modified).
SECTION 1.6 INCREASED COSTS. (a) In the event that any change after
the date upon which the Lender makes an Advance or acquires an interest in an
Advance in any Requirement of Law (including any change to the certificate of
incorporation, articles of association, by-laws or other organizational or
governing documents of the Lender, but only to the extent that such change is
the result of the compliance by the Lender with any request or directive
reflecting a change in Requirement of Law from any central bank or other
Governmental Authority in the United States of America), or in the
interpretation or application thereof or compliance by the Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority in the United
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States of America made after the date upon which the Lender makes its Advances
or acquires an interest in an Advance:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Agreement or the Note, or change the basis of taxation of
payments in respect thereof (except for taxes referred to in Section
1.7(a) and Section 15.1(a)(iii) and changes in the rate of tax on the
overall net income of the Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by the
Lender; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to reduce the amount receivable
hereunder in respect of the Advance below that which such Lender would have
received but for such change or compliance, then after submission by the Lender
to the Borrower and the Collateral Agent of a written request therefor, the
Collateral Agent shall, subject to Section 1.6(c), on behalf of the Borrower,
pay to the Lender any additional amounts necessary to compensate the Lender for
such reduced amount receivable.
(b) In the event that the Lender shall have determined that any
change after the date upon which the Lender makes an Advance or acquires an
interest in an Advance in any Requirement of Law (including any change to the
certificate of incorporation, articles of association, by-laws or other
organizational or governing documents of the Lender, but only to the extent that
such change is the result of the compliance by the Lender with any request or
directive reflecting a change in Requirement of Law from any central bank or
other Governmental Authority in the United States of America) regarding capital
adequacy or in the interpretation or application thereof or compliance by the
Lender or any corporation controlling the Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority in the United States of America made subsequent to the
date upon which such Lender makes its Advances or acquires its interest in an
Advance does or shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of the transactions
contemplated hereby to a level below that which the Lender or such corporation
would have achieved but for such change or compliance (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy) by
an amount reasonably deemed thereby to be material, then, from time to time,
after submission by the Lender to the Borrower and the Collateral Agent
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of a written request therefor, the Collateral Agent shall, subject to Section
1.6(c), on behalf of the Borrower, pay to the Lender such additional amount or
amounts as will compensate the Lender for such reduction; provided that to the
extent that six months or more pass between the date upon which the Lender
obtains actual knowledge of the liability resulting in such reduction and the
date upon which the Lender provides notice of such reduction to the Borrower
hereunder, the Borrower shall not be liable for amounts relating to the period
six months or more prior to the date of such notice.
(c) The Lender agrees that it shall use its best efforts to take any
actions that will avoid the need for, or reduce the amount of, any increased
amounts referred to in Section 1.6(a) or (b); provided, that no Lender shall be
obligated to take any actions that would, in the sole opinion of the Lender, be
disadvantageous to the Lender in any material respect.
(d) If the Lender claims the increased amounts described in Section
1.6(a) or (b) ("Increased Cost"), the Lender will furnish to the Borrower and
the Collateral Agent a certificate setting forth the basis and amount of each
request by the Lender for any such Increased Cost. If the Borrower, within 30
days after receiving a notice of the basis and amount of such Increased Cost,
disputes the basis or amount set forth in such notice, the Lender and the
Borrower shall consult in good faith to resolve such dispute. If such
consultation does not resolve such dispute within 45 days (or such longer period
as the Lender and the Borrower may then agree) after the Lender shall have
provided the Borrower with such notice, the Borrower may request that the Lender
furnish to an independent accounting firm selected by the Borrower and
reasonably acceptable to the Lender (the "Independent Accountant") all
information reasonably necessary to permit the confirmation of the accuracy of
the Lender's computation of the Increased Cost described in such notice. Within
30 days of the receipt of such information, the Independent Accountant either
shall confirm the accuracy of such computation or shall notify the Lender and
the Borrower that such computation proposed by the Lender is inaccurate. In the
latter event, the Lender shall consult with the Borrower and the Independent
Accountant as to the proper computation of the Increased Costs, whereupon the
Lender shall recompute the Increased Costs in such a manner as shall enable the
Independent Accountant to confirm their accuracy. The Borrower and the Lender
agree that the sole responsibility of the Independent Accountant shall be to
verify the calculation of the Increased Costs and that matters of interpretation
of the Program Documents are not within the scope of its responsibilities. All
expenses incurred by the Lender and the Borrower in connection with the
verification procedures described in this Section 1.6 (including the fees and
expenses of the Independent Accountant) shall be paid by the Borrower. Any
information provided to the Independent Accountant by the Lender shall be and
remain the exclusive property of the Lender and shall be deemed by the parties
to be (and the Independent Accountant shall confirm in writing that it will
treat
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such information as) the private, proprietary and confidential property of the
Lender, and no Person other than the Lender and the Independent Accountant shall
be entitled thereto or to any review thereof, and all such information shall be
returned to the Lender contemporaneously with the completion of the verification
procedure. Notwithstanding the foregoing, the Lender shall not be obligated to
disclose to any Person (other than the Independent Accountant, subject to
agreement by the Independent Accountant to keep all information therein
confidential), or permit any Person (other than the Independent Accountant,
subject to agreement by the Independent Accountant to keep all information
contained therein confidential) to examine, any federal, state or local income
tax returns of the Lender or any of its Affiliates.
(e) Failure on the part of the Lender to demand compensation for any
Increased Cost or amount pursuant to Section 1.6(a) with respect to any period
shall not constitute a waiver of the Lender's right to demand compensation with
respect to such period; provided that to the extent that six months or more pass
between the date upon which the Lender obtains actual knowledge of the liability
resulting in such reduction and the date upon which the Lender provides notice
of such reduction to the Borrower hereunder, the Borrower shall not be liable
for amounts relating to the period six months or more prior to the date of such
notice.
(f) The Borrower shall have the right, and the Lender shall
cooperate fully, to replace any Lender which makes a claim pursuant to this
Section 1.6 with a new lender that will succeed to the rights of such Lender
under this Agreement; provided, that such Lender shall not be replaced hereunder
with a new lender until such Lender has been paid in full all amounts owed to it
pursuant to this Agreement; provided, further, that the Borrower shall provide
such Lender with an Officer's Certificate stating that such new lender is not
subject to, or has agreed not to seek, such increased costs.
SECTION 1.7 TAXES. (a) All payments made by the Collateral Agent on
behalf of the Borrower, under this Agreement shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority in the United States of America, excluding, in the case
of the Lender, net income taxes and franchise taxes imposed on the Lender as a
result of a present or former connection between the jurisdiction of the
government or taxing authority imposing such tax and the Lender (excluding a
connection arising solely from the Lender having executed, delivered, performed
its obligations or received a payment under, or enforced, this Agreement) or any
political subdivision or taxing authority thereof or therein, and also excluding
United States of America withholding taxes to the extent
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that a Lender incorporated in or under the laws of a jurisdiction other than the
United States, any state thereof or the District of Columbia fails to provide to
the Collateral Agent at such times as are required by law a duly completed and
executed Internal Revenue Service form 1001 or 4224, as applicable (all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"), provided that the Lender is not
subject to backup withholding or provides the Collateral Agent with a duly
completed and executed Internal Revenue Service form W-8 or W-9, as appropriate.
If any Taxes are required to be withheld from any amounts payable to the Lender
hereunder, after submission by the Lender to the Borrower and the Collateral
Agent of a written request therefor, the amounts so payable to the Lender shall
be increased by the Collateral Agent, subject to Section 1.7(c), on behalf of
the Borrower, to the extent necessary to yield to the Lender (after payment of
all Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement, except that no increase shall be
made if the Lender is subject to backup withholding and fails to provide the
Collateral Agent with a duly completed and executed Internal Revenue Service
form W-8 or W-9, as appropriate. Any Lender shall utilize available tax credits
to decrease amounts payable with respect to any such withholding which the
Lender in its sole judgment believes are directly related to this Agreement,
except that no increase shall be made if the Lender is subject to backup
withholding and fails to provide the Collateral Agent with a duly completed and
executed Internal Revenue Service form W-8 or W-9, as appropriate. Nothing in
the preceding sentence shall give the Borrower or any other third party rights
to inspect, audit or otherwise request information regarding Lender records,
including records relating to available tax credits. If the Borrower fails to
pay any Taxes when due to the appropriate taxing authority the Collateral Agent
shall, subject to Section 1.7(c), on behalf of the Borrower, pay the Lender for
any incremental taxes, interest or penalties that may become payable by the
Lender as a result of any such failure.
(b) If the Lender claims the amounts for Taxes referred to in
Section 1.7(a), the Lender will furnish to the Borrower and the Collateral Agent
an officer's certificate setting forth the basis and amount of each request by
the Lender for such Taxes. If the Borrower, within 30 days after receiving a
notice of the basis and amount of such Taxes, disputes the basis or amount set
forth in such notice, the Lender and the Borrower shall consult in good faith to
resolve such dispute. If such consultation does not resolve such dispute within
45 days (or such longer period as the Lender and the Borrower may then agree)
after the Lender shall have provided the Borrower with such notice, the Borrower
may request that the Lender furnish to an Independent Accountant all information
reasonably necessary to permit the confirmation of the accuracy of the Lender's
computation of the Taxes described in such notice. Within 30 days of the receipt
of such information, the Independent Accountant either shall confirm the
accuracy of such computation or shall notify the
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Lender and the Borrower that such computation proposed by the Lender is
inaccurate. In the latter event, the Lender shall consult with the Borrower and
the Independent Accountant as to the proper computation of the Taxes, whereupon
the Lender shall recompute the Taxes in such a manner as shall enable the
Independent Accountant to confirm their accuracy. The Borrower and the Lender
agree that the sole responsibility of the Independent Accountant shall be to
verify the calculation of the Taxes and that matters of interpretation of the
Program Documents are not within the scope of its responsibilities. All expenses
incurred by the Lender and the Borrower in connection with the verification
procedures described in this Section 1.7 (including the fees and expenses of the
Independent Accountant) shall be paid by the Borrower. Any information provided
to the Independent Accountant by the Lender shall be and remain the exclusive
property of the Lender and shall be deemed by the parties to be (and the
Independent Accountant shall confirm in writing that it will treat such
information as) the private, proprietary and confidential property of the
Lender, and no Person other than the Lender and the Independent Accountant shall
be entitled thereto or to any review thereof, and all such information shall be
returned to the Lender contemporaneously with the completion of the verification
procedure. Notwithstanding the foregoing, the Lender shall not be obligated to
disclose to any Person (other than the Independent Accountant, subject to the
agreement by the Independent Accountant to keep all information therein
confidential), or permit any Person (other than the Independent Accountant,
subject to the agreement by the Independent Accountant to keep all information
contained therein confidential) to examine, any federal, state or local income
tax returns of the Lender or any of its Affiliates.
(c) The Lender agrees that it shall use its best efforts to take any
actions that will avoid the need for, or reduce the amount of, any increased
amounts referred to in Section 1.7(a); provided, that no Lender shall be
obligated to take any actions that would, in the sole reasonable opinion of the
Lender, be disadvantageous to the Lender in any material respect.
(d) The Lender, by its making of an Advance or acceptance of any
interest in any Advance, agrees to treat the interests evidenced by the Advances
as indebtedness for all tax purposes, and further agrees that any Person
acquiring an interest in any Advance from or through it may do so only subject
to the obligation to comply with this Agreement as to the treatment of such
Advance as indebtedness for all tax purposes.
(e) The Borrower shall have the right, and the Lender shall
cooperate fully, to replace any Lender which makes a claim pursuant to this
Section 1.7 with a new lender that will succeed to the rights of such Lender
under this Agreement; provided, that such Lender shall not be replaced hereunder
with a new
8
lender until such Lender has been paid in full all amounts owed to it pursuant
to this Agreement; provided, further, that the Borrower shall provide such
Lender with an Officer's Certificate stating that such new lender is not subject
to, or has agreed not to seek, such amounts for Taxes.
SECTION 1.8 DEFINITIONS. Capitalized terms used in this Agreement
are defined in Section 14.1 hereof. References to a "Section ", "Schedule" or
"Exhibit" are, unless otherwise specified, to the appropriate Section, Schedule
or Exhibit of this Agreement.
SECTION 1.9 TERM. The Commitment will terminate on March 31, 1998
unless terminated prior to such date in accordance with the terms hereof.
SECTION 1.10 PAYMENT INSTRUCTIONS. Each of the Lender and AutoBond
shall provide written payment instructions (including the account number of the
bank account to which payments are to be directed and the name, address and ABA
number of the bank in which such account is maintained, if payments are to be
made to such party by the wire transfer of immediately available funds) to the
Collateral Agent. Failure to provide such notice shall not affect such party's
right to receive any funds to which it is otherwise entitled in accordance with
the Program Documents, but failure to deliver such notice may result in a delay
in the receipt of such funds.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender, as of the date
hereof, and as of each Closing Date, as follows:
SECTION 2.1 GENERAL REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
(A) ORGANIZATION AND AUTHORITY. THE BORROWER:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted by the Program Documents to enter into the
Program Documents to which it is a party, to issue and deliver the Note
and to perform its obligations under the Program Documents to which it is
a party and the Note;
9
(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or
the nature of its activities makes such filings, franchises, licenses,
permits or registrations necessary.
(B) PLACE OF BUSINESS. The address of the principal place of
business and chief executive office of the Borrower is 000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000 and there have been no other such locations
during the immediately preceding four months, except as may have been previously
disclosed in writing to the Initial Lender.
(C) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Borrower is not in
violation of any term of its certificate of incorporation or by-laws. Neither
the execution, delivery or performance by the Borrower of the Program Documents
to which it is a party or the Note nor the borrowings hereunder does or will (i)
conflict with or violate the certificate of incorporation or by-laws of the
Borrower, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any Lien on any of the Properties of the Borrower pursuant to the
terms of any instrument or agreement to which the Borrower is a party or by
which it is bound, or (iii) require any consent of or other action by any
trustee or any creditor of, any lessor to or any investor in the Borrower.
(D) NO MATERIALLY ADVERSE CONTRACTS, ETC. The Borrower is not a
party to or bound by (nor are any of its Properties affected by) any contract or
agreement, or subject to any order, writ, injunction or decree or other action
of any court or any governmental department, commission, bureau, board or other
administrative agency or official, or any charter or other corporate or
contractual restriction, which materially and adversely affects, or in the
future will materially and adversely affect, the business, earnings, prospects,
properties or condition (financial or other) of the Borrower.
(E) COMPLIANCE WITH LAW. The Borrower is in compliance with all
statutes, laws and ordinances and all governmental rules and regulations to
which it or any of its Properties are subject. The policies and procedures set
forth in the AutoBond Program Manual are in compliance with all applicable
statutes, laws and ordinances and all governmental rules and regulations.
Neither the execution, delivery or performance of the Program Documents to which
it is a party or the Note nor the borrowings hereunder does or will cause the
Borrower to be in violation of any law or ordinance, or any order, rule or
regulation, of any federal, state, municipal or other governmental or public
authority or agency.
10
(F) PENDING LITIGATION, ETC. There is no action at law, suit in
equity or other proceeding or investigation (whether or not purportedly on
behalf of the Borrower) in any court, tribunal or by or before any other
governmental or public authority or agency or any arbitrator or arbitration
panel, pending or, to the best knowledge of the Borrower, threatened against or
affecting the Borrower or any of its respective Properties (i) an adverse
determination of which could materially and adversely affect the business,
earnings, prospects, Properties or condition (financial or other) of the
Borrower, each taken as a whole or (ii) that could question the validity of any
Program Document to which it is a party or the Note or the priority or
perfection of any Liens created under the Security Agreement. The Borrower is
not in default with respect to any order, writ, injunction, judgment or decree
of any court or other governmental or public authority or agency or arbitrator
or arbitration panel.
(G) TAXES. The Borrower and each entity which might have tax
liabilities for which the Borrower is or may be liable, has filed all tax
returns and paid all taxes required by law to be filed or paid, which are due
pursuant to said returns (or which to the knowledge of the Borrower are due and
payable) and on all assessments received by the Borrower or such entity, as the
case may be, other than taxes being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
established in accordance with generally accepted accounting principles. No
extensions of the time for the assessment of deficiencies have been granted by
the Borrower. There are no material Liens on any Properties of the Borrower
imposed or arising as a result of the delinquent payment or the nonpayment of
any tax, assessment, fee or other governmental charge. There are no applicable
taxes, fees or other governmental charges due and payable by the Borrower in
connection with the execution and delivery by the Borrower of the Program
Documents to which it is a party or the Note or the borrowings hereunder.
(H) INVESTMENT COMPANY ACT. The Borrower is not an "investment
company", or an "affiliated person" of an "investment company", or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and the Borrower is not an
"investment adviser" or an "affiliated person" of an "investment adviser" as
such terms are defined in the Investment Advisers Act of 1940, as amended.
(I) MARGIN RULES. Without limiting the foregoing, the application in
accordance with the Program Documents of any part of the proceeds from the
Advances by the Borrower pursuant to this Agreement will not violate or result
in a violation of Section 7 of the Securities Exchange Act or any regulations
issued pursuant thereto, including, without limitation, Regulation G (12 C.F.R.,
Part 207), as amended, Regulation T (12 C.F.R., Part 220), as amended, and
Regulation X (12 C.F.R., Part 224), as amended, of the Board of Governors of the
Federal Reserve
11
System. The assets of the Borrower do not include any "margin stock" within the
meaning of such Regulation G, and the Borrower does not have any intention of
acquiring any such margin stock.
(J) PROCEEDINGS. The Borrower has taken all action necessary to
authorize the execution and delivery of the Program Documents to which it is a
party and the Note and the borrowings hereunder and the performance of all
obligations to be performed by it hereunder and thereunder.
(K) NO EVENT OF DEFAULT OR DEFAULT. No event has occurred, and no
condition exists, that constitutes a Default or an Event of Default.
(L) NO CONSENTS. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is or
will be required for (i) the valid execution, delivery and performance by the
Borrower of the Program Documents to which it is a party or the Note, (ii) the
perfection or maintenance of the Liens intended to be created by the Security
Agreement (including the first priority status thereof) or (iii) the borrowings
hereunder, other than such UCC filings as have been provided to the Initial
Lender. The Borrower has obtained all consents, approvals or authorizations of,
made all declarations or filings with, or given all notices to, all federal,
state or local governmental or public authorities or agencies which are
necessary for the continued conduct by the Borrower of its business as now
conducted and as proposed to be conducted as contemplated by the Program
Documents.
(M) VALIDITY OF PROGRAM DOCUMENTS AND NOTE. The Program Documents to
which it is a party have each been duly executed and delivered by the Borrower
and constitute legal, valid and binding obligations of the Borrower, enforceable
in accordance with their respective terms. Upon receipt by the Borrower of the
proceeds of the initial Advance as provided in this Agreement, the Note will
have been duly issued and will constitute the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms.
(N) REPRESENTATIONS AND WARRANTIES IN PROGRAM DOCUMENTS. The
representations and warranties of the Borrower contained in each of the Program
Documents to which it is a party and in any document, certificate or instrument
delivered pursuant to any such Program Document are true and correct and the
Lender may rely on such representations and warranties, if not made directly to
the Lender, as if such representations and warranties were made directly to the
Lender.
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(O) SOLVENCY. The Borrower is Solvent and, immediately after giving
effect to the issue of the Note and the consummation of the other transactions
contemplated by this Agreement, the Borrower will be Solvent.
(P) FULL DISCLOSURE. The Program Documents to which it is a party
and any certificate, report, statement or other writing furnished to the Lender
by or on behalf of the Borrower in connection with the negotiation of any such
Program Document are accurate and complete with respect to the information
purported to be set forth therein. There is no fact known to the Borrower that
has not been disclosed to the Lender in writing that (i) materially and
adversely affects, or in the future may materially and adversely affect, the
business, earnings, prospects, properties or condition (financial or other) of
the Borrower, or (ii) materially and adversely affects, or in the future could
materially and adversely affect, the ability of the Borrower to perform its
obligations under the Program Documents or the Note.
(Q) NON-CONSOLIDATION. The Borrower has been operated in such a
manner that it would not be substantively consolidated in the bankruptcy trust
estate of any Affiliate, such that the separate existence of the Borrower and
any Affiliate would be disregarded.
(R) REPRESENTATIONS AND WARRANTIES UPDATED. The representations and
warranties set forth above shall be deemed repeated on, and as of, each Closing
Date.
SECTION 2.2 GENERAL REPRESENTATIONS AND WARRANTIES OF AUTOBOND.
AutoBond represents and warrants to the Lender, as of the date
hereof, and as of each Closing Date, as follows:
(a) Organization and Authority. AutoBond:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted as contemplated by the Program Documents to which
it is a party, to enter into the Program Documents to which it is a party
and to perform its obligations under the Program Documents to which it is
a party.
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(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or
the nature of its activities makes such filings, franchises, licenses,
permits or registrations necessary.
(b) Place of Business. The address of the principal place of
business and chief executive office of AutoBond is 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxx 00000 and there have been no other such locations during the immediately
preceding four months except as may have been previously disclosed in writing to
the Initial Lender.
(c) Compliance with Other Instruments, etc. AutoBond is not in
violation of any term of its articles of incorporation or by-laws. The
execution, delivery and performance by AutoBond of the Program Documents to
which it is a party do not and will not (i) conflict with or violate the
articles of incorporation or by-laws of AutoBond, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation of any Lien on any of the Properties or
assets of AutoBond pursuant to the terms of any instrument or agreement to which
AutoBond is a party or by which it is bound, or (c) require any consent of or
other action by any trustee or any creditor of, any lessor to or any investor in
AutoBond.
(d) No Materially Adverse Contracts, etc. AutoBond is not a party to
or bound by (nor are any of its Properties affected by) any contract or
agreement, or subject to any order, writ, injunction or decree or other action
of any court or any governmental department, commission, bureau, board or other
administrative agency or official, or any charter or other corporate or
contractual restriction, which materially and adversely affects, or in the
future will materially and adversely affect, the business, earnings, prospects,
Properties or condition (financial or other) of AutoBond.
(e) Compliance with Law. AutoBond is in compliance with all
statutes, laws and ordinances and all governmental rules and regulations to
which it is subject, the violation of which, either individually or in the
aggregate, could materially adversely affect the business, earnings, Properties
or condition (financial or other) of AutoBond, each taken as a whole. The
policies and procedures set forth in the AutoBond Program Manual are in
compliance with all applicable statutes, laws and ordinances and all
governmental rules and regulations. The execution, delivery and performance of
the Program Documents to which it is a party do not and will not cause AutoBond
to be in violation of any law or ordinance, or any order, rule or
14
regulation, of any federal, state, municipal or other governmental or public
authority or agency.
(f) Pending Litigation, etc. There is no action at law, suit in
equity or other proceeding or investigation (whether or not purportedly on
behalf of AutoBond) in any court, tribunal or by or before any other
governmental or public authority or agency or any arbitrator or arbitration
panel, pending or, to the best knowledge of AutoBond, threatened against or
affecting AutoBond or any of its respective Properties (i) an adverse
determination of which could materially and adversely affect the business,
earnings, prospects, Properties or condition (financial or other) of AutoBond,
each taken as a whole or (ii) that could question the validity of the Program
Documents. AutoBond is not in default with respect to any order, writ,
injunction, judgment or decree of any court or other governmental or public
authority or agency or arbitrator or arbitration panel.
(g) Taxes. AutoBond and each entity which might have tax liabilities
for which AutoBond is or may be liable, has filed all tax returns and paid all
taxes required by law to be filed or paid, which are due pursuant to said
returns (or which to the knowledge of AutoBond are due and payable) and on all
assessments received by AutoBond or such entity, as the case may be, other than
taxes being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been established in accordance
with generally accepted accounting principles. No extensions of the time for the
assessment of deficiencies have been granted by AutoBond. There are no material
Liens on any Properties of AutoBond imposed or arising as a result of the
delinquent payment or the nonpayment of any tax, assessment, fee or other
governmental charge. There are no applicable taxes, fees or other governmental
charges due and payable by AutoBond in connection with the execution and
delivery of the Program Documents to which it is a party.
(h) Investment Company Act. AutoBond is not an "investment company",
or an "affiliated person" of an "investment company", or a company "controlled"
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, and AutoBond is not an "investment adviser" or an
"affiliated person" of an "investment adviser" as such terms are defined in the
Investment Advisers Act of 1940, as amended.
(i) Proceedings. AutoBond has taken all action necessary to
authorize the execution and delivery by it of the Program Documents to which it
is a party and the performance of all obligations to be performed by it under
the Program Documents.
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(j) No Event of Default. No event has occurred and is continuing,
and no condition exists, that constitutes a Default or an Event of Default.
(k) No Consents. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is,
was or will be required for the valid execution, delivery and performance by
AutoBond of the Program Documents to which it is a party. AutoBond has obtained
all consents, approvals or authorizations of, made all declarations or filings
with, or given all notices to, all federal, state or local governmental or
public authorities or agencies which are necessary for the continued conduct by
AutoBond of its respective businesses as now conducted, other than such
consents, approvals, authorizations, declarations, filings and notices which,
neither individually nor in the aggregate, materially and adversely affect, or
in the future will materially and adversely affect, the business, earnings,
prospects, properties or condition (financial or other) of AutoBond.
(l) Validity of Agreement. The Program Agreements to which it is a
party have been duly executed and delivered by AutoBond and constitute the
legal, valid and binding obligation of AutoBond, enforceable in accordance with
their terms.
(m) Representations and Warranties in Program Documents. (i) The
representations of AutoBond contained in any document, certificate or instrument
delivered pursuant to the Program Documents are true and correct in all material
respects and the Lender may rely on such representations and warranties, if not
made directly to the Lender, as if such representations and warranties were made
directly to the Lender.
(ii) Each acquisition of a Specified Auto Loan by the Borrower has
been or will be made in compliance with all requirements specified in the
Program Documents; and AutoBond has performed all of its obligations with
respect to such Specified Auto Loan, including, without limitation, the payment
to the related Dealer of all amounts then owing to such Dealer by AutoBond in
respect of such Specified Auto Loan.
(n) Solvency. AutoBond is Solvent.
(o) Full Disclosure. The Program Documents to which it is a party
and any certificate, report, statement or other writing furnished to the Lender
by or on behalf of AutoBond in connection with the negotiation of any such
Program Document and the issuance of the Note are accurate and complete with
respect to the information purported to be set forth therein. The reports of
AutoBond filed with the
16
Securities and Exchange Commission did not, as of their respective dates,
contain any misstatements of any material facts or fail to state any material
facts necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and since the balance sheet date
contained in AutoBond's most recently publicly filed financial statements, there
has been no material adverse change in the financial condition or results of
operations of AutoBond or event that materially and adversely affects the
ability of AutoBond to perform its obligations under the Program Documents.
(p) Representations and Warranties Updated. The representations and
warranties set forth above shall be deemed repeated on, and made as of, each
Closing Date.
SECTION 2.3 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
SPECIFIED AUTO LOANS. (a) With respect to each Auto Loan, each of AutoBond and
the Borrower represents and warrants to the Lender, as of the Closing Date on
which such Auto Loan becomes a Specified Auto Loan, that:
(i) such Auto Loan complies in full with, and has been
acquired by AutoBond in accordance with, AutoBond's customary
underwriting guidelines and procedures;
(ii) AutoBond has conducted each of the procedures set
forth in the AutoBond Program Manual to evaluate the Obligor's
application in accordance with the criteria set forth in the
AutoBond Program Manual;
(iii) on and after such Closing Date, there shall exist
under each such Auto Loan a valid, subsisting and enforceable
security interest in the Financed Vehicle securing each such Auto
Loan and at such time an enforcement of such security interest is
sought and at all times there shall exist a valid, subsisting and
enforceable first priority perfected security interest in such
Financed Vehicle in favor of AutoBond;
(iv) such Auto Loan has not been satisfied, subordinated
or rescinded; and no provision of such Auto Loan has been waived,
altered or modified in any respect, except as identified in the Loan
File and made in accordance with the AutoBond Program Manual and the
Credit and Collection Policies;
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(v) such Auto Loan is not and will not be subject to any
right of rescission, set-off, recoupment, counterclaim or defense,
whether arising out of transactions concerning such Auto Loan
between the Obligor and the Dealer, the Dealer and AutoBond, the
Dealer and an Originator, or otherwise and no such right has been
asserted with respect thereto; the operation of the terms of such
Auto Loan or the exercise of any right thereunder will not render
any such Auto Loan unenforceable in whole or in part;
(vi) upon assigning such Auto Loan to the Borrower,
AutoBond had full right to transfer such Auto Loan to the Borrower,
and AutoBond conveyed sole ownership of and good and marketable
title to such Auto Loan to the Borrower; upon assigning such Auto
Loan to the Collateral Agent, the Borrower had full right to assign
such Auto Loan to the Collateral Agent;
(vii) such Auto Loan is not a Defaulted Auto Loan on the
date of its transfer and there is no default, breach, violation, or
event permitting acceleration under such Auto Loan, and no event has
occurred which, with notice and the expiration of any grace or cure
period or both, would constitute a default, breach, violation, or
event permitting acceleration under such Auto Loan;
(viii) the Loan File related to such Auto Loan contains
each of the documents required by the AutoBond Program Manual and
the contractual documents contained in such Loan File constitute the
entire agreement with respect to such Auto Loan between the Obligor
and the related Dealer and, with the exception of the related Dealer
Agreement, between the Dealer and AutoBond;
(ix) the down payment described in the Loan File
relating to such Auto Loan was paid to the related Dealer in the
manner stated therein at the time of the origination of such Auto
Loan, the proceeds thereof were fully disbursed; there is no
requirement for further advances thereunder; and all fees and
expenses in connection thereof have been paid;
(x) the Financed Vehicle securing the Obligor's
obligation to pay under such Auto Loan has been delivered to and
accepted by the Obligor;
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(xi) such Auto Loan is denominated and payable in United
States dollars;
(xii) the documents evidencing such Auto Loan contain
customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization of
the security afforded by the related collateral;
(xiii) the Dealer Agreement relating to such Auto Loan
is in effect, whereby the related Dealer warrants delivery of title
to such Financed Vehicle, indemnifies AutoBond or the related
Originator against fraud and misrepresentation by the related Dealer
and its employees and represents and warrants that such Dealer did
not accept any side notes as any part of the down-payment portion of
the related Obligor's purchase price, and AutoBond's or the
Originator's (as the case may be) rights thereunder with regard to
such Auto Loan have been validly assigned to the Borrower, and are
enforceable against the related Dealer by, the Borrower or its
assignee, along with any other rights of recourse which AutoBond or
the Originator has against the related Dealer;
(xiv) each Auto Loan was acquired by AutoBond or an
Originator from an "Eligible Dealer"; each Auto Loan was acquired by
the Borrower from AutoBond, and the acquisition by AutoBond or an
Originator of any Auto Loan from a Dealer was not an extension of
financing to such Dealer but was acquired in a transaction
constituting a "true sale" under applicable state law;
(xv) AutoBond has no knowledge of any fact which should
have led it to expect at the time of sale of such Auto Loan, that
(A) such Auto Loan was made by the Selling Dealer and sold by such
Dealer to AutoBond with any conduct constituting fraud or
misrepresentation on the part of such Dealer or (B) that such Auto
Loan would not be paid in full when due because of fraud or
misrepresentation on the part of the related Obligor;
(xvi) such Auto Loan was not originated in any
jurisdiction the laws of which prohibit the Selling Dealer from
transferring such Auto Loan to AutoBond or an Originator, or
prohibit AutoBond from transferring such Auto Loan to the Borrower,
or the Borrower from assigning such Auto Loans to the Collateral
Agent, nor is such Auto Loan subject to the laws of any such
jurisdiction;
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(xvii) the Security Agreement and each related
Collateral Assignment constitutes a valid sale, transfer, assignment
set-over and conveyance to the Collateral Agent of all right, title
and interest of the Borrower, AutoBond, any Originator and the
Selling Dealer in and to such Auto Loan now existing and hereafter
created, and upon its receipt of such Auto Loan and payment of the
related Loan Acquisition Price to AutoBond, the Borrower will have
good and marketable title to such Auto Loan free and clear of any
Adverse Claim (other than that of the Collateral Agent) and such
Auto Loan shall be freely transferable by the Borrower without the
required consent of any party (other than the Collateral Agent);
each Assignment is in a form sufficient to (i) convey such Auto Loan
to the Borrower under all applicable law in the state in which the
related Financed Vehicles is located and (ii) permit the assignee or
its agents to exercise all rights granted by the Obligor under such
Auto Loan and such other documents and all rights available under
applicable law to the obligee under such Auto Loan;
(xviii) such Auto Loan does not (A) contravene in any
material respect any state and federal laws, rules or regulations
applicable thereto in connection with the origination of such Auto
Loan, including without limitation, usury, disclosure, truth in
lending, equal credit and similar laws, the Federal Trade Commission
Act and applicable state laws governing motor vehicle installment
sale or loan contracts, (but specifically excluding laws, rules or
regulations applicable thereto in connection with post-origination
compliance, including, but not limited to, laws, rules and
regulations applicable thereto in connection with fair credit
billing, fair credit reporting and fair debt collection practices)
or (B) except as required by applicable law, impose any liability or
obligation of the Dealer, AutoBond or the Borrower on the Collateral
Agent or its assignee with respect to such Auto Loan;
(xix) there are no proceedings or investigations pending
or, to the best of the Borrower's or AutoBond's knowledge,
threatened before any Governmental Authority (A) asserting the
invalidity of such Auto Loan or the bankruptcy or insolvency of the
related Obligor, (B) seeking the payment of such Auto Loan or (C)
seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Auto Loan;
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(xx) the Borrower and AutoBond have duly fulfilled all
obligations on their part to be fulfilled under or in connection
with such Auto Loan and have done nothing to impair the rights of
the Collateral Agent in such Auto Loan or the rights of the Borrower
or the Collateral Agent in the proceeds with respect thereto; the
Borrower and AutoBond have paid in full all taxes and other charges
payable in connection with such Auto Loan and the transfer of such
Auto Loan to the Borrower, which could impair or become a lien prior
to the Borrower or Collateral Agent's interest in such Auto Loan;
there are no prior liens for work performed affecting any Financed
Vehicle which are or may become a lien prior to or equal with the
security interest granted in the related Auto Loan;
(xxi) the applicable Assignment has been duly executed
and delivered by AutoBond and the information regarding the Auto
Loans in such Sale Assignment and Schedules attached thereto is true
and correct as of the Cut-Off Date relating to such Closing Date;
(xxii) the residence of the related Obligor is located
within the borders of the United States of America;
(xxiii) there is only one original of the retail
installment sale contract or promissory note and security agreement
evidencing such Auto Loan, such original has been delivered to the
Collateral Agent pursuant to the Security Agreement and there are no
custodial agreements in effect that would adversely affect the
ability of the Collateral Agent to maintain possession thereof
pursuant to the Security Agreement;
(xxiv) the Obligor is not a Governmental Authority;
(xxv) the retail installment sale contract or promissory
note and security agreement evidencing such Auto Loan constitute
"chattel paper" within the meaning of the UCC in effect in the
States of Texas and Nevada and all filings required to be made and
all actions required to be taken or performed by any Person in any
jurisdiction to give the Borrower an ownership interest in such Auto
Loan have been made, taken or performed;
(xxvi) each such Auto Loan constitutes and shall
continue to constitute a legal, valid and binding obligation of the
Obligor thereunder and is enforceable in accordance with its terms,
21
except only as such enforcement may be limited by laws affecting
the enforcement of creditors' rights generally;
(xxvii) at the origination date of each such Auto Loan,
the related Financed Vehicle was covered by a comprehensive and
collision insurance policy (a) in an amount at least equal to the
lesser of (1) the actual cash value of the related Financed Vehicle
or (2) the unpaid balance owing on such Auto Loan and (b) insuring
against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and
collision coverage;
(xxviii) the total amount financed by such Auto Loan
does not exceed $40,000;
(xxix) such Auto Loan was not purchased from the related
Dealer at a discount greater than 19%;
(xxx) the APR for such Auto Loan is not less than 14.5%
per annum; and
(xxxi) no selection procedures believed by AutoBond to
be adverse to the interest of the Lenders shall have been utilized
in selecting such Auto Loans for inclusion as Collateral;
(xxxii) such Auto Loan shall have not less than 12
monthly payments annually scheduled at origination;
(xxxiii) such Auto Loan shall have a remaining maturity
of not more than 60 months; such Auto Loan shall have an original
maturity date not later than 72 months from its origination date;
(xxxiv) the first scheduled payment on such Auto Loan
was made, or, if the first scheduled payment on an Auto Loan has not
yet been made as of the related Closing Date preceding its transfer,
such Scheduled Payment will be made on or prior to the 60th day
after the due date for such Scheduled Payment;
(xxxv) each Auto Loan is eligible for coverage under and
is covered by a VSI Policy;
(xxxvi) no more than 10% of the aggregate Unpaid
Principal Balance of the Specified Auto Loans owned by the Borrower
at any
22
time shall represent Financed Vehicles purchased from Dealers who
are not franchised new car Dealers; provided, however, that the
Borrower shall not be deemed to have breached this representation if
it cures any violation of the immediately preceding clause within 30
days of the earlier to occur of (A) the first Determination Date on
which the requirements specified in the immediately preceding clause
was determined to have been breached and (B) the date on which the
Borrower has actual knowledge that the requirements set forth in the
second preceding clause have been breached;
(xxxvii) the weighted average purchase discount with
respect to all such Specified Auto Loans owned by the Borrower shall
not exceed 15% and the weighted average APR shall not be less than
16% per annum; provided, however, that the Borrower shall not be
deemed to have breached this representation if the Borrower cures
any violation of the immediately preceding clause within 30 days of
the earlier to occur of (A) the first Determination Date on which
the requirements specified in the immediately preceding clause was
determined to have been breached and (B) the date on which the
Borrower has actual knowledge that the requirements set forth in the
second preceding clause have been breached; and
(xxxviii) no more than 2% of the aggregate Unpaid
Principal Balance of the Specified Auto Loans owned by the Borrower at any
time shall be in respect of Financed Vehicles with a model year prior to
1989; provided, however, that the Borrower shall not be deemed to have
breached this representation if it cures any violation of the immediately
preceding clause within 30 days of the earlier to occur of (A) the first
Determination Date on which the requirements specified in the immediately
preceding clause was determined to have been breached and (B) the date on
which the Borrower has actual knowledge that the requirements set forth in
the second preceding clause have been breached;
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.3 shall survive the sale or contribution
of a Specified Auto Loan to the Borrower and any assignment of such Specified
Auto Loan by the Borrower to the Collateral Agent pursuant to the Security
Agreement and shall continue so long as any such Specified Auto Loan shall
remain outstanding until such time as such Specified Auto Loan is repurchased
pursuant to Section 2.3(c). AutoBond acknowledges that it has been advised that
the Borrower may assign all or part of its right, title and interest in and to
each Specified Auto Loan and its right to
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exercise the remedies created by this Section 2.3 to the Collateral Agent.
AutoBond agrees that, upon any such assignment, the Collateral Agent may enforce
directly, without joinder of the Borrower (but subject to any defense that
AutoBond may have under this Agreement), the purchase obligations of AutoBond
set forth in Section 2.3(c) with respect to breaches of the representations and
warranties set forth in Section 2.2 and Section 2.3(a).
(c) Upon the occurrence of a breach of any of the representations
and warranties in Section 2.2 or Section 2.3(a) which may, or does, materially
and adversely affect a Specified Auto Loan or the interests of the Borrower or
the Collateral Agent on behalf of the Secured Parties therein, the party
discovering such breach or failure to deliver shall give prompt written notice
to the other parties. In addition, with respect to any Auto Loan in respect of
which the title document was being applied for on the applicable Closing Date,
if such title document has not been delivered to the Collateral Agent within 135
days after such Closing Date, AutoBond shall give the Borrower, the Lender and
the Collateral Agent notice of such fact. If AutoBond does not correct or cure
such breach or failure within 30 days of such notice, occurrence or discovery,
then AutoBond shall immediately repurchase the affected Auto Loan at a purchase
price equal to the Repurchase Price. Any such repurchase shall be made without
recourse against, or warranty, express or implied, of the Borrower or the
Collateral Agent. The Repurchase Price shall be paid to the Collateral Agent for
deposit in the Loan Revenue Account, and upon receipt thereof, the Borrower and
the Collateral Agent shall execute and deliver an assignment substantially in
the form of Exhibit D attached hereto and made a part hereof to vest ownership
of such Specified Auto Loan in AutoBond or as directed by AutoBond. If, at the
time of the discovery of such breach or failure to deliver, a loss has occurred
with respect to the liquidation of such Specified Auto Loan, then AutoBond shall
pay to the Borrower or the Collateral Agent an amount equal to the amount, if
any, by which the Repurchase Price exceeds the net proceeds from such Specified
Auto Loan. It is understood and agreed that the obligation of AutoBond to
repurchase any Specified Auto Loan pursuant to this Section 2.3(c) or to make
the payment described in the immediately preceding sentence (the "Repurchase
Requirement") shall constitute the sole remedy for the breach of any
representation or warranty set forth in Section 2.3(a) or the failure by
AutoBond to deliver an original certificate of title in accordance with this
Section 2.3(c); provided, that the foregoing limitation shall not be construed
to limit in any manner the Borrower's rights to (a) declare the Termination Date
to have occurred to the extent that such breaches or failures to deliver also
constitute, or contribute to the determination of, an Event of Purchase
Termination under the Loan Acquisition Agreement, (b) indemnification to the
extent provided in Section 15.2, or (c) offset the amount of the Repurchase
Price from the Loan Acquisition Price in connection with any other Specified
Auto Loans. It is also understood and agreed that upon the repurchase by
AutoBond of a Specified Auto
24
Loan in accordance with this Section 2.3(c) and the payment by AutoBond of all
monies required to be paid by it under this Section 2.3(c), it is the intention
of the parties hereto and the Borrower warrants that, if the seller of such
Specified Auto Loan is the Borrower, AutoBond shall own all right, title and
interest of the Borrower in and to such Specified Auto Loan.
(d) It is understood and agreed that the Repurchase Requirement
shall survive any assignment of a Specified Auto Loan by the Borrower to the
Collateral Agent and shall continue so long as any such Specified Auto Loan
shall remain outstanding notwithstanding any termination of this Agreement.
SECTION 3. CONDITIONS OF OBLIGATION TO MAKE INITIAL
ADVANCE ON INITIAL CLOSING DATE.
The Initial Lender's obligation to make the initial Advance
hereunder on the Initial Closing Date shall be subject to the satisfaction,
prior to or concurrently with the making of such Advance, of the conditions set
forth in Section 4 hereof, as well as the following conditions:
SECTION 3.1 OTHER AGREEMENTS. The Program Documents and the Note
shall each have been duly authorized by all necessary action. The Borrower and
AutoBond shall have duly executed and delivered the Program Documents to which
they are a party and, in the case of the Borrower, the Note and such Program
Documents are in full force and effect.
SECTION 3.2 OPINION OF SPECIAL COUNSEL. The Initial Lender shall
have received from Xxxxx Xxxxxxxxxx, who are acting as special New York counsel
for the Lender in connection with the transactions contemplated by this
Agreement, an opinion, dated the Initial Closing Date, in the form attached
hereto as Exhibit E.
SECTION 3.3 OPINIONS OF LOCAL COUNSEL. The Initial Lender shall have
received from Xxxxxx & Xxxxxx and Xxxxxxxxx & Wedge, who are acting as special
Texas counsel for AutoBond and special Nevada counsel for the Borrower,
respectively, in connection with the transactions contemplated by this
Agreement, opinions, dated the Initial Closing Date, in the form attached as
Exhibit F and Exhibit G, respectively.
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SECTION 3.4 FITCH RATING LETTER. The Lender shall have received
written confirmation from Fitch that Fitch has assigned a rating of no less than
"A" to the Note.
SECTION 3.5 OFFICER'S CERTIFICATES. The Initial Lender shall have
received (a) an officer's certificate from the Borrower with respect to the
matters set forth in Sections 4.1 and 4.2 and (b) an officer's certificate from
AutoBond with respect to the matters set forth in Sections 4.1, 4.2 and 4.6.
SECTION 3.6 ORGANIZATIONAL AND OTHER DOCUMENTS. The Initial Lender
shall have received certified copies of the organizational documents of the
Borrower and of AutoBond and of all formalities authorizing the execution,
delivery and performance hereof and of the Program Documents to which each is a
party and, in the case of the Borrower, the Note.
SECTION 3.7 FINANCING STATEMENTS. Financing statements naming the
Borrower as debtor and the Collateral Agent on behalf of the Lender as secured
party (each, a "Financing Statement") shall have been executed and delivered to
the Collateral Agent for filing in accordance with the applicable Uniform
Commercial Code with the Secretary of State of the State of Nevada and with such
other filing officer within or without Nevada as the Initial Lender shall
request, which Financing Statements constitute all of the filings required to
perfect the security interests intended to be created by the Security Agreement.
SECTION 3.8 NECESSARY CONSENTS. The Lender shall have received a
copy of all consents to, or releases of any lien in respect to any Specified
Auto Loans subject or to be subject hereto, in form and substance satisfactory
to the Lender.
SECTION 3.9 PAYMENT OF COMMITMENT FEE. The Lender shall have
received the Commitment Fee.
SECTION 3.10 POWER OF ATTORNEY. The Lender shall have received a
power of attorney, executed by AutoBond, authorizing the Lender to rerecord
certificates of title in respect of the Financed Vehicles to specify the Lender
or its designee as lienholder, upon an Event of Termination with respect to
AutoBond as Collection Agent.
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SECTION 4. CONDITIONS OF OBLIGATION TO MAKE ADVANCES
ON ANY CLOSING DATE.
The Initial Lender's obligation to make Advances hereunder on any
Closing Date shall be subject to the satisfaction, prior to or concurrently with
the making of such Advances, of the following conditions:
SECTION 4.1 PERFORMANCE OF OBLIGATIONS; NO OLD ADVANCES. The
Borrower and AutoBond shall each have performed all of their respective
obligations to be performed hereunder prior to or on such Closing Date. No
Advances shall have been outstanding in excess of 120 days.
SECTION 4.2 REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. The
representations and warranties of the Borrower pursuant to Section 2.1 and of
AutoBond pursuant to Section 2.2 shall be true on and as of such Closing Date
and the representations and warranties with respect to the Specified Auto Loans
shall be true on and as of the related Closing Date with the same effect as
though such representations and warranties had been made on and as of such
Closing Date. There shall exist on such Closing Date no Default or Event of
Default.
SECTION 4.3 TAXES. Any taxes, fees and other charges due in
connection with the borrowings hereunder or the issuance of the Note (other than
any income or franchise taxes incurred by the Lender) shall have been paid in
full by the Borrower.
SECTION 4.4 NO MERGER OR CHANGE IN CONTROL. Neither AutoBond nor the
Borrower shall have dissolved or liquidated or consolidated or merged with, or
been wound up into, or sold, leased or otherwise disposed of all or
substantially all of its Properties to, any Person (other than a merger into a
wholly-owned Subsidiary for the purposes of reincorporation); unless the
surviving or transferee entity has assumed all the obligations of AutoBond or
the Borrower hereunder, as applicable.
SECTION 4.5 SEARCHES. The Borrower shall have delivered to the
Initial Lender such evidence (including without limitation, Uniform Commercial
Code search certificates, releases and termination statements) as the Initial
Lender may request to establish that there are no financing statements filed
against the Collateral other than with respect to Permitted Liens.
SECTION 4.6 CONSENTS AND APPROVALS. The Borrower and AutoBond shall
have obtained any necessary consents, waivers, approvals, authorizations,
registrations, filings, licenses and notifications (including, if necessary,
qualifying to do business in, and qualifying under the applicable consumer laws
of, each
27
jurisdiction where the Borrower and AutoBond is then doing business, or is
expected to be doing business utilizing the proceeds of such Advance) and the
same shall be in full force and effect.
SECTION 4.7 PROCEEDINGS, INSTRUMENTS, ETC. All proceedings and
actions taken on or prior to such Closing Date in connection with the
transactions contemplated by this Agreement, the Program Documents and the Note,
and all instruments incident thereto, shall be in form and substance reasonably
satisfactory to the Initial Lender, and the Initial Lender shall have received
copies of all documents that the Initial Lender may reasonably request in
connection with such proceedings, actions and transactions.
SECTION 4.8 LOAN ACQUISITION AGREEMENT; USE OF PROCEEDS. The
Borrower shall have entered into the Loan Acquisition Agreement and the proceeds
of the Advances shall not exceed the amount the Collateral Agent, on behalf of
the Borrower, is required to pay on the date of making of such Advances in
respect of Loan Acquisition Prices; provided, that, so long as (after giving
effect to the application of the Advance proceeds) the aggregate amount of
Permitted Investments is no greater than $1,000,000, at the direction of
AutoBond a portion of the Proceeds of the Advances may be applied to purchase
Permitted Investments, pending application to the acquisition of Eligible Auto
Loans. The Loan Acquisition Agreement shall have been duly authorized, executed
and delivered by the parties thereto. Copies of the duly executed Loan
Acquisition Agreement, together with the opinions of counsel and officer's
certificates delivered in connection therewith, shall have been delivered to the
Initial Lender and to the Collateral Agent.
SECTION 4.9 OTHER DOCUMENTS. The Borrower and AutoBond shall have
delivered to the Initial Lender such other documents, instruments, approvals
(and if requested certified duplication of executed copies thereof) and opinions
as the Initial Lender may have reasonably requested. Each of the Program
Documents shall remain in full force and effect.
SECTION 4.10 CONTINUANCE OF A FUNDING TERMINATION EVENT OR AN EVENT
OF DEFAULT. No Funding Termination Event or Event of Default shall have occurred
and be continuing; provided, however, that if the Lenders designate a Funding
Termination Event based upon clause (b) of the definition thereof, then the
Initial Lender shall return to the Borrower a pro-rated portion of the
Commitment Fee.
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SECTION 5. COVENANTS OF AUTOBOND AND THE BORROWER WITH
RESPECT TO THE SPECIFIED AUTO LOANS.
SECTION 5.1 ADDITIONAL COVENANTS. In addition to the covenants set
forth in Section 10 with respect to the Borrower and Section 11 with respect to
AutoBond, each of the Borrower and AutoBond hereby make the following additional
covenants, which shall be determined on each Determination Date:
(a) to their knowledge, there is no Borrowing Base Deficiency; and
(b) to calculate the Borrowing Base and determine the existence of
any Borrowing Base Deficiency on each Determination Date and to provide
such information to the Lender in the Monthly Servicer Report.
The remedy for any breach of the covenants set forth in this Section 5 shall be
as provided in Section 13.1(c).
SECTION 6. [RESERVED]
SECTION 7. CERTAIN SPECIAL RIGHTS.
SECTION 7.1 HOME OFFICE PAYMENT. Notwithstanding any provision to
the contrary in the Program Documents, the Collateral Agent, on behalf of the
Borrower, will punctually pay in immediately available funds prior to noon, New
York City time, all amounts payable with respect to the Advances in accordance
with the provisions of this Agreement and the Security Agreement (without the
necessity for any presentation or surrender thereof or any notation of such
payment thereon) in the manner and at any address as the Lender may from time to
time direct in writing. The Initial Lender agrees that, as promptly as
practicable after the payment or prepayment of any Advance, the Initial Lender
will record such payment or prepayment on the Note. The Borrower will afford the
benefits of this Section 7.1 to any Assignee, each of which, by its receipt and
acceptance of a Note, will be deemed to have made the same agreement relating to
the Advances as the Initial Lender has made in this Section 7.1. The Borrower
shall only be obligated to make payments on any Advance to an Assignee in the
manner provided in this Section 7.1 from and after the time such Assignee
provides to the Borrower and the Collateral Agent written notice of its election
to receive payments in such manner and the address to which payments are to be
directed (including the account number of Assignee's bank account to which
payments are to be directed and the name, address and ABA number of the
29
bank in which such account is maintained, if payments are to be made to such
Assignee by the wire transfer of immediately available funds).
SECTION 7.2 CERTAIN TAXES. The Borrower will pay all taxes (other
than income or franchise taxes incurred by the Lender) in connection with the
execution and delivery of this Agreement and the Security Agreement, the
issuance of the Note(s) by the Borrower, the borrowings hereunder and any
modification of the Program Documents or the Note requested or required by the
Borrower and will save the Lender harmless, without limitation as to time,
against any and all liabilities (including, without limitation, any interest or
penalty for nonpayment or delay in payment, or any income taxes paid by the
Lender or any Assignee in connection with any reimbursement by the Borrower for
the payment by any other Person of any such taxes) with respect to all such
taxes. The obligations of the Borrower under this Section 7.2 shall survive the
payment in full of the Advances and the termination of the Program Documents.
SECTION 7.3 SUBSTITUTION OF INITIAL LENDER. The Initial Lender shall
have the right to substitute any of the Initial Lender's Affiliates as the maker
of all or any portion of the aggregate principal amount of Advances to be made
by the Initial Lender (so long as any such Affiliate is not engaged in any
principal line of business substantially similar to the general nature of the
business presently conducted by the Borrower), by written notice delivered to
the Borrower, which notice shall be signed by both the Initial Lender and such
Affiliate and shall contain such Affiliate's agreement to be bound by this
Agreement. The Borrower agrees that upon receipt of such notice (a) wherever the
word "the Initial Lender" is used in this Agreement (other than in this Section
7.3) such word shall be deemed to refer to such Affiliate in addition to or
instead of to the Initial Lender, as the case may be, and (b) the Initial Lender
shall, to the extent of the assumption by such Affiliate of the Initial Lender's
obligations hereunder, be released from its obligations under this Agreement.
The Borrower also agrees that if the Initial Lender, at any time, acquires from
any Affiliate all or any portion of such Affiliate's rights under this
Agreement, wherever the word "the Initial Lender" is used in this Agreement such
word shall thereafter be deemed to refer to the Initial Lender in addition to or
instead of to such Affiliate, as the case may be, and such Affiliate shall, to
the extent of the assumption by the Initial Lender of such Affiliates
obligations hereunder, be released from all of its obligations under this
Agreement. Notwithstanding any other provision of this Section 7.3, neither the
Initial Lender nor any Affiliate thereof shall be entitled to substitute any
other party as the maker of any Advances if as a result of such substitution the
Borrower would be required to register as an "investment company" under the
Investment Company Act of 1940, as amended.
30
SECTION 8. ADVANCE MATURITY; ADVANCE PREPAYMENTS.
SECTION 8.1 ADVANCE MATURITY. Each Advance shall be due and payable
on the related Maturity Date. On March 31, 1998 or such later date agreed to by
the Borrower and the Lender the remaining unpaid principal amount of the
Advances, together with accrued interest thereon and unpaid fees with respect
thereto, shall be due and payable.
SECTION 8.2 MANDATORY PREPAYMENTS. The Borrower shall immediately
prepay the Advances, without premium, together with interest accrued on the
amount to be prepaid to the date of prepayment and any unpaid fees with respect
thereto, (a) to the extent required on each Payment Date pursuant to Section
6.04 of the Security Agreement and (b) upon the occurrence of a Disposition. No
prepayment pursuant to this Section 8.2 shall in and of itself have any effect
on the obligation of the Initial Lender to make Advances under this Agreement
nor the right of the Borrower to reborrow an amount equal to such repayment.
Upon the occurrence of an Event of Default, the Borrower will make payments on
the Advances in accordance with Section 13 hereof and Section 6.04 of the
Security Agreement.
SECTION 8.3 VOLUNTARY PREPAYMENTS. (a) The Borrower may, upon thirty
(30) days written notice, voluntarily prepay Advances at any time in accordance
with this Section 8.3; provided that the Borrower may only prepay Advances
pursuant to this Section 8.3 if it prepays all Advances outstanding at such
time.
(b) Any prepayment of Advances pursuant to this Section 8.3 shall be
at a price equal to one hundred percent (100%) of the aggregate outstanding
principal amount of Advances prepaid, together with accrued and unpaid interest
as of the date set for prepayment, all unpaid fees, and any amounts due in
accordance with Section 15.3 hereof.
SECTION 8.4 PREPAYMENT NOTICE. AutoBond shall provide written notice
to the Lender of any mandatory prepayment as early as practicable prior to the
date for such prepayment, but in no event later than 12:00 (noon) New York City
time on the fifth Business Day prior to the date for such prepayment.
SECTION 9. ASSIGNMENTS AND PARTICIPATIONS.
SECTION 9.1 ASSIGNMENTS. (a) The Borrower may not assign its rights
or obligations hereunder or under the Note without the prior consent of the
Lender in its sole discretion (or, if multiple Lenders, the Lenders in respect
of a majority in aggregate principal amount of Advances outstanding).
31
(b) Subject to Section 7.3, the Initial Lender may not assign all or
any portion of the Commitment without the prior written consent of the Borrower
(which consent shall not be unreasonably withheld). The Lender may, however, (i)
without the consent of the Borrower, assign to any commercial lending
institution familiar with the asset-backed securities market or (ii) with the
prior written consent of the Borrower, assign to any other entity (each, an
"Assignee"), all or any portion of the Advances or the Notes; provided that any
assignment of a portion of the Advances or the Notes shall be in an amount not
less than the Minimum Assignment Denomination. Upon written notice to the
Borrower of an assignment in accordance with the preceding sentence (which
notice shall identify the Assignee and the amount and the identity of the
Advances assigned), the Assignee shall have, to the extent of such assignment
(unless otherwise provided in such assignment), the obligations, rights and
benefits of the Lender hereunder with respect to the Advance(s) assigned to it.
For all purposes of this Agreement, the Assignee shall, so long as the
Advance(s) assigned to such Assignee remain unpaid, be entitled to the rights
and benefits of this Agreement with respect to the Advance(s) assigned to it as
if (and the Borrower shall be directly obligated to such Assignee under this
Agreement as if) such Assignee were the "Lender" for purposes of this Agreement.
Accordingly, unless otherwise provided, whenever any action, waiver, notice or
consent is to be provided to or by the Lender as herein specified, such action,
waiver, notice or consent shall (unless otherwise expressly specified herein)
also be provided to or by each Assignee.
(c) The Lender shall provide notice of each assignment to the
Collateral Agent, AutoBond and the Servicer; provided that failure to provide
such notice shall not affect the validity of any assignment.
(d) Notwithstanding the provisions of this Section 9.1, no
assignment of an interest in an Advance to an entity outside the United States
of America shall be effective unless the prospective Assignee thereof certifies
to the Borrower and AutoBond that payments to it in respect of the Advances will
not be subject to withholding taxes imposed by any Governmental Authority in the
United States of America or any political subdivision or taxing authority
thereof or therein or that if it is subject to such withholding taxes it will
not seek reimbursement or gross-up from the Borrower or AutoBond.
SECTION 9.2 PARTICIPATIONS. (a) The Lender may sell or agree to sell
(i) without the consent of the Borrower, to any commercial lending institution
familiar with the asset-backed securities market or (ii) with the prior written
consent of the Borrower, to any other entity, a participation in all or any part
of any Advance held by it or Advances made or to be made by it, in which event
each such participant shall be entitled to the rights and benefits of the
provisions of Sections 12.1(f) and 12.2(i) hereof with respect to its
participation in such Advance as if (and the
32
Borrower and AutoBond shall be directly obligated to such participant under such
provisions as if) such participant were the "Lender" for purposes of said
Sections, but shall not have any other rights or benefits under this Agreement
or any Note (the participant's rights against the Lender in respect of such
participation to be those set forth in the agreement executed by the Lender in
favor of the participant). All amounts payable by the Borrower to the Lender
under this Agreement shall be determined as if the Lender had not sold or agreed
to sell any participations in such Advance and as if the Lender were funding all
of such Advance in the same way that it is funding the Advance in which no
participations have been sold.
(b) The Lender may furnish any information concerning the Borrower,
AutoBond or any of their other Affiliates in the possession of the Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided, however, that, prior to receipt of any such
information, and prior to any inspection by a Lender, other than the Initial
Lender, pursuant to Sections 12.4 or 13.4 hereof, such assignees and
participants or prospective assignees and participants, as the case may be, may
be required by the Borrower to execute a confidentiality agreement in form and
substance reasonably acceptable to the Borrower.
SECTION 10. CERTAIN COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that so long as any Advance shall
remain unpaid:
SECTION 10.1 MAINTENANCE OF OFFICE. The Borrower will maintain at
its office located at its address shown at the head of this Agreement an office
where notices, presentations and demands in respect of this Agreement and the
Note may be given to and made upon it; provided, however, that it may, upon
fifteen (15) Business Days prior written notice to the Lender, move such office
to any other location within the boundaries of the continental United States of
America.
SECTION 10.2 EXISTENCE. The Borrower will take and fulfill, or cause
to be taken and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary to
qualify, and to preserve and keep in full force and effect its qualification, to
do business in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification.
33
SECTION 10.3 GENERAL MAINTENANCE OF BUSINESS, ETC. The Borrower
will:
(a) keep proper books of record and accounts in which entries will
be made of its business transactions in accordance with and to the extent
required by generally accepted accounting principles;
(b) enforce (or cause the Collection Agent or the Collateral Agent,
as the case may be, to enforce) all of its rights under each of the
Program Documents to which it is a party and each other agreement entered
into in connection with the transactions contemplated hereby.
SECTION 10.4 INSPECTION. The Borrower will permit, upon reasonable
notice to it, the Lender, by its representatives, agents or attorneys: (a) to
examine all books of account, records, reports and other papers of the Borrower
(including the Loan Files), (b) to make copies and take extracts from any
thereof, (c) to discuss the affairs, finances and accounts of the Borrower with
its respective officers and independent certified public accountants (and by
this provision the Borrower hereby authorizes said accountants to discuss with
the Lender the finances and accounts of the Borrower) and (d) to visit and
inspect, at reasonable times during normal business hours, the properties of the
Borrower. It is understood and agreed by the parties hereto that all reasonable
expenses in connection with any such inspection or discussion incurred by the
Lender or the Borrower, any officers and employees thereof and the independent
certified public accountants therefor shall be expenses payable by the Person
making the inspection or discussion.
SECTION 10.5 COMPLIANCE WITH LAW, ETC. The Borrower will not (i)
violate any laws, ordinances, governmental rules or regulations to which it is
or may become subject, or (ii) fail to obtain or maintain any patents,
trademarks, service marks, trade names, copyrights, design patents, licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business except to the extent
that any such violation or failure could not materially and adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Borrower.
SECTION 10.6 PAYMENT OF TAXES AND CLAIMS. The Borrower will pay, and
discharge, promptly when due all taxes, assessments and governmental charges and
levies imposed upon it, its income or profits or any of its properties;
provided, however, that the foregoing need not be paid while the same is being
contested in good faith by appropriate proceedings diligently conducted so long
as:
34
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(b) the right of the Borrower to use the particular property shall
not be materially and adversely affected thereby.
SECTION 10.7 LIMITATIONS ON INDEBTEDNESS. The Borrower will not at
any time incur, create, assume or guarantee, or otherwise become or be liable in
any manner with respect to, any Indebtedness, except (i) the Advances and (ii)
Non-recourse Indebtedness.
SECTION 10.8 RESTRICTED INVESTMENTS. With respect to amounts on
deposit in the Collateral Account, the Borrower will not make any Restricted
Investments except in accordance with the Program Documents.
SECTION 10.9 NATURE OF BUSINESS. The Borrower will not engage in any
business or activity (whether or not pursued for gain or other pecuniary
advantage) other than financing, purchasing and disposing of Eligible Auto Loans
and Permitted Investments.
SECTION 10.10 INDEPENDENCE. Until 367 days have elapsed following
payment and satisfaction of all obligations of the Borrower hereunder and under
the Note, the Borrower shall be required to observe the applicable legal
requirements for the recognition of the Borrower as a legal entity separate and
apart from AutoBond and each other Affiliate of AutoBond, including, without
limitation, assuring that each of the following is complied with:
(a) the Borrower shall maintain separate records, books of account
and financial statements (each of which shall be sufficiently full and
complete to permit a determination of the Borrower's assets and
liabilities separate and apart from those of AutoBond and each other
Affiliate of AutoBond and to permit a determination of the obligees
thereon and the time for performance of each of the Borrower's obligations
separate and apart from those of AutoBond and each other Affiliate of
AutoBond) from those of AutoBond and each other Affiliate of AutoBond;
(b) the Borrower shall not commingle any of its assets or funds with
those of AutoBond or any of the other Affiliates of AutoBond;
(c) the Borrower shall maintain a separate board of directors
(including an "independent director" (as such term is defined in the
Borrower's Certificate of Incorporation)) and shall observe all separate
corporate
35
formalities, and all decisions with respect to the Borrower's business and
daily operations shall be independently made by the officers of the
Borrower pursuant to resolutions of its board of directors;
(d) other than payment of dividends and return of capital, no
transactions shall be entered into between the Borrower and AutoBond or
between the Borrower and any of the other Affiliates of AutoBond except
such transactions as are contemplated by the Loan Acquisition Agreement;
(e) except for such origination, collection and servicing functions
as AutoBond may perform on behalf of the Borrower pursuant to the Program
Documents, the Borrower shall act solely in its own name and through its
own authorized officers and agents and the Borrower will not act as agent
of AutoBond or any other person in any capacity;
(f) except for any funds received from AutoBond as a capital
contribution, the Borrower shall not accept funds from AutoBond or any of
the other Affiliates of AutoBond; and the Borrower shall not allow
AutoBond or any of the other Affiliates of AutoBond otherwise to supply
funds to, or guarantee any obligation of, the Borrower;
(g) the Borrower shall not guarantee, or otherwise become liable
with respect to, any obligation of AutoBond or any of the other Affiliates
of AutoBond; and
(h) the Borrower shall at all times hold itself out to the public
under the Borrower's own name as a legal entity separate and distinct from
AutoBond and the other Affiliates of AutoBond.
SECTION 10.11 OTHER AGREEMENTS AND PARTIES. The Borrower will comply
with all terms of the Program Documents to which it is a party. The Borrower
will not (a) enter into any agreements other than the Program Documents to which
it is a party without the consent of the Lender (or, if multiple Lenders, the
Lenders in respect of a majority in aggregate principal amount of Advances
outstanding), such consent not to be unreasonably withheld, (b) except as
otherwise expressly set forth herein and in the Security Agreement, agree to any
amendment, supplement or modification to or waiver of the terms of the Program
Documents to which it is a party, the AutoBond Program Manual or any document
related thereto without the consent of the Lender (or, if multiple Lenders, the
Lenders in respect of a majority in aggregate principal amount of Advances
outstanding), such consent not to be unreasonably withheld, (c) appoint any
Successor Servicer, without the consent of the Lender (or, if multiple Lenders,
the Lenders in respect of a majority in aggregate
36
principal amount of the Advances outstanding), such consent not to be
unreasonably withheld or (d) consent to the appointment of any Subservicer,
without the consent of the Lender (or, if multiple Lenders, the Lenders in
respect of a majority in aggregate principal amount of the Advances
outstanding), such consent not to be unreasonably withheld.
SECTION 10.12 INVESTMENT COMPANY ACT. The Borrower will not take any
action which would require it to be registered as an "investment company" under
the Investment Company Act of 1940, as amended.
SECTION 10.13 PURCHASES OF AUTO LOANS. The Borrower will cease
purchasing Specified Auto Loans from AutoBond for financing hereunder, if the
Borrower or the Initial Lender shall have determined that any of the following
shall have occurred:
(i) any Event of Default described in Section 13.1(g) through
(k) shall occur with respect to AutoBond;
(ii) there shall have occurred an Event of Purchase
Termination (as such term is defined in the Loan Acquisition
Agreement) under the Loan Acquisition Agreement;
(iii) any Advance is outstanding hereunder after the Maturity
Date;
(iv) a Funding Termination Event shall have occurred
hereunder;
(v) the Borrower has received written notice from the Lender
(or if multiple Lenders, the Lenders in respect of a majority in
aggregate principal amount of the Advances) that the continuation of
the activities contemplated hereby may reasonably be expected to
cause the Lender or any of its Affiliates to suffer materially
adverse regulatory, accounting or tax consequences; provided, that
the Borrower may require that the Lender deliver an Opinion of
Counsel or an opinion of a nationally recognized independent
accounting firm supporting the position of the Lender.
SECTION 10.14 LIENS. The Borrower will not permit any Lien to exist
on any of its Properties, whether now owned or hereafter acquired, other than
Permitted Liens.
37
SECTION 11. CERTAIN COVENANTS OF AUTOBOND.
AutoBond covenants and agrees that so long as any Advances shall
remain unpaid:
SECTION 11.1 EXISTENCE. AutoBond will take and fulfill, or cause to
be taken and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary to
qualify, and to preserve and keep in full force and effect its qualification, to
do business in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification.
SECTION 11.2 COMPLIANCE WITH LAW, ETC. AutoBond will not (a) violate
any laws, ordinances, governmental rules or regulations to which it is or may
become subject or (b) fail to obtain or maintain any patents, trademarks,
service marks, trade names, copyrights, design patents, licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its Property or to the conduct of its business.
SECTION 11.3 PAYMENT OF TAXES AND CLAIMS. AutoBond will pay and
discharge promptly, as and when due, all taxes, assessments and governmental
charges and levies imposed upon it, its income or profits or any of its
properties; provided, however, that the foregoing need not be paid while the
same is being contested in good faith by appropriate proceedings diligently
conducted so long as:
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(b) the right of AutoBond, as the case may be, to use the particular
property shall not be materially and adversely affected thereby.
SECTION 11.4 INSPECTION. AutoBond will permit, upon reasonable
notice to it, the Lender, by its representatives, agents or attorneys, (a) to
examine all books of account, records, reports and other papers of AutoBond
relevant to its role as Collection Agent (including the Loan Files), (b) to make
copies and take extracts from any thereof, (c) to discuss the affairs, finances
and accounts of AutoBond with its respective officers and independent certified
public accountants (and by this provision AutoBond hereby authorizes said
accountants to discuss with the Lender the finances and accounts of AutoBond),
and (d) to visit and inspect, at reasonable times during normal business hours,
the properties of AutoBond. It is understood and agreed by the parties hereto
that all reasonable expenses in connection with any such
38
inspection or discussion incurred by the Lender or AutoBond, any officers and
employees thereof and the independent certified public accountants therefor
shall be expenses payable by AutoBond.
SECTION 11.5 CONSOLIDATION AND MERGER. AutoBond will not merge into
or consolidate with any other Person (or permit any other Person to merge into
or consolidate with it) or sell, transfer or otherwise dispose of all or
substantially all of its Properties to any Person unless (a) the surviving or
transferee corporation following any merger or consolidation or sale expressly
assumes the obligations of AutoBond hereunder and under the other Program
Documents and (b) Fitch confirms in writing to the Lender that such merger,
consolidation or sale will not result in the reduction or withdrawal of its
rating of the Note below "A".
SECTION 11.6 FURTHER ASSURANCES. AutoBond will promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary in order to give effect to the provisions of the Program
Documents and the transactions contemplated hereby.
SECTION 11.7 INDEPENDENCE. Until 367 days have elapsed following
payment and satisfaction of all obligations of the Borrower hereunder and in
respect of the Advances, AutoBond shall be required to (and shall assure that
each other Affiliate of AutoBond shall) observe the applicable legal
requirements for the recognition of the Borrower as a legal entity separate and
apart from AutoBond and each other Affiliate of AutoBond, including, without
limitation, assuring that each of the following is complied with:
(a) AutoBond and each other Affiliate of AutoBond shall maintain
separate records and books of account (each of which shall be sufficiently
full and complete to permit a determination of the assets and liabilities
of AutoBond or such Affiliate, as the case may be, separate and apart from
those of the Borrower and to permit a determination of the obligees
thereon and the time for performance on each of the obligations of
AutoBond or such Affiliate, as the case may be, separate and apart from
those of the Borrower) from those of the Borrower;
(b) neither AutoBond nor any of its other Affiliates shall commingle
any of its assets or funds with those of the Borrower;
(c) the board of directors of AutoBond shall not dictate decisions
with respect to the Borrower's business and daily operations and AutoBond
shall maintain its own corporate formalities and shall otherwise respect
the separate corporate identity of the Borrower;
39
(d) other than the making of capital contributions and the
transactions contemplated by the Loan Acquisition Agreement, neither
AutoBond nor any of its other Affiliates shall enter into any transactions
with the Borrower;
(e) neither AutoBond nor any of its other Affiliates shall accept
appointment as, or act as, an agent of the Borrower except, to the extent
AutoBond performs certain servicing and collection functions pursuant to
the Servicing Agreement;
(f) neither AutoBond nor any of its other Affiliates shall advance
funds to the Borrower (except for the making of capital contributions);
and neither AutoBond nor any of its other Affiliates will otherwise supply
funds to, or guarantee any obligation of, the Borrower;
(g) neither AutoBond nor any of its other Affiliates shall
guarantee, or otherwise become liable with respect to, any obligation of
the Borrower;
(h) AutoBond and each of its other Affiliates shall at all times
hold itself out to the public under its respective name as a legal entity
separate and distinct from the Borrower; and
(i) all financial reports prepared by AutoBond and each of its other
Affiliates shall comply with generally accepted accounting principles.
SECTION 11.8 OTHER AGREEMENTS AND PARTIES. AutoBond will comply with
all terms of the Program Documents to which it is a party. AutoBond will not (a)
except as otherwise expressly set forth herein and in the Security Agreement,
agree to any amendment, supplement or modification to or waiver of the terms of
the Program Documents to which it is a party, the AutoBond Program Manual or any
document related thereto without the consent of the Lender (or, if multiple
Lenders, the Lenders in respect of a majority in aggregate principal amount of
Advances outstanding), such consent not to be unreasonably withheld, (b) appoint
any Successor Servicer, without the consent of the Lender (or, if multiple
Lenders, the Lenders in respect of a majority in aggregate principal amount of
the Advances outstanding), such consent not to be unreasonably withheld or (c)
consent to the appointment of any Subservicer, without the consent of the Lender
(or, if multiple Lenders, the Lenders in respect of a majority in aggregate
principal amount of the Advances outstanding), such consent not to be
unreasonably withheld.
SECTION 11.9 SERVICING ARRANGEMENTS. AutoBond will take any
necessary action to evidence that the Specified Auto Loans are to be serviced
and administered by the Servicer and AutoBond, as Collection Agent under the
Servicing
40
Agreement. AutoBond will act as Collection Agent under the Servicing Agreement
and will perform its duties as Collection Agent thereunder in accordance with
the provisions of the Servicing Agreement, the AutoBond Program Manual and this
Agreement. So long as any Advances are outstanding, upon the occurrence of an
Event of Termination under the Servicing Agreement, AutoBond agrees to provide
prompt notice to the Lender of such Event of Termination and to thereafter act
in accordance with the instructions of the Lender, including the appointment of
a new Servicer and/or Collection Agent. Any optional termination of the Servicer
by AutoBond under the Servicing Agreement shall require the prior written
consent of Fitch and the Initial Lender.
SECTION 11.10 PRESERVATION OF QUALITY OF AUTO LOANS. AutoBond will
use its best efforts to prevent a deterioration in the quality of the Specified
Auto Loans and will use its best efforts as Collection Agent to preserve the
credit quality and collectibility of the Specified Auto Loans.
SECTION 12. INFORMATION TO BE FURNISHED TO LENDER.
SECTION 12.1 INFORMATION TO BE FURNISHED BY THE BORROWER.
The Borrower will deliver or cause to be delivered to the Collateral
Agent and the Lender the following:
(a) promptly, and in any event within five (5) days, after any
Executive Officer of the Borrower shall have obtained knowledge of any
Default or Event of Default, an Officer's Certificate from the Borrower
specifying the nature and period of existence thereof, what action the
Borrower has taken or is taking or proposes to take with respect thereto,
and an estimate of the time necessary to cure such condition or event;
(b) promptly upon the release or distribution thereof, copies of all
press releases and other written statements made available generally by
the Borrower to one or more financial news services concerning material
developments in the business of the Borrower; and
(c) promptly upon request therefor, such other data, filings and
information as the Lender may from time to time reasonably request.
SECTION 12.2 INFORMATION TO BE FURNISHED BY AUTOBOND. AutoBond shall
deliver or cause to be delivered to the Collateral Agent and the Lender the
following:
41
(a) promptly, and in any event within five (5) days, after any
Executive Officer of AutoBond shall have obtained knowledge of any Default
or Event of Default, an Officer's Certificate from AutoBond specifying the
nature and period of existence thereof, what action AutoBond has taken or
is taking or proposes to take with respect thereto, and an estimate of the
time necessary to cure such condition or event;
(b) promptly upon the release or distribution thereof, copies of all
press releases and other written statements made available generally by
AutoBond to one or more financial news services concerning material
developments in the business of AutoBond; and
(c) on or prior to the Closing Date, a copy of its quarterly report
on Form 10-Q for the period ending September 30, 1996, and thereafter each
publicly filed report with respect to AutoBond; and
(d) in its capacity as Collection Agent, on each Payment Date, a
report as to the collection and payment activities with respect to the
Specified Auto Loans during the preceding Collection Period, in the form
of Exhibit H hereto.
SECTION 13. DEFAULTS, REMEDIES AND TERMINATION.
SECTION 13.1 EVENTS OF DEFAULT; ACCELERATION OF ADVANCES. If any of
the following conditions or events ("Events of Default") shall occur and be
continuing:
(a) (i) any payment or prepayment of principal of any Advance shall
not be made as and when the same becomes due and payable, whether at
maturity, at a date fixed for prepayment, upon acceleration or otherwise;
or (ii) any payment of interest on any Advance (or any other amount due
hereunder or under any Note) shall not be made as and when the same
becomes due and payable; or (iii) failure to make any deposit when due
under the Security Agreement or under the Servicing Agreement, or (iv) a
Borrowing Base Deficiency is determined to exist on a Determination Date
and continues unremedied after giving effect to the transactions on the
related Payment Date or (v) failure of AutoBond to repurchase any Auto
Loans pursuant to Section 2.3(c) hereof, in each case, within five (5)
Business Days after notice from the Lender; or
(b) the Borrower or AutoBond shall default in the due and punctual
performance of or compliance with any covenant, condition or agreement to
be
42
performed or observed by it under Sections 10 or 11, respectively, hereof
and any such default shall continue unremedied for a period of twenty (20)
Business Days after an Authorized Officer of the Borrower or AutoBond
obtains knowledge thereof; or
(c) the Borrower or AutoBond shall default in the due and punctual
performance of or compliance with any other material covenant, condition
or agreement to be performed or observed by it under any provision hereof
or any other Program Document which failure would have a material adverse
effect upon the Lender and which failure shall continue unremedied for
thirty (30) Business Days after an Authorized Officer of the Borrower or
AutoBond obtains knowledge thereof; or
(d) the Lien created or intended to be created by the Security
Agreement shall cease to be a valid, fully perfected and enforceable Lien
prior to the rights of all Persons other than the Lender whether or not
such Persons have notice of any such Lien and, if curable, such failure
shall continue unremedied for thirty (30) days after an Authorized Officer
of the Borrower or AutoBond obtains knowledge thereof; or
(e) any representation, warranty, certification or statement of the
Borrower or AutoBond made or contained in any Program Document or in any
agreement, instrument, certificate, statement or other writing furnished
in connection herewith or therewith or pursuant hereto or thereto, shall
prove to have been false or inaccurate in any material respect on the date
as of which such representation or warranty was made and any such breach
shall continue unremedied for a period of thirty (30) days after an
Authorized Officer of the Borrower or AutoBond obtains knowledge thereof;
or
(f) a final judgment or judgments entered by a court or courts of
competent jurisdiction for the payment of money (other than such judgments
or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $25,000 in the aggregate shall be rendered
against the Borrower and shall remain in force unpaid, unbonded,
undismissed, undischarged and unstayed on appeal for a period of more than
thirty (30) days; or
(g) the Borrower shall institute proceedings for liquidation,
readjustment, arrangement or composition (or for any related or similar
purpose) under any law relating to financially distressed debtors, their
creditors or property, or shall consent to (or fail to object to in a
timely manner) the institution of any such proceedings against the
Borrower; or
43
(h) the Borrower shall be insolvent (within the meaning of any
applicable law), or shall be unable, or shall admit in writing its
inability, to pay its debts as they become due, or shall make an
assignment for the benefit of creditors or enter into any arrangement for
the adjustment or composition of debts or claims; or
(i) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order (i) for the
appointment of a receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of the Borrower or of any part of
its property, or for the winding-up or liquidation of its affairs; and
such decree or order shall remain in force undischarged and unstayed for a
period of more than sixty (60) days, or (ii) for the sequestration or
attachment of any material part of the property of the Borrower without
its unconditional return to the possession of the Borrower, or its
unconditional release from such sequestration or attachment, within sixty
(60) days thereafter; or
(j) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order approving or
acknowledging as properly filed, or any party commences against the
Borrower, a petition or proceedings for liquidation, rehabilitation,
readjustment or composition (or for any related or similar purpose) under
any law relating to financially distressed debtors, their creditors or
property, and any such decree or order shall remain in force undischarged
and unstayed for a period of more than sixty (60) days; or
(k) the Borrower shall take action for the purpose or with the
effect of authorizing or confirming the taking or existence of any action
or condition specified in clause (i) or (j) above; or
(l) a default by the Collateral Agent in the performance of its
duties under the Security Agreement shall have occurred and be continuing
and such event shall not have been cured or such party replaced within
twenty (20) Business Days thereafter;
then
(I) upon the occurrence and continuance of any of the Events
of Default set forth in clauses (g) through (k), inclusive, of this
Section 13.1, the unpaid principal amount of the Advances shall
automatically become due and payable, together with interest accrued
thereon, without presentment, demand, protest or any notice, all of
44
which are expressly hereby waived and the Initial Lender may remove
AutoBond as Collection Agent and appoint a successor Collection
Agent under the Servicing Agreement;
(II) upon the occurrence and continuance of any Event of
Default set forth in clause (a) of this Section 13.1, any Lender
may, by written notice to the Borrower (with a copy to the
Collateral Agent), declare the Advances held by it to be due and
payable, whereupon the same shall mature and become due and payable,
together with interest accrued thereon and fees in respect thereof,
without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived;
(III) upon the occurrence and continuance of any Event of
Default, the Lender (or, if multiple Lenders, Lenders with respect
to a majority of the aggregate unpaid principal amount of the
Advances) may by written notice or notices to the Borrower (with a
copy to the Collateral Agent) declare all of the Advances to be due
and payable, whereupon the same shall mature and become due and
payable, together with interest and fees accrued thereon, without
presentment, demand, protest or any other notice, all of which are
hereby waived;
(IV) upon the occurrence and continuance of any Event of
Default, the Initial Lender shall no longer be obligated to make
additional Advances hereunder; and
(V) upon the occurrence and continuance of any Event of
Default set forth in clauses (a)(iii) (b) or (c) of this Section
13.1 by AutoBond with respect to its obligations under the Servicing
Agreement, the Initial Lender may remove AutoBond as Collection
Agent thereunder and appoint a successor Collection Agent.
SECTION 13.2 DEFAULT REMEDIES. If an Event of Default shall occur
and be continuing, the Lender may, or the Lenders in respect of a majority in
aggregate principal amount of the Advances outstanding may instruct the
Collateral Agent to, exercise any right, power or remedy permitted to it by law,
either by suit in equity or by action at law, or both, whether for specific
performance of any covenant or agreement contained in the Program Documents or
in the Note or for an injunction against a violation of any of the terms of the
Program Documents or such Advance or in aid of any exercise of any power granted
to such Lender or to the Collateral Agent in the Program Documents or in such
Advance, or may proceed to enforce payment of such Advance or to enforce any
other legal or equitable right of the Lender. No
45
remedy herein or in the Security Agreement conferred upon the Lender or the
Collateral Agent is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law, in equity, by statute or
otherwise. No course of dealing on the part of the Lender or the Collateral
Agent, or any delay or failure on the part of the Lender or the Collateral Agent
to exercise any right or power, shall operate as a waiver of such right or power
or otherwise prejudice the rights, powers and remedies of the Lender or the
Collateral Agent or of any other Lender or the Collateral Agent. No failure to
insist upon strict compliance with any covenant, term, condition or other
provision of the Program Documents or the Note shall constitute a waiver by the
Lender or the Collateral Agent of any such covenant, term, condition or other
provision or of any Default or Event of Default in connection therewith. To the
extent effective under applicable law, the Borrower hereby agrees to waive, and
does hereby absolutely and irrevocably waive and relinquish, the benefit and
advantage of any valuation, stay, appraisement, extension or redemption laws now
existing or that may hereafter exist that, but for this provision, might be
applicable to any sale made under any judgment, order or decree of any court, or
otherwise, based on the Advances or on any claim for interest and fees in
respect of the Advances. If an Event of Default shall occur, and be continuing,
the Borrower will pay to the Lender or the Collateral Agent, to the extent not
prohibited by applicable law and not paid in accordance with the Security
Agreement, such further amount as shall be sufficient to cover the reasonable
costs and expenses of collection and of the taking of remedial actions and the
maintenance of enforcement proceedings, including, without limitation,
reasonable and necessary attorneys' fees and disbursements.
SECTION 13.3 NOTICE OF DEFAULT. If the Lender or the Collateral
Agent shall give any notice or take any other action with respect to a claimed
default, the Borrower shall forthwith give written notice thereof to the
Collateral Agent, the Lender and all Assignees describing the notice or action
and the nature of the claimed default.
SECTION 13.4 ANNULMENT OF ACCELERATION OF ADVANCES. If notice is
delivered pursuant to clause (III) of Section 13.1 hereof, then the Lender (or,
if multiple Lenders, the Lenders with respect to at least sixty-six and
two-thirds percent (66-2/3%) of the aggregate unpaid principal amount of the
Advances) may, in respect of all of the Advances, by written instrument filed
with the Borrower (with a copy to the Collateral Agent), rescind and annul the
declaration delivered pursuant to clause (III) of Section 13.1 and the
consequences thereof or of such Event of Default pursuant to this Agreement;
provided, however, that at the time of any such annulment and rescission:
46
(a) no judgment or decree shall have been entered for payment of any
monies due pursuant to the Advances or this Agreement and no action shall
have been taken pursuant to the Security Agreement which may not then be
waived, rescinded or annulled;
(b) all arrears of principal and interest upon all the Advances and
all other sums payable in respect of the Advances and to the Lender under
the Program Documents (including reasonable costs and expenses of the
Lender incurred in connection with such notice under Section 13.1 hereof
or annulment under this Section 13.4, but excluding any principal or
interest on the Advances or any fees in respect thereof that shall have
become due and payable by reason of such notice under Section 13.1 hereof
or happening of such Event of Default) shall have been duly paid; and
(c) each and every other default hereunder and Event of Default
shall have been duly waived or cured; and
provided, further, that there shall not be waived, without the consent of the
Lender, an Event of Default resulting from a violation or failure to comply with
any provision of the Security Agreement the amendment of which, under the
provisions thereof, would require the consent of the Lender to be affected
thereby; and, provided, further, that no such rescission and annulment shall
extend to or affect any subsequent default or Event of Default or impair any
right or power consequent thereon.
SECTION 14. INTERPRETATION OF AGREEMENT AND NOTES.
SECTION 14.1 DEFINITIONS. Except as the context shall otherwise
require, the following terms shall have the following meanings for all purposes
of this Agreement (the definitions to be applicable to both the singular and the
plural form of the terms defined, where either such form is used in this
Agreement):
The term "Account Receivable" shall mean, with respect to any
Person, any right of such Person to the payment of money arising out of
the sale, lease or other disposition of goods or merchandise or the
rendering of services by such Person, determined in accordance with
generally accepted accounting principles.
The term "Advances" means the advances provided for by Section 1.1.
The term "Affiliate," with respect to any Person (hereinafter "such
Person"), shall mean any other Person which directly or indirectly through
one
47
or more intermediaries controls, or is controlled by, or is under common
control with, such Person or another Affiliate of such Person. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
The term "APR" shall mean the annual percentage rate of an Auto Loan
as determined according to the related contractual documents with the
Obligor thereof.
The term "Assignee" shall have the meaning set forth in Section
9.1(b).
The term "Authorized Officer" means, with respect to AutoBond or the
Borrower, any officer of AutoBond or the Borrower, as the case may be, who
is authorized to act for AutoBond or the Borrower, as the case may be, in
matters relating to transactions contemplated by this Agreement.
The term "AutoBond Program Manual" means the AutoBond Program Manual
(including the Credit and Collection Policies) attached hereto as Exhibit
J, as modified from time to time, with notice of each such modification to
Fitch, the Servicer, the Collateral Agent and the Lender.
The term "Auto Loan" means a fixed-rate, fully amortizing,
closed-end installment loan (bearing interest calculable on a simple
interest basis or based upon the Rule of 78s, as set forth in Section 2(m)
of the Loan Acquisition Agreement) arising from the sale of a new or used
automobiles and light-duty trucks to a consumer which includes, without
limitation, (i) all security interests or liens and property subject
thereto from time to time purporting to secure payment by the obligor
thereunder, including, without limitation, AutoBond's rights under the
related dealer agreement, (ii) all guarantees, indemnities and warranties,
insurance policies, certificates of title and other agreements or
arrangements of whatever character from time to time supporting or
securing payment of such loan, (iii) all collections and records with
respect to the foregoing and (iv) all proceeds of any of the foregoing.
The term "AutoBond" shall mean AutoBond Acceptance Corporation, a
Texas corporation.
The term "Available Facility Amount," on any date of determination,
shall mean the sum of (a) the Commitment on such date, minus (b) the
aggregate Advances outstanding on such day.
48
The term "Board" shall mean, with respect to any Person, its board
of directors or, if it does not have a board of directors, its governing
body which performs the same duties as a board of directors.
The term "Borrowing Base Deficiency" means, on any date of
determination, the excess of Advances outstanding on such Determination
Date over 91.74% of the sum of (a) the aggregate Unpaid Principal Balance
of all Specified Auto Loans other than Excluded Auto Loans and (b) all
amounts on deposit in the Loan Purchase Account, the Reserve Account and
Collection Account (to the extent allocable to principal).
The term "Borrowing Notice" shall have the meaning set forth in
Section 1.3 hereof.
The term "Business Day" shall mean any day other than a Saturday or
a Sunday, or another day on which commercial banks in the States of
Minnesota, New York or Texas (or in any other state in which the Servicer
or any Agent is located) are required, or authorized by law, to close or,
for purposes of calculating interest on the Advances, on which commercial
banks are not open for domestic and foreign exchange business in New York,
New York and London, England (as specified in writing from time to time by
the Borrower or an Agent).
The term "Capital Lease" shall mean any lease or other agreement for
the use of property which is required to be capitalized on a balance sheet
of the lessee or other user of property in accordance with generally
accepted accounting principles.
The term "Closing Date" shall have the meaning set forth in Section
1.2 hereof.
The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute, together with the
rules and regulations thereunder.
The term "Collateral" shall have the meaning set forth in the
Security Agreement.
The term "Collateral Account" shall have the meaning set forth in
the Security Agreement.
49
The term "Collateral Agent" shall have the meaning set forth in
Section 1.5 hereof.
The term "Collection Period" shall mean each calendar month;
provided, however, the initial Collection Period shall be the period from
the Closing Date to January 31, 1997.
The term "Commitment" shall mean the obligation of the Initial
Lender to make Advances in an aggregate amount at any one time outstanding
up to but not exceeding (a) $30,000,000 until May 15, 1997, (b)
$40,000,000 from May 15, 1997 until August 15, 1997 and (c) $50,000,000
from August 15, 1997 until March 31, 1998.
The term "Commitment Fee" shall mean the fee payable to the Lender
pursuant to Section 3.9 hereof in the amount agreed to by the Borrower and
the Lender.
The term "Credit and Collection Policies" means written credit
procedures and policies consistent with the requirements of this Agreement
and the Servicing Agreement, in effect from time to time formulated by
AutoBond as to the requirements of certain servicing matters and
comprising part of AutoBond Program Manual.
The term "Dealer" shall mean each automobile dealer with whom
AutoBond has entered into a Dealer Agreement.
The term "Dealer Agreement" shall mean each agreement between
AutoBond and a Dealer, which provides for acquisition of the Auto Loans.
The term "Default" shall mean any event or condition that would
become an Event of Default after notice or passage of time or both.
The term "Defaulted Auto Loan" shall mean an Auto Loan which by its
terms has more than 10% of any installment of principal or interest which
is 60 or more days contractually past due.
The term "Determination Date" shall mean the 10th day of each month
(or the immediately preceding Business Days if such day is not a Business
Day).
The term "Disposition" shall mean any pooling or disposition of
Specified Auto Loans by the Borrower, either (a) in structured-finance
50
securitization transactions, (b) pursuant to whole-loan sales or (c) in
some other form of disposition.
The term "Dollars" or "$" shall mean the lawful currency of the
United States of America, and in relation to any payment under this
Agreement, same day or immediately available funds.
The term "Eligible Auto Loan" shall mean any Auto Loan as to which
the representations and warranties set forth in Section 2.3(a) are true
and correct as of the related Closing Date.
The term "Eligible Dealer" shall mean a franchised Dealer (a) duly
licensed and authorized as a dealer in new or used Automobiles by
Governmental Authorities and (b) as to which AutoBond has entered into a
Dealer Agreement.
The term "Event of Collection Agent Termination" shall have the
meaning assigned thereto in Section 3.07 of the Servicing Agreement.
The term "Event of Default" shall have the meaning assigned thereto
in Section 13.1 hereof.
The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
The term "Excluded Auto Loan" means, on any Determination Date, any
Specified Auto Loan (a) which is a Defaulted Auto Loan, (b) as to which
the Obligor is bankrupt or (c) as to which the related Auto has been
repossessed.
The term "Executive Officer" with respect to a Person shall mean the
Chief Executive Officer, Chief Operating Officer or Chief Financial
Officer.
The term "Financing Statement" shall have the meaning set forth in
Section 3.8 hereof.
The term "Fitch" shall mean Fitch Investors Service, L.P.
The term "Funding Termination Event" shall have occurred if (a)
Fitch shall have indicated in writing that it has reduced or withdrawn its
rating of the Note below "A" or (b) upon 30 days' prior written notice,
deterioration has taken place in the quality of the Specified Auto Loans
or in the
51
collectibility thereof which the Lender, in its reasonable discretion,
determines to be material.
The term "generally accepted accounting principles" shall mean, as
of the date of any determination with respect thereto, generally accepted
accounting principles as understood and applied in the United States at
the time in question.
The term "Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
The term "Guarantee," with respect to any Person, shall mean all
obligations of such Person guaranteeing or in effect guaranteeing any
Indebtedness (including, without limitation, liability in respect of a
joint venture or a partnership), dividend or other obligation or
Investment of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations incurred through an
agreement, contingent or otherwise, by such Person (a) to purchase such
Indebtedness, obligation or Investment or any property or assets
constituting security therefor, (b) to advance or supply funds (i) for the
purchase or payment of such Indebtedness, obligation or Investment or (ii)
to maintain working capital or equity capital, or otherwise to advance or
make available funds for the purchase or payment of such Indebtedness,
obligation or Investment, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness,
obligation or Investment of the ability of the primary obligor to make
payment of such Indebtedness, obligation or Investment, or (d) otherwise
to assure the owner of such Indebtedness, obligation or Investment against
loss in respect thereof.
The terms "hereof," "herein," "hereunder" and other words of similar
import shall be construed to refer to this Agreement as a whole and not to
any particular Section or other subsection.
The term "Increased Cost" shall have the meaning set forth in
Section 1.6(d) hereof.
The term "Indebtedness," with respect to any Person, shall mean all
items (other than capital stock, capital surplus, retained earnings and
deferred credits and deferred income taxes), which in accordance with
generally accepted accounting principles would be included in determining
total liabilities
52
as shown on the liability side of a balance sheet as at the date on which
Indebtedness is to be determined. The term "Indebtedness" shall also
include, whether or not so reflected, (a) indebtedness, obligations and
liabilities secured by any Lien on property of such Person, whether or not
the indebtedness secured thereby shall have been assumed by such Person,
(b) all obligations of such Person in respect of Capital Leases, and (c)
all Guarantees.
The term "Indemnifying Party" shall have the meaning set forth in
Section 15.1 hereof.
The term "Independent Accountant" shall have the meaning set forth
in Section 1.6 hereof.
The term "Independent Public Accountant" shall mean any of (a)
Xxxxxx Xxxxxxxx & Co., (b) Deloitte & Touche, (c) Coopers & Xxxxxxx, (d)
Ernst & Young, (e) KMPG Peat Marwick and (f) Price Waterhouse (and any
successors thereof); provided, that such firm is independent with respect
to the Borrower or AutoBond, as the case may be, within the meaning of the
Securities Act of 1933, as amended.
The term "Initial Closing Date" shall have the meaning set forth in
Section 1.2 hereof.
The term "Initial Lender" shall mean, subject to Section 7.3, Daiwa
Finance Corporation.
The term "Interest Payment Date" means each Payment Date and each
date upon which Advances are repaid, either in whole or in part.
The term "Interest Period" shall mean, with respect to any Advance,
the period commencing with the date of such Advance to and excluding the
Payment Date occurring in the month following the date of such Advance,
and thereafter, the period commencing with each Payment Date, to and
excluding the following Payment Date; provided that the final Interest
Period in respect of an Advance shall end on (but exclude) the Maturity
Date or prepayment date in respect of such Advance.
The term "Interest Rate" shall mean, for any Interest Period, LIBOR
plus 1.15; provided, however, that in no event shall the Interest Rate be
greater than 11%.
53
The term "Investment" shall mean any loan, advance, extension of
credit (except for accounts and notes receivable for merchandise sold or
services furnished in the ordinary course of business, and amounts paid in
advance on account of the purchase price of merchandise to be delivered to
the payor within one year of the date of the advance), or purchase of
stock, notes, bonds or other securities or capital contribution to any
Person, whether in cash or other property. The amount of any Investment
shall be its cost (the amount of cash or the fair market value of other
property given in exchange therefor).
The term "Lender" shall mean the Initial Lender and any Assignees
thereof.
The term "LIBOR" shall mean the per annum rate for deposits in
United States dollars for a period of one month which appears on Telerate
Page 3750 as of 11:00 a.m., London time, on the related LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750 on
such day, the rate will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such day to prime banks in the
London interbank market for a period of one month commencing on that day.
The Collateral Agent will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic
mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that day will be the arithmetic mean of the rates
quoted by two or more major banks in New York City, selected by the
Collateral Agent , in its sole discretion at approximately 11:00 a.m., New
York City time, on that day for loans in United States dollars to leading
European banks for a period of one month.
The term "LIBOR Determination Date" shall mean the second Business
Day prior to the commencement of each Interest Period; provided that with
respect to the first Interest Period such date shall be the first Business
Day prior to the Initial Closing Date.
The term "Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, civil
law, statute, civil code or contract, whether or not such interest shall
be recorded or perfected and whether or not such interest shall be
contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, and including the
lien, privilege, security
54
11interest or other encumbrance arising from a mortgage, deed of trust,
hypothecation, cession, transfer, assignment, pledge, adverse claim or
charge, conditional sale or trust receipt, or from a lease, consignment or
bailment for security purposes. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. For the purposes of this Agreement, a
Person shall be deemed to be the owner of any property that such Person
shall have acquired or shall hold subject to a conditional sale agreement
or other arrangement (including a leasing arrangement) pursuant to which
title to the property shall have been retained by or vested in some other
Person for security purposes.
The term "Loan Acquisition Agreement" shall mean the Amended and
Restated Loan Acquisition, Sale and Contribution Agreement dated as of
February 1, 1997 between the Borrower and AutoBond pursuant to which the
Borrower agrees to acquire Eligible Auto Loans, as from time to time
further amended, supplemented or modified.
The term "Loan Acquisition Price" shall mean 91.74% of the Unpaid
Principal Balance for Specified Auto Loans as of the date of purchase
under the Loan Acquisition Agreement.
The term "Loan Documents" means, with respect to an Auto Loan (a) a
copy of the retail installment loan contract and security agreement
evidencing such Auto Loan, (b) a copy of the credit application, and (c) a
copy of an executed agreement to provide insurance signed by the Obligor,
a binder in respect thereof or the original confirmation of payment of
premiums required under the VSI Policy, if any.
The term "Loan File" means, with respect to any Auto Loan, the
original retail installment loan contract and security agreement
evidencing the Auto Loan and originals or copies of such other documents
and instruments relating to such Auto Loan and the security interest on
the selected Financed Vehicle as specified in the Credit and Collection
Policies.
The term "Loan Purchase Account" shall have the meaning set forth in
the Security Agreement.
The term "Maturity Date" in respect of any Advance shall mean the
earlier to occur of (a) 120 days following the date of such Advance and
(b) March 31, 1998.
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The term "Minimum Assignment Denomination" shall mean $500,000.
The term "Monthly Servicer Fee" shall have the meaning specified in
the Security Agreement.
The term "Moody's" shall mean Xxxxx'x Investors Service, Inc.
The term "Net Payoff Balance" means, in respect of any Precomputed
Auto Loans, the net payoff less any accrued but unpaid late charges, as
determined in accordance with the worksheet attached hereto as Schedule 2.
The term "Net Principal Balance" means, with respect to any
Precomputed Auto Loan, the Net Payoff Balance as of the due date of the
last full Scheduled Payment, or if more recent, the due date of the last
periodic payment of principal thereon.
The term "Net Unrealized Amount" means, (a) with respect to any Auto
Loan which is more than 90 days contractually past due or where the
Financed Vehicle is otherwise subject to repossession (including voluntary
or involuntary, or upon casualty), the Unpaid Principal Balance of such
Auto Loan minus the sum of (i) any repossession proceeds allocable to
principal actually received on such Auto Loan, (ii) any insurance proceeds
allocable to principal actually received from a claim with respect to such
Auto Loan and (iii) refunds received from the cancellation of any
insurance policies or service contracts with respect to such Auto Loan,
and (b) with respect to any Auto Loan where the related Obligor is in
bankruptcy, the amount of losses allocable to principal incurred thereon.
The term "Nondefaulted Auto Loan" shall mean an Auto Loan which is
not a Defaulted Auto Loan.
The term "Non-recourse Indebtedness" means Indebtedness as to which
the Borrower is obligated only to the extent of the cash flow from a
designated asset pool pledged to secure such Indebtedness.
The term "Note(s)" shall have the meaning set forth in Section
1.2(b) hereof and shall include any subdivision of the Note issued in
accordance with Section 1.2(c).
The term "Obligor" shall mean, with respect to any Auto Loan, the
Person primarily obligated to make payments in respect thereto.
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The term "Officer's Certificate" (i) with respect to the Collateral
Agent, any officer within the structured capital division (or any
successor thereof) including any vice president, assistant vice president,
or any officer or assistant officer of the Collateral Agent customarily
performing functions similar to those performed by any of the
above-designated officers and (ii) with respect to AutoBond, the
Collateral Agent, the Servicer or the Borrower shall mean a certificate
executed on behalf of such party by the Chairman of the Board, the
President or any Vice President of the relevant entity.
The term "Originator" means any Person, other than AutoBond, that
acquires Auto Loans directly from a Dealer.
The term "Payment Date" shall mean the 15th day of each month (or,
if such day is not a Business Day, the next succeeding Business Day),
commencing March 15, 1997.
The term "Permitted Investments" shall mean Eligible Auto Loans and
any of the following Investments to be held in an account of the Borrower
at the Collateral Agent:
(a) certificates of deposit with final maturities of one (1) year
or less issued by banks or trust companies organized under the
laws of the United States of America or any state thereof and
having unsecured long-term debt rated "A" or better by S&P or
"A-2" or better by Moody's provided, however, that any such
certificates of deposit that are rated by both such rating
agencies shall be rated "A" or better by S&P and "A-2" or
better by Moody's;
(b) commercial paper of corporations organized under the laws of a
jurisdiction within the United States of America maturing not
more than two hundred seventy (270) days from the date of
issuance thereof and rated "A-1" or better by S&P or "P-1" or
better by Moody's without regard to maturity; provided,
however, that any such commercial paper that is rated by both
such rating agencies shall be rated "A-1" or better by S&P and
"P-1" or better by Moody's;
(c) direct obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof and maturing
within one (1) year from the date of acquisition thereof;
57
(d) debt securities of corporations organized under the laws of a
jurisdiction within the United States of America (i) with a
maturity of one (1) year or less and rated "A" or better by
S&P or "A-2" or better by Moody's; provided, however, that any
such debt security that is rated by both such rating agencies
shall be rated "A" or better by S&P and "A-2" or better by
Moody's; and
(e) money market funds having ratings in the highest or second
highest available rating category of S&P and Moody's at the
time of such investment which invest only in other Permitted
Investments; any such money market funds which provide for
demand withdrawals being conclusively deemed to satisfy any
maturity requirement for Permitted Investments set forth in
this Agreement.
Any Permitted Investments may be purchased by or through the Collateral
Agent or any of its Affiliates.
The term "Permitted Liens" shall mean:
(a) Liens created under the Security Agreement;
(b) Liens securing taxes, assessments, governmental charges or
levies not yet due or the payment of which is not then required by
Section 10.6 hereof;
(c) any Lien which is a mechanics lien assessed against an
Automobile securing a Specified Auto Loan; and
(d) Liens securing Non-recourse Indebtedness.
The term "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government (or any agency or
political subsection thereof).
The term "Precomputed Auto Loan" shall mean any Auto Loan under
which earned interest (which may be referred to in the Auto Loan as the
add-on finance charge) and principal is determined according to the sum of
periodic balances or the sum of monthly balances or the sum of the digits
or any equivalent method commonly referred to as the "Rule of 78s".
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The term "Program Documents" shall mean this Agreement, the Security
Agreement, the Servicing Agreement, the Sale Assignments, the Note and the
Loan Acquisition Agreement.
The term "Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible.
The term "Purchase Price" shall have the meaning set forth in the
Loan Acquisition Agreement.
The term "Reference Banks" shall mean four major banks in the London
interbank market selected by the Collateral Agent.
The term "Repurchase Price" shall mean, with respect to any
Specified Auto Loan which AutoBond is obligated to repurchase, an amount
equal to (a) the Unpaid Principal Balance of such Specified Auto Loan as
of the end of the preceding Collection Period, plus (b) accrued and unpaid
interest in respect thereof calculated at the Interest Rate from the last
day to which interest has been paid and credited to the Lockbox or
Collateral Account through the date of repurchase, minus (iii) the amount
of any principal deposited in the Lockbox or the Collection Account in
respect of such Auto Loan since the end of such Collection Period.
The term "Repurchase Requirement" shall have the meaning specified
in Section 2.3 hereof.
The term "Requirement of Law" shall mean, as to any Person, any law,
treaty, rule or regulation, or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject, whether federal, state or local
(including, without limitation, usury laws, the federal Truth in Lending
Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
The term "Restricted Investment" shall mean any Investment other
than a Permitted Investment.
The term "Securities" shall mean, with respect to any Person, any
shares of any class of such Person's capital stock, or any options or
warrants to purchase its capital stock or other security exchangeable for
or convertible into its capital stock.
59
The term "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
The term "Security Agreement" shall have the meaning set forth in
Section 1.5 hereof.
The term "Security Interest" shall mean the security interest and
rights created under the Security Agreement in the Collateral in favor of
the Lender.
The term "Selling Dealer" shall mean with respect to each Specified
Auto Loan, the Dealer that sold such Specified Auto Loan to AutoBond.
The term "Servicer" means CSC Logic/MSA L.L.P., doing business as
"Loan Servicing Enterprises", a Texas limited liability partnership, or
any other entity, in the capacity as servicer under the Servicing
Agreement.
The term "Servicer Report" shall have the meaning set forth in the
Servicing Agreement.
The term "Servicing Agreement" shall mean the Servicing Agreement,
dated as of January 29, 1997 between AutoBond and the Servicer.
The term "Solvent" shall mean, with respect to any Person, that:
(a) the Properties of such Person, at a fair valuation, exceed
the total liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of such Person;
(b) based on current projections, which are based on
underlying assumptions which provide a reasonable basis for the
projections and which reflect such Person's judgment based on
present circumstances of the most likely set of conditions and such
Person's most likely course of action for the period projected, such
Person believes it has sufficient cash flow to enable it to pay its
debts as they mature; and
(c) such Person does not have an unreasonably small capital
with which to engage in its anticipated business.
The "fair valuation" of the Properties of any Person shall be
determined on the basis of the amount which may be realized within a
reasonable time, either through collection or sale of such assets at the
regular market value, conceiving the latter as the amount which could be
obtained for
60
the property in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under
ordinary selling conditions.
The term "S&P" shall mean Standard & Poor's Ratings Group.
The term "Specified Auto Loan" shall mean each Auto Loan pledged by
the Borrower to the Collateral Agent under the Security Agreement as
security for its obligations hereunder and under the Security Agreement.
The term "Subsequent Closing Date" shall have the meaning set forth
in Section 1.2 hereof.
The term "Successor Servicer" shall have the meaning set forth in
the Servicing Agreement.
The term "Telerate Page 3750" shall mean the display page so
designated on the Dow Xxxxx Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying comparable
rates or prices).
The term "this Agreement" shall mean this Credit Agreement
(including the annexed Exhibits and Schedules), as it may from time to
time be amended, supplemented or modified in accordance with its terms.
The term "Unpaid Principal Balance" means, with respect to any Auto
Loan as of any Determination Date, (i) for an Auto Loan bearing interest
calculable on a simple interest basis, the unpaid principal amount for
such Auto Loan or (ii) for a Precomputed Auto Loan, the Net Principal
Balance, in each case as of the end of the most recent Collection Period;
provided that, for any Auto Loan where the Net Unrealized Amount equals
the Unpaid Principal Balance, such Unpaid Principal Balance shall
thereafter equal zero (other than for purposes of calculating the Net
Unrealized Amounts).
The term "VSI Policy" means a vendor's single interest insurance
policy insuring against risk of physical damage on the Financed Vehicles.
SECTION 14.2 ACCOUNTING TERMS. All accounting terms used herein that
are not otherwise expressly defined shall have the respective meanings given to
them in accordance with generally accepted accounting principles at the
particular time.
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SECTION 14.3 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 14.4 HEADINGS. The headings of the Sections and other
subsections of this Agreement have been inserted for convenience of reference
only and shall not affect the meaning of this Agreement.
SECTION 14.5 INDEPENDENCE OF COVENANTS, ETC. Each representation,
covenant or Event of Default herein shall be given independent effect so that if
any action or condition would violate any of such covenants, would breach any of
such representations or would constitute any of such Events of Default, the fact
that such action or condition would not violate or breach, any other covenant or
representation or constitute another Event of Default shall not avoid the
violation of such covenant or representation or the occurrence of such Event of
Default.
SECTION 15. INDEMNIFICATION AND FUNDING LOSSES.
SECTION 15.1 INDEMNIFICATION. (a) The Borrower and AutoBond, jointly
and severally, agree to indemnify and hold harmless the Lender, the directors,
officers, employees and agents of the Lender and each Person who controls the
Lender within the meaning of the Securities Act or the Securities Exchange Act
from and against any and all claims, damages, losses, liabilities, costs or
expenses (including reasonable attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which any of them may become subject to the extent that any such claims,
damages, losses, liabilities, costs or expenses are attributable to the
transactions contemplated herein, including, without limitation, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise; provided, that the Borrower and AutoBond
shall not be liable to the Lender for any (i) credit losses incurred by the
Lender in its capacity as a Lender with respect to the Advances resulting from
the performance of the Specified Auto Loans, (ii) losses incurred by the Lender
as a result of breaches by the Lender of any of its obligations hereunder or
under any of the other Program Documents, the fraudulent actions,
misrepresentations, negligence or willful misconduct of the Lender or (iii)
losses, claims, damages, liabilities and expenses arising out of the imposition
by any taxing authority of any federal income, state or local income or
franchise taxes, or any other taxes imposed on or measured by gross or net
income, gross or net receipts, capital, net worth and similar items (including
any interest, penalties or additions with respect thereto) upon the Lender
(including
62
any liabilities, costs or expenses with respect thereto). The foregoing is in
addition to any rights (including without limitation rights to indemnity) to
which the Lender may otherwise be entitled.
(b) Promptly after receipt by the Lender of notice of the
commencement of any action, the Lender shall, if a claim in respect thereof is
to be made against the Borrower or AutoBond (each, an "Indemnifying Party")
under this Section 15.1, notify the Indemnifying Party in writing of the
commencement thereof; but the omission so to notify the Indemnifying Party will
not relieve it from any liability which it may have to the Lender except to the
extent such Indemnifying Party is prejudiced thereby. In case any action is
brought against the Lender, and it notifies the Indemnifying Party of the
commencement thereof, the Indemnifying Party will be entitled to appoint counsel
satisfactory to such Indemnifying Party (who shall not, except with the consent
of the Lender, be counsel to the Borrower or AutoBond) to represent the Lender
in such action; provided, however, that, if the defendants in any action include
both the Lender and an Indemnifying Party and the Lender shall have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to those available to the Indemnifying Party, the Lender
shall have the right to select separate counsel to defend such action on behalf
of it. Upon receipt of notice from the Indemnifying Party to the Lender of its
election so to appoint counsel to defend such action and approval by the Lender
of such counsel, the Indemnifying Party will not be liable to the Lender under
this Section 15.1 for any legal or other expenses subsequently incurred by the
Lender in connection with the defense thereof unless (i) the Lender shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence, (ii) the Indemnifying Party shall not have employed counsel
satisfactory to the Lender to represent the Lender within a reasonable time
after notice of commencement of the action or (iii) the Indemnifying Party has
authorized the employment of counsel for the Lender at the expense of the
Indemnifying Party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii).
(c) If the indemnification provided for in this Section 15.1 is
unavailable or insufficient to hold harmless the Lender under subsection (a) or
(b) above, then the Indemnifying Parties shall contribute to the amount paid or
payable by the Lender as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying
Parties on the one hand and the Lender on the other from the transactions
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Indemnifying Parties on the one hand
63
and the Lender on the other in connection with the actions or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The Lender and the Indemnifying Parties agree
that it would not be just and equitable if contributions pursuant to this
subsection (c) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (c). The amount payable by
the Indemnifying Parties as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (c) shall be
deemed to include any legal or other expenses reasonably incurred by the Lender
in connection with investigating or defending any action or claim which is the
subject of this subsection (c). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The obligations of the Indemnifying Parties and the Lender under
this Section 15.1 shall be in addition to any liability which each of them may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the Lender within the meaning of the Securities
Act; and, with respect to the obligation of the Indemnifying Parties to the
Lender as indemnified party, shall extend, upon the same terms and conditions,
to each director of the Lender.
(e) The Lender agrees to notify the indemnifying party in writing of
the commencement of any action with respect to which indemnification may be owed
to it pursuant to this Section 15.1 or Article V of the Servicing Agreement
after receipt by the Lender of notice of commencement thereof, but the omission
so to notify the indemnifying party will not relieve such indemnifying party
from any liability which it may have except to the extent the indemnifying party
is prejudiced thereby. For purposes of this Section 15.1(e), the Servicer shall
be a third party beneficiary of the agreements herein contained.
(f) The agreement, indemnities and other statements of the parties
hereto in or made pursuant to this Section 15.1 will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any other parties hereto or any of the officers,
directors or controlling persons referred to in this Section 15.1. The
provisions of this Section 15.1 shall survive the termination or cancellation of
this Agreement.
SECTION 15.2 INDEMNIFICATION WITH RESPECT TO THE SPECIFIED AUTO
LOANS. Without limiting any other rights that the Collateral Agent or the
Secured Parties (each an "Indemnified Party") may have hereunder or under
applicable law,
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AutoBond hereby agrees, jointly and severally, to pay on demand to each
Indemnified Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all claims, losses, damages and liabilities and
related costs and expenses, including taxes and reasonable attorneys' fees and
disbursements ("Indemnified Amounts") which may be imposed on, incurred by or
asserted against an Indemnified Party in any way arising out of or resulting
from:
(a) the use by AutoBond of proceeds of any sale or in respect of any
Auto Loan;
(b) any representation or warranty made or deemed made by AutoBond
(or any of its officers) under this Agreement, or any report delivered by
AutoBond pursuant hereto or any other information delivered by AutoBond
pursuant hereto, having been incorrect in any material respect when made
or deemed made or delivered (except with respect to any representation and
warranty arising under Section 2.3(a) (other than Section 2.3(a)(xxi)(A)
in respect of losses to or damages imposed on Borrower or the Collateral
Agent in excess of the Repurchase Price of a Specified Auto Loan) in
respect of a Specified Auto Loan, as to which the remedies are set forth
in Section 2.3(b));
(c) the failure by AutoBond to comply with any applicable law, rule
or regulation with respect to any Specified Auto Loan, or the
nonconformity of any Specified Auto Loan with any such applicable law,
rule or regulation;
(d) the failure to vest and maintain vested in the Borrower and its
assignees, legal, equitable and marketable title to and ownership of the
Auto Loans which are, or are purported to be, Specified Auto Loans,
together with all proceeds in respect thereof, free and clear of any
Adverse Claim (except as permitted hereunder) whether existing at the time
of the proposed sale of such Auto Loan or at any time thereafter and
without limitation to the remedies set forth in Section 2.3(c);
(e) the actions or inactions of AutoBond or any officer, director,
employee or agent of AutoBond; or
(f) the assessment of any tax or governmental fee or charge (and all
interest or penalties with respect thereto) as the result of the purchase
or ownership of any Auto Loan, other than taxes on or measured by the
gross income of any Person.
excluding, however, (i) recourse for any uncollectible Specified Auto Loan;
provided, that the foregoing shall not be deemed to limit the Borrower's or the
Collateral
65
Agent's rights under Sections 2.3(c), or this Section 15.2 and, with respect to
a breach in the representation and warranty set forth in Section 2.3(a)(xxi)(A),
Section 9(b), and (b) Indemnified Amounts to the extent resulting from the gross
negligence or willful misconduct on the part of any Indemnified Party. AutoBond
acknowledges that the Borrower has assigned its rights of indemnity granted
hereunder to the Collateral Agent. AutoBond agrees that, upon such assignment,
such assignee may enforce directly, without joinder of the Borrower, the
indemnities set forth in this Section 15.2. It is understood and agreed that the
indemnity obligations of AutoBond hereunder shall survive the termination of
this Agreement or of any Specified Auto Loan.
SECTION 15.3 FUNDING LOSSES. Except in connection with a mandatory
prepayment pursuant to Section 8.2(a) or (b), if the Borrower makes, or the
Lender otherwise receives, any payment in respect of principal of any Advance
other than on the first day of an Interest Period, the Borrower and AutoBond
shall, jointly and severally, indemnify the Lender for any loss, or expense
("Funding Loss") incurred by the Lender as a result thereof, including without
limitation, lost profit and any loss, cost or expense from employing, obtaining
or liquidating deposits from third parties. The amount of any Funding Loss shall
be determined in good faith by the Lender. If the Borrower, within 30 days after
receiving a notice of the amount of such Funding Loss, disputes, the amount set
forth in such notice, the Lender and the Borrower shall consult in good faith to
resolve such dispute. If such consultation does not resolve such dispute within
45 days (or such longer period as the Lender and the Borrower may then agree)
after the Lender shall have provided the Borrower with such notice, the Borrower
may request that the Lender furnish to an Independent Accountant all information
reasonably necessary to permit the confirmation of the accuracy of the Lender's
computation of the Funding Losses described in such notice. Within 30 days of
the receipt of such information, the Independent Accountant either shall confirm
the accuracy of such computation or shall notify the Lender and the Borrower
that such computation proposed by the Lender is inaccurate. In the latter event,
the Lender shall consult with the Borrower and the Independent Account as to the
proper computation of the Funding Losses, whereupon the Lender shall recompute
the Funding Losses in such a manner as shall enable the Independent Accountant
to confirm their accuracy. The Borrower and the Lender agree that the sole
responsibility of the Independent Accountant shall be to verify the calculation
of the Funding Losses and that matters of interpretation of the Program
Documents are not within the scope of its responsibilities. All expenses
incurred by the Lender and the Borrower in connection with the verification
procedures described in this Section 15.3 (including the fees and expenses of
the Independent Accountant) shall be paid by the Borrower. Any information
provided to the Independent Accountant by the Lender shall be and remain the
exclusive property of the Lender and shall be deemed by the parties to be (and
the Independent Accountant shall confirm in writing that it will treat
66
such information as) the private, proprietary and confidential property of the
Lender, and no Person other than the Lender and the Independent Accountant shall
be entitled thereto or to any review thereof, and all such information shall be
returned to the Lender contemporaneously with the completion of the verification
procedure.
SECTION 16. MISCELLANEOUS.
SECTION 16.1 NOTICES. (a) All communications under this Agreement or
the Notes shall be in writing and shall be delivered or mailed or sent by
facsimile transmission and confirmed in writing (i) if to the Lender, to the
Lender, at such address as the Lender may have furnished to the Borrower in
writing, and (ii) if to the Borrower, at the address set forth in Section 2.2(b)
or at such other address or facsimile number as it shall have furnished in
writing to the Lender and (iii) if to AutoBond to it at the address set forth in
Section 2.3(b) or at such other address or facsimile number as it shall have
furnished in writing to the Lender.
(b) Any written communication so addressed and mailed by certified
or registered mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof.
SECTION 16.2 SURVIVAL. All representations, warranties and covenants
made by the Borrower herein or by the Borrower in any certificate or other
instrument delivered under or in connection with this Agreement shall be
considered to have been relied upon by the Lender and shall survive regardless
of any investigation made by the Lender or on the Lender's behalf.
SECTION 16.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereof and their respective successors and assigns, and shall
inure to the benefit of and be enforceable by the parties hereof and their
respective successors and assigns permitted hereunder. Whether or not expressly
so stated and subject to the restrictions set forth herein, the provisions of
Sections 5 through 16 of this Agreement are intended to be for the Lender's
benefit and shall be enforceable by the Lender; and, provided further, that the
provisions of Sections 7.2 and 10.1 hereof shall also be for the benefit of, and
shall be enforceable by, any Person who shall no longer be a Lender hereunder
but who shall have incurred any expense or been subjected to any liability
referred to therein while, or on the basis of being, a Lender.
SECTION 16.4 AMENDMENT AND WAIVER. (a) This Agreement and the Notes
may be amended or supplemented, and the observance of any term hereof or thereof
may be waived, with the written consent of the Borrower, AutoBond and (i) on or
prior to the Initial Closing Date, the Initial Lender, and (ii) after the
Initial
67
Closing Date, the Lender (or, if multiple Lenders, Lenders with respect to at
least 66- 2/3% in aggregate unpaid principal amount of the Advances; provided,
however, that no such amendment, supplement or waiver shall, without the written
consent of all Lenders, (a) change, with respect to the Advances, the amount or
time of any required prepayment or payment of principal or premium or the rate
or time of payment of interest, or change the funds in which any prepayment or
payment on the Advances is required to be made; (b) reduce the percentage of the
aggregate principal amount of Advances required for any amendment, consent or
waiver hereunder; or (c) release any material Lien of the Collateral Agent, held
for the benefit of the Lender, on any of the Collateral or affect the priority
thereof.
(b) Any amendment, supplement or waiver effected in accordance with
this Section 16.4 shall be binding upon the Lender, each Assignee and the
Borrower.
(c) The Borrower will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of the
Program Documents or the Note unless the Initial Lender (irrespective of the
amount of Advances made by it) shall be informed thereof by the Borrower and
shall be afforded the opportunity of considering the same and shall be supplied
by the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
effected pursuant to the provisions of this Section 16.4 shall be delivered by
the Borrower to the Lender forthwith following the date on which the same shall
have been executed and delivered by the Lender of the requisite percentage of
Advances.
SECTION 16.5 COUNTERPARTS. This Agreement may be executed and
delivered simultaneously in two (2) or more counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute but one
and the same instrument.
SECTION 16.6 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto (other than the Note), including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Initial Lender at the closing of the Initial Lender's
making of Advances, and (c) financial statements, certificates and other
information heretofore or hereafter furnished to the Lender, may be reproduced
by the Lender by any photographic or other similar process and the Lender may
destroy any original document so reproduced. The Borrower agrees and stipulates
that, to the extent permitted by applicable law and court or agency rules, any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such
68
reproduction was made by the Lender in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall be
admissible in evidence to the same extent.
SECTION 16.7 CONSENT TO JURISDICTION AND VENUE. The Borrower and
AutoBond each hereby irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to the Program Documents or any Note may
be brought in a court of record in the State of New York or in the courts of the
United States of America located in such State, (ii) consents to the
jurisdiction of each such court in any such suit, action or proceeding, and
(iii) waives any objection which it may have to the laying of venue of any such
claim that any such suit, action or proceeding has been brought in an
inconvenient forum and covenants that it will not seek to challenge the
jurisdiction of any such court or seek to oust the jurisdiction of any such
court, whether on the basis of inconvenient forum or otherwise. The Borrower and
AutoBond each irrevocably consent to the service of any and all process in any
such suit, action or proceeding by mail copies of such process to the Borrower
at its address for notices provided in Section 16.1 hereof. The Borrower and
AutoBond each agree that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. All mailings under this Section 16.7
shall be by registered or certified mail, return receipt requested. Nothing in
this Section 16.7 shall affect the Lender's right to serve legal process in any
other manner permitted by law or affect the Lender's right to bring any suit,
action or proceeding against the Borrower or any of its properties in the courts
of any other jurisdiction.
SECTION 16.8 NO PETITION. The Lender and each Assignee hereby
covenant and agree that, until the expiration of the date which is one year and
one day after the payment in full of all investor certificates or other
securities outstanding and issued pursuant to any Disposition, it will not
institute against the Borrower, or join in any institution against the Borrower
of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any applicable bankruptcy or similar law
in connection with any obligations relating to the Advances or the Program
Documents.
SECTION 16.9 ACTS OF LENDER. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by the Lender may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by the Lender in person or by
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
is or are delivered to the Borrower. Proof of execution of any such instrument
or of a
69
writing appointing any such agent shall be sufficient for any purpose of this
Agreement if made in the manner provided in this Section 16.9.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Borrower deems
sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Lender or any Assignee shall bind the Lender and
such Assignee in respect of anything done, omitted or suffered to be done by the
Borrower in reliance thereon, whether or not notation of such action is made
upon such Note.
SECTION 16.10 CONFIDENTIALITY. All non-public information relating
to this Agreement, the Program Documents and the transactions contemplated
thereby will be kept confidential by AutoBond, the Borrower and the Initial
Lender. The Initial Lender agrees to cause each assignee and Participant with
which it is a party to agree to keep such information confidential. The
provisions of this Section 16.10 shall survive the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the day and year first above written.
AUTOBOND FUNDING CORPORATION II
By:/s/ Xxxxxx Xxxx
---------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
AUTOBOND ACCEPTANCE CORPORATION
By:/s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Secretary
DAIWA FINANCE CORPORATION
By:/s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: Executive VP/ CFO
EXHIBIT A
[FORM OF NOTE]
PROMISSORY NOTE
$50,000,000
February 19, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, AutoBond Funding Corporation II, a Nevada
corporation (the "Borrower") for value received, hereby promises to pay to Daiwa
Finance Corporation (the "Lender") or its assigns, the principal sum of Fifty
Million Dollars ($50,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Advances made by the Lender to the
Borrower under the Credit Agreement), in lawful money of the United States of
America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Advance, in like money and funds, for the period
commencing on the date of such Advance until such Advance shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, interest rate and maturity date of each Advance
made by the Lender shall be recorded by the Lender on its books and, prior to
any transfer of this Note, endorsed by the Lender on the schedule attached
hereto or any continuation thereof.
This Note is the Note referred to in the Credit Agreement (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") dated as of February 1, 1997 among the Borrower, AutoBond Acceptance
Corporation and the Lender, and evidences Advances made by the Lender
thereunder. Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity
of this Note upon the occurrence of certain events and for prepayments of
Advances upon the terms and conditions specified therein.
This Note is secured in accordance with and entitled to the benefits
of the Security Agreement. Copies of the Security Agreement may be examined at
the office of the Borrower maintained pursuant to Section 16 of the Credit
Agreement.
The Borrower agrees to perform and observe duly and punctually each
of the covenants and agreements set forth in the Credit Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
The Borrower hereby waives diligence, presentment and notice of any
kind. The non-exercise by the holder hereof of any right in any one instance
shall not limit the other (or further) exercise of that right in that (or any
other) circumstances.
By its holding of this Note, the Lender shall be deemed to accept
the terms of the Credit Agreement and the Security Agreement and agree to be
bound thereby.
This Note shall be governed by and construed in accordance with the
law of the State of New York.
2
IN WITNESS WHEREOF, AutoBond Funding Corporation II has caused this
Note to be duly executed on its behalf by its officers thereunto duly
authorized.
AUTOBOND FUNDING CORPORATION II
By:
----------------------------
Name:
Title:
3
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Credit
Agreement to the Borrower, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Date of Amount of Interest Date of Paid or Principal Notation
Advance Advance Rate Advance Prepaid amount Made By
--------------------------------------------------------------------------------
4
EXHIBIT B
FORM OF BORROWING NOTICE
[BORROWER'S LETTERHEAD]
[Date]
[Lender]
[Address]
Attention: __________________________
In accordance with Section 1.3 of the Credit Agreement, dated as of
February 1, 1997 (the "Credit Agreement"), among AutoBond Funding Corporation II
(the "Borrower"), AutoBond Acceptance Corporation and Daiwa Finance Corporation,
the undersigned hereby gives notice to the Lender that on ______________ the
Borrower proposes to borrow from the Lender $________________ in accordance with
and subject to the terms of the Credit Agreement. The Borrower hereby confirms
that all conditions to funding have been satisfied.
The Advance shall be wired to:
[insert wire instructions]
AUTOBOND FUNDING CORPORATION II
By:
---------------------------
Name:
Title:
