EXHIBIT 4.1
TRANSITION AUTO FINANCE IV, INC.
AND
TRUST MANAGEMENT, INC., AS TRUSTEE
9.0% SECURED REDEEMABLE PROMISSORY NOTES
DUE _________, 2006
----------
INDENTURE
----------
DATED AS OF
_______________, 2001
CROSS-REFERENCE TABLE
TRUST INDENTURE ACT
SECTION INDENTURE SECTION
------------------- -----------------
310 (a) (1) 7.10
(a) (2) 7.10
(a) (3) N/A
(a) (4) N/A
(a) (5) 7.10
(b) 7.8, 7.10, 11.2
(c) N/A
311 (a) 7.11
(b) 7.11
(c) N/A
312 (a) 2.6
(b) 11.3
(c) 11.3
313 (a) 7.6
(b) 7.6
(c) 11.2
(d) 7.6
314 (a) 5.7, 5.8, 11.2
(b) 5.9
(c) (1) 11.4
(c) (2) 11.4
(c) (3) N/A
(d) 5.12
(e) 11.4
(f) N/A
315 (a) 7.1(b)
(b) 7.5, 11.2
(c) 7.1(a)
(d) 7.1(c)
(e) 6.11
316 (a) (1) (A) 6.5
(a) (1) (B) 6.4
(a) (last sentence) 1.1 (Def. of "Outstanding")
(b) 6.7
(c) N/A
317 (a) (1) 6.8
(a) (2) 6.9
(b) 5.2
318 (a) 11.1
"N/A" = Not Applicable
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE......................................................2
SECTION 1.1 DEFINITIONS..................................................................................2
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...........................................11
SECTION 1.3 RULES OF CONSTRUCTION.......................................................................12
ARTICLE 2 THE SECURITIES.................................................................................12
SECTION 2.1 FORMS GENERALLY.............................................................................12
SECTION 2.2 FORMS OF SECURITY...........................................................................13
SECTION 2.3 DENOMINATIONS...............................................................................17
SECTION 2.4 EXECUTION AND AUTHENTICATION................................................................17
SECTION 2.5 REGISTRAR AND PAYING AGENT..................................................................18
SECTION 2.6 SECURITYHOLDER LISTS........................................................................18
SECTION 2.7 TRANSFER AND EXCHANGE.......................................................................18
SECTION 2.8 REPLACEMENT SECURITIES......................................................................18
SECTION 2.9 TEMPORARY SECURITIES........................................................................19
SECTION 2.10 CANCELLATION................................................................................19
SECTION 2.11 DEFAULTED INTEREST..........................................................................19
SECTION 2.12 PERSONS DEEMED OWNERS.......................................................................19
ARTICLE 3 REDEMPTION.....................................................................................20
SECTION 3.1 REDEMPTION AFTER SINKING FUND TRIGGER DATE..................................................20
SECTION 3.2 SECURITIES NOT PREVIOUSLY DELIVERED TO TRUSTEE..............................................20
SECTION 3.3 SELECTION OF SECURITIES TO BE PURCHASED OR REDEEMED.........................................20
SECTION 3.4 NOTICE OF REDEMPTION........................................................................20
SECTION 3.5 EFFECT OF NOTICE OF REDEMPTION..............................................................21
SECTION 3.6 DEPOSIT OF REDEMPTION AMOUNT................................................................21
SECTION 3.7 SECURITIES REDEEMED IN PART.................................................................21
ARTICLE 4 ACCOUNTS, DISBURSEMENTS AND RELEASES...........................................................22
SECTION 4.1 COLLECTION OF MONEYS........................................................................22
SECTION 4.2 SINKING FUND ACCOUNT; OPERATING ACCOUNT; MASTER COLLECTIONS ACCOUNT.........................22
SECTION 4.3 PURCHASE OF LEASED VEHICLES AND ELIGIBLE ADDITIONAL CONTRACTS...............................25
SECTION 4.4 REPRESENTATIONS AND WARRANTIES AS TO THE CONTRACTS..........................................26
SECTION 4.5 GENERAL PROVISIONS REGARDING SINKING FUND ACCOUNT...........................................28
SECTION 4.6 RELEASES....................................................................................29
SECTION 4.7 REPORTS BY TRUSTEE..........................................................................30
ARTICLE 5 COVENANTS......................................................................................30
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST...........................................................30
SECTION 5.2 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.............................................32
SECTION 5.3 PAYMENT OF TAXES AND OTHER CLAIMS...........................................................32
SECTION 5.4 MAINTENANCE OF PROPERTIES...................................................................33
SECTION 5.5 LIMITATION ON INVESTMENT ACTIVITIES.........................................................33
SECTION 5.6 COMPLIANCE CERTIFICATES.....................................................................33
SECTION 5.7 REPORTING...................................................................................33
SECTION 5.8 PROTECTION OF TRUST ESTATE..................................................................34
SECTION 5.9 OPINIONS AS TO TRUST ESTATE.................................................................35
SECTION 5.10 PERFORMANCE OF OBLIGATIONS; Servicing Agreements............................................35
SECTION 5.11 NEGATIVE COVENANTS..........................................................................36
SECTION 5.12 SUBSTITUTION OR RELEASE OF COLLATERAL OR WITHDRAWAL OF CASH IN TRUST ESTATE................38
i
ARTICLE 6 DEFAULTS AND REMEDIES..........................................................................39
SECTION 6.1 EVENTS OF DEFAULT...........................................................................39
SECTION 6.2 ACCELERATION................................................................................40
SECTION 6.3 REMEDIES....................................................................................41
SECTION 6.4 WAIVER OF PAST DEFAULTS.....................................................................41
SECTION 6.5 CONTROL BY MAJORITY.........................................................................41
SECTION 6.6 LIMITATION ON SUITS.........................................................................42
SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT........................................................42
SECTION 6.8 COLLECTION SUIT BY TRUSTEE..................................................................42
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM............................................................42
SECTION 6.10 PRIORITIES..................................................................................43
SECTION 6.11 UNDERTAKING FOR COSTS.......................................................................43
SECTION 6.12 STAY, EXTENSION OR USURY LAWS...............................................................43
SECTION 6.13 OPTIONAL PRESERVATION OF TRUST ESTATE.......................................................44
SECTION 6.14 SALE OF TRUST ESTATE........................................................................44
ARTICLE 7 TRUSTEE........................................................................................45
SECTION 7.1 DUTIES OF TRUSTEE...........................................................................45
SECTION 7.2 RIGHTS OF TRUSTEE...........................................................................47
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE................................................................48
SECTION 7.4 TRUSTEE'S DISCLAIMER........................................................................48
SECTION 7.5 NOTICE OF DEFAULTS..........................................................................48
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS...............................................................48
SECTION 7.7 COMPENSATION AND INDEMNITY..................................................................48
SECTION 7.8 REPLACEMENT OF TRUSTEE......................................................................49
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC............................................................50
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION...............................................................50
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...........................................50
SECTION 7.12 WITHHOLDING TAXES...........................................................................50
ARTICLE 8 DISCHARGE OF INDENTURE.........................................................................51
SECTION 8.1 SATISFACTION AND DISCHARGE OF INDENTURE.....................................................51
SECTION 8.2 APPLICATION OF TRUST MONEY..................................................................51
SECTION 8.3 REPAYMENT TO COMPANY........................................................................52
ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND XXXXXXX............................................................52
SECTION 9.1 WITHOUT CONSENT OF HOLDERS..................................................................52
SECTION 9.2 WITH CONSENT OF HOLDERS.....................................................................52
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.........................................................53
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS...........................................................53
SECTION 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.......................................................53
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.............................................................54
ARTICLE 10 MEETINGS OF SECURITYHOLDERS....................................................................54
SECTION 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED...................................................54
SECTION 10.2 MANNER OF CALLING MEETINGS..................................................................54
SECTION 10.3 CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS..............................................55
SECTION 10.4 WHO MAY ATTEND AND VOTE AT MEETINGS.........................................................55
SECTION 10.5 REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE MEETING; VOTING RIGHTS...................55
SECTION 10.6 EXERCISE OF RIGHTS OF TRUSTEE OR SECURITYHOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING......................................................55
SECTION 10.7 EVIDENCE OF ACTIONS BY SECURITYHOLDERS......................................................56
i
ARTICLE 11 MISCELLANEOUS..................................................................................56
SECTION 11.1 TRUST INDENTURE ACT CONTROLS................................................................56
SECTION 11.2 NOTICES.....................................................................................56
SECTION 11.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.................................................57
SECTION 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT..........................................57
SECTION 11.5 RULES BY PAYING AGENT AND REGISTRAR.........................................................57
SECTION 11.6 LEGAL HOLIDAYS..............................................................................57
SECTION 11.7 GOVERNING LAW...............................................................................57
SECTION 11.8 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS...............................................58
SECTION 11.9 NO RECOURSE AGAINST OTHERS..................................................................58
SECTION 11.10 SUCCESSORS..................................................................................58
SECTION 11.11 DUPLICATE ORIGINALS.........................................................................58
ARTICLE 12 AGREEMENTS OF SERVICER.........................................................................58
SECTION 12.1 GENERAL.....................................................................................58
SECTION 12.2 SERVICER ACTING AS CUSTODIAN................................................................58
SECTION 12.3 REPRESENTATIONS AND WARRANTIES CONCERNING THE SERVICER......................................58
SECTION 12.4 CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER.............................................59
SECTION 12.5 PERFORMANCE OF OBLIGATIONS..................................................................60
SECTION 12.6 THE SERVICER NOT TO RESIGN; ASSIGNMENT......................................................60
SECTION 12.7 REPRESENTATIONS AND WARRANTIES AS TO THE CONTRACTS..........................................61
SECTION 12.8 PURCHASE OF CERTAIN CONTRACTS...............................................................62
SECTION 12.9 INDEMNIFICATION.............................................................................63
SECTION 12.10 TERMINATION.................................................................................63
SECTION 12.11 AMENDMENT...................................................................................64
SECTION 12.12 INSPECTION AND AUDIT RIGHTS.................................................................64
iii
THIS INDENTURE, dated as of ______________, 2001, is between TRANSITION
AUTO FINANCE IV, INC., a
Texas corporation (the "Company"), having its principal
office at 0000 Xxxxxx Xxxx Xxxx, Xxxxxx 000, Xxxxxx, Xxxxx 00000 and TRUST
MANAGEMENT, INC., a
Texas Trust Company, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxx 00000, as Trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture and the issuance of 9.0% Secured Redeemable Promissory Notes, due
____, 2006, in the maximum aggregate principal amount of $10,000,000 (the
"Securities").
All acts necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company and to make this Indenture a valid agreement of
the Company, in accordance with their and its terms, have been accomplished.
THEREFORE, for and in consideration of the premises and the purchase or
acceptance of the Securities by the Holders (as herein defined) thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities, as follows:
GRANTING CLAUSES
The Company hereby Grants to the Trustee, for the exclusive benefit of
the Holders of the Securities, all of the Company's right, title and interest in
and to (a) all Contracts (as herein defined) hereafter acquired by the Company,
together with all related Contract Documents, and all payments or instruments
paid on account of such Contracts whenever received, and all other proceeds
(cash or non-cash) received in respect of such Contracts, (b) the Servicing
Agreements, (c) the Operating Account, (d) the Master Collections Account, (e)
the Sinking Fund Account, including all Eligible Investments therein and all
income from the investment of funds therein, (f) all Leased Vehicles, together
with any repossessed or returned Leased Vehicles (including any Leased Vehicle
returned upon termination of its Contract), and (g) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property, including, without limitation, all Net Liquidation Proceeds and
Insurance Proceeds (collectively, the "Trust Estate").
The foregoing Grants are made, however, in trust, to secure the
Securities equally and ratably without prejudice, priority or distinction,
except as expressly provided in the Indenture, between any Security and any
other Securities by reason of difference in time of issuance or otherwise, and
to secure (i) the payment of all amounts due on the Securities in accordance
with their terms, (ii) the payment of all other sums payable under this
Indenture, and (iii) compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Trustee acknowledges the foregoing Grants, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform the
duties herein required to the best of its ability.
1
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
"Accounts" means the Sinking Fund Account, the Master Collections
Account and the Operating Account established by the Company under the
provisions of Section 4.2.
"Affiliate" means, as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of capital stock, partnership interests,
by contract or otherwise), provided that, in any event, any Person that owns
directly or indirectly 20% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
20% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control
such other Person for the purposes of this definition; and provided further that
no individual shall be an Affiliate of a corporation or partnership solely by
reason of his being an officer, director or partner of such entity.
"Allowed Expenses" means any amounts due the Trustee under Section 7.7,
any Servicing Fees, any fees payable for the transfer of the lien reflected in
the Title Documents into and out of the Trustee's name, any fees payable for the
transfer of the ownership reflected in the Title Documents into and out of the
Company's name, any federal, state and local taxes and assessments incurred by
the Company (including corporate franchise taxes), any bank service charges and
account fees relating to the Accounts, the Company's pro rata share (based on
the relative amounts of funds attributable to the Contracts as compared to the
lease Contracts of all other Persons serviced by the Servicer) of the lockbox
fees, account fees and bank service charges relating to the Master Collections
Account, any legal and accounting fees for reports, certificates and opinions of
attorneys and independent accountants required under this Indenture, and any
Liquidation Expenses.
"Assignment" means the original instrument of assignment of a Contract
and all other documents securing such Contract made by the Servicer to the
Company (or in the case of any Contract acquired by the Company from another
Person, from such other Person to the Company), which is in a form sufficient
under the laws of the jurisdiction under which the ownership interest in the
Leased Vehicle is governed such that the ownership interest and a first priority
security interest in the Leased Vehicle may be transferred to the Company and a
second priority security interest in the related Leased Vehicle may be granted
in favor of the Trustee to permit the assignee to exercise all rights granted by
the Obligor under such Contract and such other documents and all rights
available under applicable law to the obligee under such Contract and that may,
to the extent permitted by the laws of such jurisdiction, be an assignment
constituting a part of the form of the Contract itself or a blanket instrument
of assignment covering other Contracts as well.
2
"Bankruptcy Law" shall have the meaning provided in Section 6.1.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a Legal Holiday.
"Collection Period" means with respect to any Payment Date, the
calendar month immediately preceding the Payment Date.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person replaces it pursuant to
the applicable provisions of this Indenture, and thereafter "Company" means such
successor Person.
"Company Order" or "Company Request" means a written order or request
signed in the name of the Company by its Chairman, President or a Vice
President, and by its Treasurer, Assistant Treasurer, Controller, Assistant
Controller, Secretary or an Assistant Secretary, and delivered to the Trustee.
"Contract" means each lease contract that has been executed by an
Obligor and pursuant to which such Obligor leased the Leased Vehicle described
therein, agreed to pay the lease payments as therein provided in connection with
such lease, and undertook to perform certain other obligations as specified in
such contract and that is Granted to the Trustee pursuant to this Indenture as
security for the Securities. The term "outstanding Contracts" as of any date
means all Contracts other than Liquidated Contracts.
"Contract Documents" means with respect to each Contract, (i) the
original Contract; (ii) either the original Title Document for the related
Leased Vehicle showing the Company as the owner and first lienholder and the
Trustee as second lienholder or an official receipt from the responsible state
or local government authority showing that an application has been made (and the
required fees have been paid) for registration of the Title Documents for such
Leased Vehicle in the names of the Company as owner and first lienholder and the
Trustee as second lienholder (or such other evidence of ownership of the Leased
Vehicle by the Company and perfection of the security interest in the related
Leased Vehicle, as determined by the Trustee to be permitted or required to
transfer ownership of the Leased Vehicle to the Company and to perfect such
security interests under the laws of the applicable jurisdiction, or a guarantee
from the dealer conveying such Leased Vehicle that the Title Document for such
Leased Vehicle showing the Company as owner and first lienholder and the Trustee
as second lienholder has been applied for); (iii) the related Assignment; and
(iv) any agreement(s) modifying the Contract (including, without limitation, any
extension agreement(s)).
"Contract Number" means with respect to any Contract included in the
Trust Estate, the number assigned to such Contract by the Servicer, which number
is set forth in the related Monthly Report.
"Contract Unavailability Notice" shall have the following meaning: in
the event that the Company determines, in its discretion, that it is unable, for
any reason outside its control, to purchase additional Leased Vehicles and
Contracts that conform with the purchasing criteria set
3
forth in the Servicing Agreements or in Exhibit A hereto, the Company may elect
to provide notice of such determination to the Trustee, such notice to be
referred to herein as a "Contract Unavailability Notice."
"Corporation" or "corporation" includes corporations, associations,
companies and business trusts.
"Default" means any event that is, or after notice or passage of time
would be, an Event of Default.
"Defaulted Contract" means with respect to any Collection Period, a
Contract (a) whose Obligor, at the end of such Collection Period is past due
with respect to at least one scheduled lease payment, or (b) with respect to
which the related Leased Vehicle has been repossessed and, in the case of either
(a) or (b), in respect of which Liquidation Proceeds, which, in the Servicer's
judgment, would constitute the final amounts recoverable in respect of such
Contracts, have not yet been collected as of the end of such Collection Period.
"Disbursement Certificate" means an Officers' Certificate of the
Company setting forth the individual items of Allowed Expenses to be paid by the
Company from funds in the Operating Account, agreeing that such items will be
promptly paid with such funds and certifying that such withdrawal of funds and
the payment of such Allowed Expenses conforms to the requirements of this
Indenture.
"Due Date" means as to any lease payment by an Obligor on a Contract,
the date upon which such lease payment is due.
"Eligible Account" means an account that is either (i) maintained with
a depository institution subject to supervision or examination by federal or
state authority and having a combined capital and surplus of at least
$3,000,000, or (ii) an account or accounts the deposits in which are fully
insured by the Federal Deposit Insurance Corporation.
"Eligible Additional Contract" means a Contract hereafter acquired by
the Company that, as of the date of such acquisition, satisfies the
representations and warranties contained in Section 4.4 of this Indenture.
"Eligible Investments" means any one or more of the following
obligations or securities:
(i) United States Obligations;
(ii) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company incorporated under the laws of the United
States of America or any State thereof and subject to supervision and
examination by federal and/or state banking authorities, so long as
such institution or company has a combined capital and surplus of at
least $3,000,000;
4
(iii) repurchase obligations with respect to any security
described in clause (i) entered into with a depository institution or
trust company, acting as principal, whose obligations have the same
maturity as that of the repurchase agreement and would be Eligible
Investments under clause (ii) above;
(iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any state thereof that at the time of such investment has
long-term, unsecured debt rated by Standard & Poor's as "AA-" or
better; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust
Estate to exceed 10% of the aggregate outstanding balances and amounts
of all Contracts and Eligible Investments held as part of the Trust
Estate;
(v) commercial paper given the highest rating by Standard &
Poor's at the time of such investment; and
(vi) any publicly traded money market mutual fund that is
invested in the above-mentioned Eligible Investments. "Event of
Default" shall have the meaning provided in Section 6.1.
"Full Prepayment" with respect to a Contract means either of the
following: (i) payment to the Servicer of 100% of the outstanding lease payments
of a Contract plus early termination fees and/or other charges properly payable
under the Contract (exclusive of any Contract referred to in clause (ii) or
(iii) of the definition of the term "Liquidated Contract"), less any discount of
such lease payments to which the Obligor shall be entitled under the terms of
such Contract and applicable law by virtue of early payment of any lease
payment, or (ii) payment by the Servicer into the Master Collections Account of
the purchase price of a Contract in connection with the repurchase by Servicer
of the Contract.
"Grant" means to mortgage, pledge, assign and grant a security interest
in. A Grant of a Contract and the related Contract Documents, the related Leased
Vehicle, an Eligible Investment, the Servicing Agreements or any other
instrument shall include all rights, powers and options (but none of the
obligations, except to the extent required by law) of the Granting party
thereunder, including without limitation, the immediate and continuing right to
claim, collect, receive and give receipt for payments in respect of the Contract
and principal and interest payments in respect of the Eligible Investment,
Insurance Proceeds, Liquidation Proceeds, purchase prices and all other moneys
payable thereunder and all proceeds thereof, to give and receive notices and
other communications, to make waivers or other agreements, to exercise all
rights and options, to bring suit or other legal proceedings in the name of the
Granting party or otherwise, and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Holder," "Securityholder" or "Noteholder" means a Person in whose name
a Security is registered on the Registrar's books.
5
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Independent" means with respect to any specified Person, such a Person
who (i) is in fact independent, (ii) does not have any direct financial interest
or any material indirect financial interest in the Company or in any other
obligor upon the Notes or in any Affiliate of the Company or of such other
obligor, and (iii) is not connected with the Company or such other obligor as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by a Company Order in the exercise of reasonable
care and such opinion or certificate shall state that the signer is Independent
within the meaning hereof.
"Insurance Proceeds" means the proceeds paid pursuant to any Physical
Damage Insurance Policy and amounts paid by any insurer under any other
insurance policy for damage or repair of a Leased Vehicle.
"Investment Company Act" means the Investment Company Act of 1940 (15
U.S.C. 90a-1 et seq.), as amended.
"Leased Vehicle" means, as to any Contract, the automobile (which may
be a passenger car, minivan, sport/utility vehicle or light truck) that
constitutes the subject of such Contract.
"Legal Holiday" shall have the meaning provided in Section 11.6 of this
Indenture.
"Liquidated Contract" means a Contract that (i) has been the subject of
a Full Prepayment, (ii) was a Defaulted Contract and with respect to which
Liquidation Proceeds that, in the Servicer's judgment, constitute the final
amounts recoverable in respect of such Contract have been realized and deposited
in the Master Collections Account, or (iii) has been paid in full on or after
its Maturity Date.
"Liquidation Expenses" means the reasonable out-of-pocket expenses
incurred by the Servicer in connection with the liquidation of any Contract
(including the attempted liquidation of a Contract that is brought current and
is no longer in default during such attempted liquidation) and the sale of any
property acquired in respect thereof, which expenses are not recoverable under
any insurance policy.
"Liquidation Proceeds" means the amounts received by the Servicer
(before reimbursement for Liquidation Expenses) in connection with the
liquidation of any Defaulted Contract and the sale of any property acquired in
respect thereof, whether through receipt of Insurance Proceeds, repossession,
sale or otherwise.
"Master Collections Account" means the lockbox account established and
maintained by the Servicer.
6
"Master Purchasing Agreement" means the agreement between the Company
and Transition Leasing Management, Inc. pursuant to which Transition Leasing
will acquire on behalf of the Company vehicles that are to become Leased
Vehicles and prepare and execute Contracts on the Company's behalf with
Obligors.
"Maturity Date" means with respect to any Contract, the date on which
the last scheduled lease payment of such Contract shall be due and payable
(after giving effect to all prepayments received prior to the date of
determination).
"Monthly Report" means an Officer's Certificate of the Company relating
to interest payments on the Notes required to be delivered to the Trustee under
this Indenture. The Monthly Report shall be substantially in the form of Exhibit
B attached hereto, as amended from time to time, and shall have attached or
included all lists, data and information required to be attached or included
hereunder.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"Net Capitalized Cost," with respect to a Leased Vehicle, means an
amount equal to 120% of the actual purchase price of the vehicle, less the
amount of the Lessee's down payment.
"Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"Note Register" means the register for the Securities maintained by the
Registrar pursuant to Section 2.5.
"Obligor" means each Person who is indebted under a Contract or who has
acquired the Leased Vehicle subject to a Contract.
"Offering Amount" shall mean the $10,000,000 in aggregate principal
amount of 9.0% Secured Redeemable Promissory Notes, due ________, 2006, that may
be issued under this Indenture.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of any Person.
"Officers' Certificate" when used with respect to any Person, means a
certificate signed by the Chairman of the Board, President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of such Person, or any other officer of such Person customarily performing
functions similar to those performed by any of the above designated officers.
"Operating Account" means the commercial bank account created and
maintained by the Company and denominated as such pursuant to Section 4.2.
7
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Outstanding" means, with respect to the Securities, as of the date of
determination, all the Securities theretofore authenticated and delivered under
this Indenture except:
(i) the Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) the Securities or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Holders of such
Securities; provided that, if such Securities or portions thereof are
to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture unless proof satisfactory to the Trustee is presented that
any such Securities are held by a holder in due course; provided,
however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any Affiliates of the Company shall
be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or
waiver, only Securities with respect to which the Trustee has received
written notice of such ownership or otherwise has actual knowledge of
such ownership shall be so disregarded. Securities so owned that have
been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is
not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor.
"Overdue Interest Rate" means the lesser of (i) an interest rate of 18%
per annum, or (ii) the highest lawful rate of interest.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 7.10 and is
authorized by the Company to pay the principal or any interest that may become
payable on any Securities on behalf of the Company.
"Payment Date" with respect to any Security, means the (i) fifteenth
day of each calendar month (unless such day is a Legal Holiday, in which event
the next succeeding Business Day) commencing with the second calendar month
following the month in which the Security is issued, and (ii) the Stated
Maturity.
"Payment Date Statement" shall have the meaning provided in Section
5.1.
8
"Person" means any individual, corporation, partnership, joint venture,
joint adventure, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Physical Damage Insurance Policy" means with respect to a Leased
Vehicle, any policy of physical damage, comprehensive or collision insurance
covering the Leased Vehicle pursuant to which the Servicer may obtain recoveries
for loss or damage to the Leased Vehicle.
"Purchase Date" means the date on which the Company remits funds from
the Operating Account to pay the purchase price for a Leased Vehicle or for an
Eligible Additional Contract.
"Purchased Contracts Certificate" means the Officer's Certificate of
the Company and the Servicer required to be delivered to the Trustee in
connection with the purchase of any Eligible Additional Contracts and designated
as such pursuant to Section 4.3.
"Record Date" for the interest payable on any Payment Date means the
first Business Day of the month in which such Payment Date occurs.
"Redemption Date" means any Payment Date which is subsequent to the
Sinking Fund Trigger Date and which is designated by the Company as the date
upon which the Company will redeem some or all of the Securities.
"Redemption Price" means with respect to any Security to be redeemed,
100% of the unpaid principal amount of such Security together with accrued and
unpaid interest on the unpaid principal amount thereof to the applicable
Redemption Date.
"Registrar" means the registrar for the Securities appointed by the
Company pursuant to Section 2.5 hereof, and any successor registrar appointed by
the Company hereunder.
"Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Leased Vehicle is registered.
"Responsible Officer" when used with respect to the Trustee means the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive Committee of the Board of Directors or Trustees,
the President, any Vice President, any Assistant Trust Officer, the Secretary,
any Assistant Secretary, the Treasurer, any Assistant Treasurer, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Sale" has the meaning set forth in Section 6.14.
"Schedule of Contracts" means the list of Contracts attached hereto as
Schedule A, as such list may be supplemented from time to time hereafter
pursuant to Section 4.3, as being Granted to the Trustee as part of the Trust
Estate, which list or lists shall set forth, with respect to
9
each Contract, the Contract Number, the aggregate unpaid lease payments as of
the date acquired by the Company and as of the date of origination, the name of
the Obligor, the Maturity Date, the name of the originating person, and the
vehicle identification number for the Leased Vehicle, and the date on which the
Contract was originated.
"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Securities" or "Notes" means the 9.0% Secured Redeemable Promissory
Notes, due __________ 2006, that are issued under this Indenture, as amended
from time to time.
"Securities Act of 1933" means the Securities Act of 1933, as amended.
"Securities Exchange Act of 1934" means the Securities Exchange Act of
1934, as amended.
"Servicer" means Transition Leasing Management, Inc., as servicer under
the Servicing Agreement, and its permitted successors and assigns, including any
successor servicer appointed pursuant to Section 5.10.
"Servicer Report Date" means the 10th day (or the Business Day next
following such day if such day is not a Business Day) of each month during the
existence of this Indenture.
"Servicing Agreements" means the Master Purchasing Agreement and the
Servicing Agreement, each dated as of ______________, 2001, between the Company
and the Servicer, providing, among other things, for the purchasing of Leased
Vehicles and Contracts and the collecting and servicing of the Contracts, as
said agreements may be amended or supplemented from time to time as permitted
hereby and thereby. Such term shall also include any servicing agreement entered
into with a successor servicer pursuant to Section 5.10 and any separate
servicing agreement for the servicing of Contracts.
"Servicing Fees" means the compensation payable by the Company to the
Servicer under the Servicing Agreement.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Company and the Trustee
by the Servicer, as such list may be amended or supplemented from time to time.
"Sinking Fund Account" means the trust account established and
maintained by the Company and designated as such pursuant to Section 4.2.
"Sinking Fund Trigger Date" means the earlier to occur of __________,
2004 or the date of receipt by the Trustee of a Contract Unavailability Notice.
10
"Special Record Date" means the date determined pursuant to Section
2.11.
"Stated Maturity" means ___________, 2006.
"Subsidiary" means, with respect to the Company, any corporation,
partnership, joint venture or joint adventure whether now existing or hereafter
organized or acquired: (i) in the case of a corporation, of which a majority of
the securities having ordinary voting power for the election of directors or
other governing body of such corporation (other than securities having such
power only by reason of the happening of a contingency) are at the time owned by
the Company or one of more other Subsidiaries of the Company, or (ii) in the
case of a partnership, joint venture or joint adventure, in which the Company is
a general partner or joint venturer or joint adventurer.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended from time to time.
"Title Document" means, with respect to any Leased Vehicle, the
certificate of title for, or other evidence of ownership of, such Leased Vehicle
issued by the Registrar of Titles in the jurisdiction in which such Leased
Vehicle is registered.
"Trust Estate" shall have the meaning provided in the Granting Clauses
of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it, and thereafter means the successor.
"Trust Officer" means any Responsible Officer assigned by the Trustee
to administer its corporate trust matters.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"United States Obligations" means direct obligations of the United
States of America or any agency or instrumentality of the United States of
America, or other obligations the principal of and interest on which are
unconditionally guaranteed or insured by the United States of America.
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. If
this Indenture is qualified under the TIA, any provision that is required by the
TIA to be incorporated herein shall be so incorporated and shall supersede any
conflicting provision hereof. The following TIA terms have the following
meanings in this Indenture:
"Commission" means the SEC.
"indenture securities" means the Securities.
11
"indenture securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company (or any other
obligor on the Securities).
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule have the meanings so
assigned to them.
SECTION 1.3. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as of the date of this Indenture;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the
plural include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.1 FORMS GENERALLY.
The Securities and the Trustee's certificate of authentication shall be
in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the
Securities may be listed, or as may consistently herewith be determined by the
officers executing such Securities, as evidenced by their execution thereof. Any
portion of the text of any Security may be set forth on the reverse thereof, in
which case the following reference to the portion of the text appearing on the
reverse of the Securities shall be inserted on the face of the Securities,
immediately prior to the paragraph stating that the certificate of
authentication on the Security must be executed by manual signature of the
Trustee as a condition to the validity of such Security:
"Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which provisions
shall for all purposes have the same effect as if set forth at
this place."
12
The definitive Securities shall be printed, lithographed or engraved or produced
by any commercially reasonable manner, all as determined by the officers
executing such Securities, as evidenced by their execution thereof.
SECTION 2.2 FORMS OF SECURITY.
(a) The form of Security is as follows:
TRANSITION AUTO FINANCE IV, INC.
9.0% SECURED REDEEMABLE PROMISSORY NOTES
DUE _________, 2006
No. _________ CUSIP NO. _______ $__________
Transition Auto Finance IV, Inc., a corporation duly organized and
existing under the laws of the State of
Texas (herein referred to as the
"Company"), for value received, hereby promises to pay to ______________________
or registered assigns, the principal sum of ____________________________ dollars
on ________, 2006 (the "Stated Maturity" of such principal), and to pay interest
(computed on the basis of a 360-day year consisting of 12 months of 30 days
each) on the unpaid portion of said principal sum outstanding from time to time
from the date of issue, until the principal amount of this Note is paid in full
at the rate of 9.0% per annum, which interest shall be due and payable on the
fifteenth day of each calendar month (for such interest accruing during the
preceding month or months) commencing with the second calendar month after the
issuance hereof and upon the Stated Maturity (each a "Payment Date").
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Company
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note. Any
installment of interest that is not paid when and as due shall bear interest at
the Overdue Interest Rate from the date due to the date of payment thereof, but
only to the extent payment of such interest shall be lawful and enforceable.
This Note represents a general obligation of the Company.
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 9.0% Secured Redeemable Promissory Notes (herein called the
"Notes"), all issued and to be issued under the Indenture dated as of
_______________, 2001 (herein called the "Indenture"), between the Company and
Trust Management, Inc. (the "Trustee," which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights thereunder of
the Company, the Trustee and the Holders of the Notes, and the terms upon which
the Notes are, and are to be, authenticated and delivered. All terms used in
this Note that are capitalized, if not defined herein, are defined in the
Indenture and shall have the meanings assigned to them in the Indenture.
13
Payment of the outstanding principal of and accrued interest on this
Note at the Stated Maturity or of the Redemption Price payable on any Redemption
Date as of which this Note has been called for redemption shall be made upon
presentation of this Note to the Paying Agent appointed by the Company for such
purpose. Payments of all installments of interest due and payable on any Payment
Date (other than the Stated Maturity) shall be made by check mailed to the
Person whose name appears as the Holder of this Note on the Note Register as of
the first Business Day of the month in which such Payment Date occurs (the
"Record Date") without requiring that this Note be submitted for notation of
payment. Checks returned undelivered will be held for payment to the Person
entitled thereto, subject to the terms of the Indenture, at the office or agency
in the United States of America designated by the Company for such purpose
pursuant to the Indenture.
The payment of principal and accrued interest on the Notes, when due,
is secured by the Trust Estate, which consists of, among other things, a first
priority security interest in specific motor vehicle lease Contracts, the Leased
Vehicles described therein and the funds in the Sinking Fund Account.
If an Event of Default shall occur and be continuing with respect to
the Notes, the Notes, and all principal and unpaid accrued interest, may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Company and each surety, endorser, guarantor, and other party, if
any, now or hereafter liable for payment of any sums of money payable on this
Note, jointly and severally, waive presentment and demand for payment, notice of
intent to accelerate and notice of acceleration, protest and notice of protest
and nonpayment, and diligence in collecting or bringing suit against any party
hereon, and agree that their liability on this Note shall not be affected by any
renewal or extension in time of payment hereof, by any indulgence, or by any
release, modification, or substitution of any security for the payment of this
Note, and hereby consent to any and all extensions, renewals, replacements,
waivers, releases, or exchanges affecting this Note and the taking, release,
modification, or substitution of any security, with or without notice and before
or after maturity.
The Notes are redeemable at the option of the Company on any Payment
Date following the Sinking Fund Trigger Date, in whole or in part, at 100% of
the unpaid principal amount thereof, together with accrued and unpaid interest
thereon to the Redemption Date; provided, however, that the Paying Agent shall
be required to redeem the Notes at such time only to the extent that the Company
has theretofore deposited with the Paying Agent money sufficient to effect such
redemption. At least 10 but not more than 60 days prior to the Redemption Date,
the Company is required to mail a notice of redemption by first class mall to
the registered owner of this Note specifying the Redemption Date, the Redemption
Price, the name and address of the Paying Agent, that this Note must be
delivered to the Paying Agent and that interest on this Note ceases to accrue on
and after the Redemption Date.
If provision is made for the redemption and payment of this Note in
accordance with the Indenture, this Note shall thereupon cease to bear interest
from and after the Redemption Date.
14
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note may be registered on the Note Register of
the Company, upon surrender of this Note for registration of transfer at the
office or agency designated by the Company pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes
of authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of this Note,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company with the consent of the Holders of Notes representing more
than 50% of the principal amount of all Notes at the time outstanding.
The Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the principal amount of the Notes at the
time outstanding, on behalf of the Holders of all the Notes, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Note issued
thereunder.
The term "Company" as used in this Note includes any successor to the
Company under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture and subject to certain limitations therein set forth.
The Notes are exchangeable for a like aggregate principal amount of a different
authorized denomination, as requested by the Holder surrendering same.
This Note and the Indenture shall be construed in accordance with, and
governed by, the laws of the State of
Texas applicable to agreements made and to
be performed therein.
The Indenture and this Note are hereby expressly limited so that in no
contingency or event, whether by reason of acceleration of the maturity of this
Note or otherwise, shall the amount paid, or agreed to be paid by the Company
for the use, forbearance, or detention of the money loaned under this Note or
otherwise or for the payment or performance of any covenant or obligation
contained herein or the Indenture or in any other document evidencing, securing
or
15
pertaining hereto, exceed the maximum amount permissible under applicable law,
as now or as hereafter amended. If from any circumstances whatsoever fulfillment
of any provision hereof or any of such other documents, at the time performance
of such provision shall be due, shall involve transcending the limit of
validity, and if from any such circumstances the registered owner of this Note
shall ever receive interest or anything that might be deemed interest under
applicable law that should exceed the highest lawful rate, such amount that
would be excessive interest shall be applied to the reduction of the principal
of this Note and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal of this Note such excess shall be
refunded to the Company. All sums paid or agreed to be paid to the registered
owner of this Note for the use, forbearance or detention of the indebtedness of
the Company to the registered owner of this Note shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the actual rate of
interest on account of such indebtedness is uniform, or does not exceed the
maximum rate permitted by applicable law as now or hereafter amended, throughout
the term thereof. The terms and provisions of this paragraph shall control and
supersede every other provision of this Note and the Indenture. The Company
hereby waives, to the extent permitted by applicable law, all of its rights or
protections afforded by any applicable usury or interest limitation law.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall impair or affect the right of the registered owner of
this Note to receive payment of principal and interest on this Note, on or after
the respective due dates, or the right of the Trustee to bring suit for the
enforcement of any such payment on or after such respective dates, without the
consent of the registered owner.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Transition Auto Finance IV, Inc. has caused this
instrument to be duly executed under its corporate seal.
Dated:
---------------------------
TRANSITION AUTO FINANCE IV, INC.
By:
-------------------------------------
(Authorized Officer)
[SEAL]
Attest:
-------------------------------------
(Authorized Officer)
16
(b) The form of the Trustee's certificate of authentication is as
follows:
This is one of the Notes referred to in the within-mentioned Indenture.
-----------------------------------------
-----------------------------------------
as Trustee, Paying Agent and Registrar
By:
--------------------------------------
Authorized Signatory
SECTION 2.3 DENOMINATIONS.
The Securities shall be issuable only as registered securities in
authorized denominations with a minimum denomination of $1,000 and larger
denominations of integral multiples of $1,000 (in each case expressed in terms
of the principal amount thereof on the date of issuance).
SECTION 2.4 EXECUTION AND AUTHENTICATION.
(a) The Securities shall be executed on behalf of the Company by its
Chairman of the Board, President or any Vice President of the Company and
attested to by an Officer of the Company other than an Officer who has executed
the Securities. The signature of any such Persons on the Securities may be
manual or facsimile.
(b) Securities bearing the manual or facsimile signatures of
individuals who were at any time the Officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased to be
such prior to the authentication and delivery of such Securities.
(c) A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security on
behalf of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
(d) The Trustee shall authenticate Securities from time to time for
original issue in the aggregate Offering Amount upon a Company Order; provided,
however, the Trustee shall not be required to so authenticate more often than
once a week. The aggregate principal amount of Securities outstanding at any
time may not exceed that amount except as provided in Section 2.8.
(e) Notwithstanding anything contained herein to the contrary, each of
the Notes issued hereunder, with the consent of the Company and Trustee, may be
issued in book entry form as an uncertificated security in accordance with the
provisions of Article 8 of the Uniform Commercial Code as adopted in the state
of organization of the Company.
17
SECTION 2.5 REGISTRAR AND PAYING AGENT.
(a) The Company shall appoint a registrar for the Securities (the
"Registrar") who shall maintain or cause to be maintained an office or agency
where Securities may be presented for registration or transfer or for exchange.
The Registrar shall keep a register of the Securities and of their transfer and
exchange (the "Note Register"). The Company may have one or more co-registrars.
(b) Subject to the provisions of Section 5.2, the Company may designate
one or more Paying Agents (the "Paying Agents") who shall maintain or cause to
be maintained an office within the United States of America, at which the
Securities may be presented or surrendered for payment or at which the Paying
Agent may make payments of accrued interest on the Securities on behalf of the
Company with funds withdrawn from the Sinking Fund Account.
(c) The Company shall notify the Trustee of the name and address of any
such Registrar or Paying Agent and may appoint successors thereof.
(d) The Company initially appoints the Trustee as Registrar and as
Paying Agent.
SECTION 2.6 SECURITYHOLDER LISTS.
The Trustee shall preserve a list of the names and addresses of
Securityholders in as current a form as is reasonably practicable. If the
Trustee is not the Registrar, the Company shall cause the Registrar to furnish
to the Trustee five Business Days before each Payment Date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.7 TRANSFER AND EXCHANGE.
Where a Security is presented to the Company or the Registrar with a
request to register a transfer of Securities, the Company shall cause the
Registrar to register the transfer as requested if the requirements for a
transfer pursuant to the Uniform Commercial Code, as enacted in the State of
Texas, are met. Where Securities are presented to the Company or the Registrar
with a request to exchange them for an equal principal amount of Securities of
other denominations, the Company shall cause the Registrar to make the exchange
as requested if the same requirements are met. To permit transfers and
exchanges, the Trustee shall authenticate Securities upon Company Request or
upon request of the Registrar. The Company may charge a reasonable fee to the
Holder for any transfer or exchange other than an exchange pursuant to Section
2.9, 3.7 or 9.5.
SECTION 2.8 REPLACEMENT SECURITIES.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements for the issuance of
replacements securities pursuant to the Uniform Commercial Code, as enacted in
the State of
Texas, are met. An indemnity bond must be sufficient in the
18
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent and the Registrar from any loss that any of them may suffer if a
Security is replaced. The Company may charge for its expenses in replacing a
Security.
SECTION 2.9 TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
SECTION 2.10 CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Company shall forward to
the Trustee any Securities surrendered to them for transfer, exchange, payment
or cancellation and shall dispose of cancelled Securities as the Company directs
in accordance with applicable law. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation.
SECTION 2.11 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest and, to the extent permitted by law, interest
on defaulted interest at the Overdue Interest Rate to the persons who are
Securityholders of record as of a subsequent date designated as a "Special
Record Date" for such payment. The Trustee shall establish the Special Record
Date if and when funds for the payment of such interest have been received by
the Paying Agent from the Company. At least 15 days before the subsequent
Special Record Date, the Trustee shall mail to each Securityholder a notice that
states the subsequent Special Record Date, the payment date for the defaulted
interest, and the amount of defaulted interest (plus any permitted interest
thereon) to be paid.
SECTION 2.12 PERSONS DEEMED OWNERS.
Prior to the due presentment for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar and any
agent of the Company or of the Trustee may treat the Person whose name and
Security is registered on the Note Register as the owner of such Security for
the purpose of receiving payments of the principal of and interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee, nor any agent of the Company
shall be affected by notice to the contrary.
19
ARTICLE 3
REDEMPTION
SECTION 3.1 REDEMPTION AFTER SINKING FUND TRIGGER DATE.
At any time on any Payment Date on or after the Sinking Fund Trigger
Date, the Securities may be redeemed, in whole or in part, at the option of the
Company at the Redemption Price for such Securities. If the Company elects to
redeem the Securities, it shall, not later than 45 days prior to the Payment
Date selected for redemption, deliver notice of such election to the Trustee,
together with a Company Order directing the Trustee to effect such redemption,
which notice will specify the date selected for redemption and, if the
Securities are to be redeemed in part, the principal amount of the Securities to
be redeemed.
SECTION 3.2 SECURITIES NOT PREVIOUSLY DELIVERED TO TRUSTEE.
If the Company wishes to credit Securities it has not previously
delivered to the Trustee for cancellation against the principal amount of
Securities to be redeemed, it shall so notify the Trustee and it shall deliver
the Securities duly endorsed with the notice.
SECTION 3.3 SELECTION OF SECURITIES TO BE PURCHASED OR REDEEMED.
If less than all of the Securities are to be called for redemption, the
particular Securities to be redeemed shall be selected by the Trustee at random,
by lot or by such other method as the Trustee deems appropriate.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. Securities and
portions of Securities selected shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Securities of a Holder are to be redeemed,
the entire outstanding amount of Securities held by such Holder, even if not a
multiple of $1,000, shall be purchased or redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called for redemption.
SECTION 3.4 NOTICE OF REDEMPTION.
(a) At least 10 days but not more than 60 days before the Redemption
Date, the Company shall mail a notice of redemption by first-class mail to each
Holder of Securities, with a copy thereof to Trustee.
(b) The notice shall identify the Securities to be redeemed by CUSIP
No. and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) if any Security is being redeemed in part, the portion
of the principal amount of such Security to be redeemed and that, after
the redemption date upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Security;
20
(iv) the name and address of the Paying Agent;
(v) that the Securities must be delivered to Paying Agent at
the address stated in the notice for the Holder to receive the
Redemption Price; and
(vi) that interest on the Securities ceases to accrue on and
after the Redemption Date.
(c) At the Company's request, the Trustee shall give notice of
redemption in the Company's name and at the Company's expense. Failure to give
notice of redemption, or any defect therein, to any Holder of any Security shall
not impair or affect the validity of the redemption of any Security.
SECTION 3.5 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption under Section 3.4 has been given, the
Securities called for redemption must be redeemed on the designated Redemption
Date. Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price.
A notice of redemption under Section 3.4 may not be conditional. Unless
the Company shall default in the payment of the Redemption Price, no interest
shall accrue on the Securities for any period after the Redemption Date.
SECTION 3.6 DEPOSIT OF REDEMPTION AMOUNT.
Prior to the Redemption Date, the Company shall deposit with the Paying
Agent money sufficient to pay the Redemption Price on Securities on that date.
Such moneys shall be segregated by the Paying Agent for the purpose of
application to such redemption on the Redemption Date. If such deposit shall be
made, the amount payable on the Securities shall be limited to the Redemption
Price therefore, without any premium or penalty, and no interest shall accrue on
such Redemption Price for any period after the Redemption Date. If any Security
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the provisions of this Section 3.6,
interest shall be paid on the unpaid principal from the Redemption Date until
such principal is paid, and, to the extent lawful, on any interest not paid on
such unpaid principal, in each case at the rate provided in the Securities.
SECTION 3.7 SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
21
ARTICLE 4
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 4.1 COLLECTION OF MONEYS.
Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and may receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Trustee pursuant to this
Indenture. The Trustee shall hold all such money and property received by it as
part of the Trust Estate, and shall apply it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under the Servicing Agreements, the
Trustee may, and upon the request of the Holders of Securities representing more
than 50% of the principal amount of the Outstanding Securities shall, take such
action as may be appropriate to enforce such payment or performance including
the institution and prosecution of appropriate judicial proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and to proceed thereafter as provided in Article 7.
SECTION 4.2 SINKING FUND ACCOUNT; OPERATING ACCOUNT; MASTER COLLECTIONS
ACCOUNT.
(a) Prior to the initial authentication and delivery of any Securities,
the Company shall open, at one or more depository institutions (which may be the
Trustee) (the "Custodians"), a trust account denominated "Sinking Fund
Account--Trust Management, Inc., as trustee in respect of the 9.0% Secured
Redeemable Promissory Notes" (the "Sinking Fund Account"). The Sinking Fund
Account shall be an Eligible Account. Deposits to and withdrawals from the
Sinking Fund Account shall be made solely in accordance herewith, and the funds
in the Sinking Fund Account shall not be commingled with any other moneys,
except as expressly provided for herein. The Company shall also open a
commercial bank account in its own name for use in holding the Company's funds
and in paying the Company's expenditures (the "Operating Account"). The Sinking
Fund Account, the Master Collections Account and the Operating Account are
sometimes collectively referred to as the "Accounts" or individually as an
"Account." The Company shall give the Trustee at least five Business Days'
written notice of any change in the location of any Operating Account and any
related account identification information.
(b) The Company shall direct or cause to be directed all Obligors to
remit all collections and payments on the Contracts directly to the Master
Collections Account maintained by the Servicer. The Company agrees to provide or
cause to be provided payment books or will mail or cause to be mailed monthly
statements to all Obligors with remittance instructions directing all payments
to be remitted directly to the Master Collections Account. The Company agrees
that all cash, money orders, checks, notes, drafts and other items that it
otherwise receives and that are attributable to the Contracts shall be promptly
deposited into the Master Collections Account. The Company shall likewise
deposit or cause to be deposited in the Master Collections Account within two
Business Days of receipt all Net Liquidation Proceeds and Insurance Proceeds
(net of any portion thereof applied to the repair of any Leased Vehicle,
released to an
22
Obligor in accordance with the normal servicing procedures of the Servicer). The
Company shall cause the Servicer to transfer to the Operating Account, at least
weekly and more frequently if deemed reasonable by the Company under the
circumstances, all funds (except any minimum sum necessary to avoid bank service
charges) in the Master Collections Account that are attributable to the
Contracts.
(c) The Company shall cause the Servicer to maintain detailed
accounting books and records adequate to determine the respective share of the
funds (including all income earned thereon as determined by any allocation
method deemed reasonable by the Servicer) deposited or contained in the Master
Collections Account attributable to each motor vehicle lease contract, including
the Contracts, owned by the Company or serviced by the Servicer.
(d) The Company agrees that it shall not withdraw any funds in the
Operating Account except for an investment, transfer or payment of such funds in
accordance with the provisions of this Section 4.2 and Section 4.3.
(e) The Company may invest the funds in the Operating Account but only
in Eligible Investments that mature on or prior to the Business Day next
preceding the next Payment Date following the making of such investment.
(f) So long as the Securities have not been declared due and payable
pursuant to Section 6.2 and subject to the receipt by the Trustee of any
certificates required by the Trustee pursuant to Section 5.6, Section 5.12,
Section 7.2(b) and/or Section 11.4, the Company shall have the right to cause
the funds in the Operating Account to be withdrawn or applied, to the extent
necessary and in the amounts required, for the following purposes in the
following order of priority:
FIRST to the transfer to the Sinking Fund Account of the
amount that, together with any amounts held in the Sinking
Fund Account, is sufficient for the payment, PRO RATA, of all
interest due on the Outstanding Securities on each Payment
Date;
SECOND, to the payment to the Trustee of any unpaid amount due
the Trustee pursuant to Section 7.7;
THIRD, to the payment of any other unpaid Allowed Expenses,
except that during the continuance of an Event of Default, no
such payments of unpaid Allowed Expenses shall be made (except
for payments of amounts due to the Trustee under Section 7.7);
FOURTH, after the Sinking Fund Trigger Date or during the
continuance of an Event of Default, to the transfer to the
Sinking Fund Account for the PRO RATA payment of amounts owing
on the Notes when due; and FIFTH except during the continuance
of an Event of Default, until the Sinking Fund Trigger Date,
to the purchase of Eligible Additional Contracts in accordance
with Section 4.3.
23
All of the foregoing applications of funds in the Operating Account that have
higher priority must be fully satisfied before any of the foregoing applications
having lower priority may be satisfied with such funds.
(g) On or prior to the Business Day next preceding each Payment Date
occurring prior to the Sinking Fund Trigger Date, the Company shall cause to be
transferred from the Operating Account to the Sinking Fund Account an amount
that, together with any funds then held in the Sinking Fund Account, is
sufficient to pay the accrued interest due on the Outstanding Notes on such
Payment Date. After the Sinking Fund Trigger Date, upon the written request of a
Trust Officer from time to time or as otherwise determined by the Company but in
any event not less often than the Business Day next preceding each Payment Date,
the Company shall cause to be transferred from the Operating Account to the
Sinking Fund Account the funds in the Operating Account (except any minimum
balance necessary to avoid bank service charges), less any Allowed Expenses for
which funds have not been previously withdrawn from the Operating Account.
(h) During the continuance of an Event of Default, upon the written
request of a Trust Officer from time to time but in any event not less often
than the Business Day next preceding each Payment Date, the Company shall cause
to be transferred from the Operating Account to the Sinking Fund Account all of
the funds in the Operating Account, less any amounts due the Trustee under
Section 7.7.
(i) If the funds in the Operating Account exceed $250,000 for a period
of 60 consecutive days or longer, the Company shall promptly transfer from the
Operating Account to the Sinking Fund Account that portion of such funds
exceeding $250,000 at the end of such 60 day period. This provision shall not
apply to any proceeds from the sale of the Notes by the Company if the Company
elects to deposit such proceeds in the Operating Account, and for this purpose,
any proceeds from the sale of Notes shall be deemed to be the first funds used
by the Company for the purchase of Eligible Additional Contracts.
(j) Upon the Sinking Fund Trigger Date, the Company shall deposit in
the Sinking Fund Account any remaining net proceeds from the sale of the
Securities that have not been used for the purchase of Contracts.
(k) All payments of principal or accrued interest with respect to the
Securities shall be made from amounts held in the Sinking Fund Account. All
payments to be made from time to time to the holders of Securities out of funds
in the Sinking Fund Account pursuant to this Indenture shall be made by the
Trustee as the Paying Agent appointed by the Company, subject to Section 5.2.
All moneys deposited from time to time in the Sinking Fund Account, and all
investments made with such moneys, shall be held by the Trustee as part of the
Trust Estate as herein provided. No amounts contained in the Sinking Fund
Account shall be paid over to or at the direction of the Company, except as
provided in a Payment Date Statement delivered by the Company, that is in
compliance with provisions of Section 5.1 or as otherwise provided by the
provisions of this Indenture.
24
(l) Subject to Section 4.5(e), any funds in the Sinking Fund Account
shall be invested and reinvested by the Trustee at the Company's direction as
provided in Section 4.5(d) in one or more Eligible Investments. All income or
other gain from investment of moneys deposited in the Sinking Fund Account shall
be deposited therein immediately upon receipt, and any loss resulting from such
investment shall be charged to such Account. If an Event of Default has occurred
and is continuing or the Company does not give investment instructions to the
Trustee, then the Trustee shall follow the investment instructions contained in
Section 4.5(e).
(m) Notwithstanding any other provision of this Indenture, the Company
may elect, in its sole discretion, to deposit the proceeds from the sale of
Notes into the Operating Account. In that event, the Company may, without the
consent of the Trustee or any Noteholder, withdraw from the Operating Account
the funds necessary to pay the offering expenses incurred in connection with the
sale of the Notes, but not to exceed the limits set forth in the Company's final
prospectus filed with the SEC pursuant to which the Securities are offered and
sold on behalf of the Company.
SECTION 4.3 PURCHASE OF LEASED VEHICLES AND ELIGIBLE ADDITIONAL CONTRACTS.
(a) Leased Vehicles and Eligible Additional Contracts shall be
originated by the Servicer (or its contractors) for purchase by the Company
pursuant to the terms of the Servicing Agreements and this Indenture. In
carrying out its purchase obligations, the Servicer shall use its customary and
usual procedures in evaluating the purchase of motor vehicles and motor vehicle
lease Contracts and, to the extent more exacting, the procedures used by the
Servicer in respect to such motor vehicles and Contracts purchased by it for its
own account. The Company and the Servicer shall agree from time to time as to
which Leased Vehicles and Eligible Additional Contracts are to be purchased by
the Company through Servicer. The purchase prices for any such purchases shall
be payable from the funds in the Operating Account, notwithstanding the
provisions of Section 5.12. On or prior to each Servicer Report Date, the
Company shall deliver to the Trustee (or any duly appointed custodian for the
Contract Documents) the Contract Documents relating to such Contracts, with the
Contracts containing the notice required by Section 4.3(e). Also, on or prior to
each Servicer Report Date, the Company shall deliver to the Trustee a
supplemental Schedule A to this Indenture, reflecting all Contracts acquired by
or for the Company during the report period. If no Contracts were acquired
during the report period, it will not be necessary to file a supplemental
Schedule A for that period.
(b) Servicer agrees that any motor vehicle lease Contracts originated
by it that satisfy the criteria established in Section 4.4 of this Indenture
will be offered for sale to the Company, to the extent that the Company has
sufficient funds to purchase such Contracts.
(c) The purchase price payable by the Company for each Leased Vehicle
originated by the Servicer on the Company's behalf shall equal the original
purchase price of the Leased Vehicle, plus a fee to the Servicer equal to $150
per purchased Contract, plus 57.5% of the Obligor's down payment to the Company.
(d) Servicer and the Company may amend the purchasing criteria set
forth in the Servicing Agreements with the exception of the purchasing criteria
set forth on Exhibit A to this
25
Indenture, for which the prior written consent of the Trustee or the Holders of
50% of the aggregate principal amount of the Outstanding Securities must be
obtained.
(e) Each Eligible Additional Contract purchased by the Company pursuant
to this Section 4.3 shall be marked on its face with the following notice:
"NOTICE: THIS MOTOR VEHICLE LEASE CONTRACT HAS BEEN SOLD TO
TRANSITION AUTO FINANCE IV, INC., AND IS SUBJECT TO A
PERFECTED SECURITY INTEREST OF TRUST MANAGEMENT, INC., AS
TRUSTEE, UNDER AN INDENTURE DATED AS OF ______________, 2001,
BETWEEN TRANSITION AUTO FINANCE IV, INC. AND SAID TRUSTEE."
A UCC-l financing statement properly describing each Eligible
Additional Contract and naming the Trustee as secured party shall be duly filed
in the appropriate filing office to perfect the Trustee's security interest in
such Contract.
(f) Without the prior consent of the Trustee, neither the Servicer nor
the Company shall make any payments or withdrawals from funds in the Operating
Account for the purchase of any Contracts (i) following the Sinking Fund Trigger
Date, or (ii) during the continuance of an Event of Default.
SECTION 4.4 REPRESENTATIONS AND WARRANTIES AS TO THE CONTRACTS.
With respect to each Contract, the Company covenants and agrees that,
effective as of the Purchase Date for such Contract, the following
representations and warranties shall be true and shall be reaffirmed by delivery
of the Purchased Contracts Certificate signed by the Servicer:
(a) Each Contract conforms with all applicable Federal, state
and local laws, regulations and official rulings.
(b) Each Contract (i) shall have been originated in the United
States of America and shall cover a Leased Vehicle purchased from a
dealer in the retail sale of the Leased Vehicle in the ordinary course
of such dealer's business, shall have been fully and properly executed
by the parties thereto and the full and complete title to such Leased
Vehicle shall have been validly assigned by such dealer to the Company
in accordance with its terms, (ii) shall have created or shall create
ownership of the Leased Vehicle in the name of the Company and a valid,
subsisting and enforceable first priority security interest in favor of
the Trustee in the Leased Vehicle, (iii) shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of the
benefits of the Leased Vehicle, (iv) shall provide for, in the event
that such Contract is prepaid, a prepayment that fully satisfies all
required payments pursuant to the Contract, (v) meets in all material
respects all purchasing criteria set forth on Exhibit A attached
hereto, and (vi) shall not be a Defaulted Contract.
26
(c) (i) The Title Document for the related Leased Vehicle
shows (or if a new or replacement Title Document is applied for with
respect to such Leased Vehicle, the official receipt from the
responsible state or local governmental authority indicating that an
application has been made and that the Title Document, when issued,
will show) the Servicer or the Company as the owner of the Leased
Vehicle and the Trustee as the holder of a first priority security
interest in such Leased Vehicle, (ii) within 30 days after the Purchase
Date for the Contract relating to the Leased Vehicle, the Title
Document for such Leased Vehicle will show the Company as owner of the
Leased Vehicle and the Trustee as the holder of a first priority
security interest in such Leased Vehicle, and (iii) the Company, upon
delivery of the Assignment, will have a valid and enforceable ownership
interest in the Leased Vehicle and the Trustee will have a first
priority security interest in the Leased Vehicle.
(d) Each Contract and the lease of the Leased Vehicle shall
have complied at the time it was originated or made in all material
respects with all requirements of applicable federal, state, and local
laws, and regulations thereunder, including, without limitation, usury
laws, the Federal Truth-In-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Federal Reserve Board's
Regulations B, M and Z, and state adaptations of the National Consumer
Act and of the Uniform Consumer Credit Code, and other consumer laws
and equal credit opportunity and disclosure laws.
(e) Each Contract shall represent the genuine, legal, valid
and binding payment obligation in writing of the Obligor, enforceable
by the holder thereof in accordance with its terms subject to the
effects of bankruptcy, insolvency, reorganization or other similar laws
affecting the enforceability of creditors' rights generally.
(f) No provision of a Contract shall have been waived, amended
or modified, except as disclosed in writing by Servicer.
(g) No right of rescission, setoff, counterclaims or defense
shall have been asserted or threatened with respect to any Contract.
(h) The Assignment constitutes an enforceable sale and
transfer of the Leased Vehicle and the Contract from the Person from
whom they are purchased to the Company and it is the intention of the
Servicer that the beneficial interest in and title to the Leased
Vehicles and the Contracts not be part of Servicer's estate in the
event of the filing of a bankruptcy petition by or against Servicer
under bankruptcy law.
(i) Immediately prior to the Assignment herein contemplated,
the Person from whom such Leased Vehicle or Contract is purchased by
the Company had good and marketable title to each Leased Vehicle or
Contract free and clear of all liens, encumbrances, security interests,
and rights of others and, immediately upon the transfer thereof
pursuant to the Assignment, the Company shall have good and marketable
title to each Leased Vehicle and Contract, free and clear of all liens,
encumbrances, security interests and rights of others.
27
(j) No Contract shall have been originated in, or shall be
subject to the laws of, any jurisdiction under which the sale, transfer
and assignment of such Contract to the Company or the Trustee would be
unlawful, void or voidable.
SECTION 4.5 GENERAL PROVISIONS REGARDING SINKING FUND ACCOUNT.
(a) The Company shall not direct the Trustee to make any investment of
any funds in the Sinking Fund Account or to sell any investment held in the
Sinking Fund Account except under the following terms and conditions: (i) (A)
each such investment shall be made in the name of the Trustee (in its capacity
as such) or its nominee (or, if applicable law provides for perfection of
pledges of an investment not evidenced by a certificate or other instrument
through registration of such pledge on books maintained by or on behalf of such
issuer of such investment, such pledge may be so registered), (B) any instrument
evidencing such investment shall be delivered directly to the Trustee or its
agent; and (ii) the proceeds of each such sale of an investment shall be
remitted by the purchaser thereof directly to the Trustee for deposit into the
Sinking Fund Account.
(b) If any amounts are needed for disbursement from the Sinking Fund
Account and sufficient uninvested funds are not available to make such
disbursement, in the absence of a Company Order for the liquidation of the
investments in an amount sufficient to provide the required funds, the Trustee
may cause to be sold or otherwise converted to cash a sufficient amount of the
investments in the Sinking Fund Account.
(c) The Trustee shall not in any way be held liable by reason of any
insufficiency in the Sinking Fund Account resulting from any loss on any
Eligible Investment included therein except that the Trustee shall remain liable
on Eligible Investments that are obligations of the Trustee in its commercial
capacity.
(d) All investments of funds in the Sinking Fund Account and all sales
of Eligible Investments held in the Sinking Fund Account shall, except as
otherwise expressly provided in this Indenture, be made by the Trustee in
accordance with a Company Order. Such Company Order may specify actions
(including, without limitation, that such funds not be invested, in which case
such funds shall remain deposited in the Sinking Fund Account) or may be a
general, standing order authorizing the Trustee to act on written instructions
of specified personnel or agents of the Company. In order to insure that the
Trustee can invest funds in the Sinking Fund Account or sell any investment in
the Sinking Fund Account, the Company Order with respect thereto must be
received by the Trustee no later than 9:00 a.m. on the date specified in the
Company Order for effecting such transaction.
(e) In the event that:
(i) the Company shall have failed to give investment
directions to the Trustee by 9:00 a.m. Dallas,
Texas time on any
Business Day authorizing the Trustee to invest the funds then in the
Sinking Funds Account,
28
(ii) a Default or Event of Default shall have occurred and be
continuing but the Securities shall not have been declared due and
payable pursuant to Section 6.2, or if the Securities shall have been
declared due and payable following an Event of Default, amounts
collected or receivable from the related Trust Estate are being applied
in accordance with Section 6.13, or
(iii) an Event of Default shall have occurred and be
continuing, the Securities shall have been declared due and payable
pursuant to Section 6.2, and amounts collected or receivable from the
related Trust Estate are being applied in accordance with Section 6.10,
the Trustee shall invest and reinvest the funds then in the Sinking Fund Account
to the fullest extent practicable in Eligible Investments. All investments made
pursuant to clause (i) above shall mature on the next Business Day following the
date of such investment, all such investments made pursuant to clause (ii) above
shall mature no later than the next Payment Date, and all investments made
pursuant to clause (iii) above shall mature no later than the first date
following the date of such investment on which the Trustee proposes to make a
distribution to Noteholders pursuant to Section 6.10. The Trustee shall not be
liable or responsible for any loss resulting from any such investment.
SECTION 4.6 RELEASES.
(a) The lien of this Indenture shall be released from a Liquidated
Contract (including any related Contract Documents and Leased Vehicle),
notwithstanding the provisions of Section 5.12, if:
(i) in the event that such Liquidated Contract has been paid
in full, the Trustee receives the certificate of a Servicing Officer
identifying such Contract and certifying that such Contract has been
fully paid and all proceeds received in respect of such Contract have
been deposited in the Master Collections Account;
(ii) in the event that such Liquidated Contract is required to
be purchased by the Servicer pursuant to the Servicing Agreements, the
Trustee receives a certificate of a Servicing Officer (A) identifying
the Contract to be released, (B) requesting the release thereof, and
(C) certifying that the correct repurchase price therefor has been
deposited in the Master Collections Account; and
(iii) in the event that such Liquidated Contract is a
"Liquidated Contract" by virtue of clause (ii) of the definition
thereof, the Trustee receives the certificate of a Servicing Officer to
the effect that such Contract is a Defaulted Contract that became a
Liquidated Contract during the related Collection Period, and there has
been deposited in the Master Collections Account any related Net
Liquidation Proceeds that, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Contract.
(b) Each certificate of a Servicing Officer required by subsection (a)
above, shall contain a statement to the effect that the release of the
Liquidated Contract from the lien for this Indenture will not impair the
security under this Indenture in contravention of its provisions,
29
after taking into account the amounts deposited in the Master Collections
Account on the account of such Liquidated Contract.
SECTION 4.7 REPORTS BY TRUSTEE.
The Trustee shall report and account to the Company in writing (using
such form as the Trustee shall choose in its sole discretion) with respect to
the Sinking Fund Account and the identity of the investments included therein,
on a monthly basis and more frequently as the Company may from time to time
reasonably request, including accounting of deposits into and payments from the
Sinking Fund Account.
SECTION 4.8 TRUST ESTATE; CONTRACT DOCUMENTS.
(a) Subject to the payment of its fees and expenses the Trustee may,
and when required by the provisions of this Indenture shall, execute instruments
to release property from the lien of this Indenture, or convey the Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Trustee as provided in this Article 4 shall be bound
to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) In order to facilitate the servicing of the Contracts by the
Servicer, the Trustee hereby acknowledges that the Servicer is authorized in the
name and on behalf of the Company, to execute instruments of satisfaction or
cancellation, or of partial or full release or discharge, and other comparable
instruments with respect to the Contracts and with respect to the Leased
Vehicles.
(c) Upon Company Order, the Trustee shall, at such time as there are no
Securities Outstanding, release and transfer, without recourse, all of the Trust
Estate that secured the Securities (other than any cash held for the payment of
the Securities pursuant to Sections 4.2(b) or 8.2).
ARTICLE 5
COVENANTS
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST.
(a) Interest payable on any Security shall be paid to the Person in
whose name such Security (or one or more predecessor Securities) is registered
at the close of business on the Record Date for such Payment Date by check
mailed to such Person's address as it appears in the Note Register on such
Record Date, except for the final payment of principal of a Security, which
shall be payable only upon presentation and surrender as provided in subsection
(b) of this Section 5.1.
Checks for interest shall be mailed without requiring that
such Security be submitted for notation of payment. Checks returned undelivered
will be held by the Paying
30
Agent for payment to the Person entitled thereto, subject to the terms of
Section 5.2. Payments made on any Payment Date shall be binding upon all future
Holders of such Securities and of any Securities issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, whether or not
noted thereon.
(b) Each installment of interest on the Securities is payable as
specified in the form of Security set forth in Section 2.2. Any installment of
interest that is not paid when and as due shall bear interest at the Overdue
Interest Rate from the date due to the date of payment thereof, but only to the
extent payment of such interest shall be lawful and enforceable. The principal
of each Security shall be payable at the Stated Maturity thereof unless such
Security becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise. The final payment of principal
of each Security (or the Redemption Price thereof of the Securities called for
redemption) shall be payable upon presentation and surrender thereof on or after
its Stated Maturity to the Paying Agent. The Trustee upon Company Order shall
notify the Person in whose name a Security is registered at the Record Date for
the Payment Date next preceding the Payment Date on which the Company expects
that the final payment of principal and interest on such Security will be paid.
Such notice shall be mailed no earlier than the sixtieth (60th) day, and no
later than the twentieth (20th) day, prior to such Payment Date and shall
specify that such final payment will be payable only upon presentation and
surrender of such Securities and shall specify the name and address of the
Paying Agent where such Securities may be presented and surrendered for payment
of such installment. Notices in connection with redemptions of Securities shall
be mailed to Securityholders as provided in Section 3.2.
(c) All computations of interest due with respect to any Securities
shall be based on a 360-day year consisting of 12 months of 30 days each and on
the amount of principal outstanding on the Securities from time to time.
(d) On each Servicer Report Date, the Company shall transmit to the
Trustee the Monthly Report (a "Payment Date Statement"), which shall set forth,
with respect to the next succeeding Payment Date, the amount of interest payable
on such Payment Date on each Outstanding Security. On the last Servicer Report
Date prior to the Stated Maturity, the Company shall transmit to the Trustee a
final Payment Date Statement setting forth, with respect to the Stated Maturity,
the amount of accrued interest and principal payable on the Stated Maturity on
each Outstanding Security. Each Payment Date Statement shall state that the
computations of interest were made in conformity with the requirements of this
Indenture. Notwithstanding the foregoing, the Trustee may rely on its own
calculations for purposes of paying interest on the Securities.
(e) The Company at any time may terminate its obligation to pay an
installment of interest if it deposits with the Trustee, or the Trustee holds in
the Sinking Fund Account as of the related Payment Date, money sufficient to pay
the installment when due. The Company shall designate the installment.
(f) Subject to the foregoing provisions of this Section 5.1, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to unpaid
principal and interest, if any, that were carried by such other Security.
31
SECTION 5.2 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
(a) Whenever the Company shall have a Paying Agent other than the
Trustee, it will, by Company Order delivered on or before the Business Day next
preceding each Payment Date, direct the Trustee to deposit with such Paying
Agent on or before such Payment Date a sum sufficient to pay the amounts then
becoming due, and the Trustee shall, to the extent it has received such amount
from the Company, deposit such amount with the Paying Agent as directed. Such
sum shall be held in trust for the benefit of the Persons entitled to such
payments.
(b) The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent, in acting as Paying Agent, will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Securities in trust for the benefit of the persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities) in the making of any payment
required to be made with respect to the Securities; and
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
(c) For the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, the Company may at any time direct by
Company Order any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
SECTION 5.3 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged
before the same shall become delinquent (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or the Leased Vehicles,
and (2) all lawful claims for labor, materials and supplies that, if unpaid,
might by law become a lien upon the property of the Company; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings; and provided further, that the Company shall not be required to
cause to be paid or discharged any such tax, assessment, charge or claim if the
Company's Board of Directors shall determine such payment is not advantageous to
the conduct of the business of the Company and that the failure so to pay or
discharge is not disadvantageous in any material respect to the Holders.
32
SECTION 5.4 MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of
its business to be maintained and kept in good condition, repair and working
order and will cause to be made all necessary repairs, renewals, replacements,
betterment and improvements thereof, all as in the judgment of the Company may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is, in the judgment of the Company's Board of
Directors, desirable in the conduct of the business of the Company and not
disadvantageous in any material respect to the Holders.
SECTION 5.5 LIMITATION ON INVESTMENT ACTIVITIES.
The Company will not register as, or conduct its business or take any
action that shall cause it to become, or to be deemed to be, an "investment
Company" as defined under the provisions of the Investment Company Act.
SECTION 5.6 COMPLIANCE CERTIFICATES.
(a) [Reserved.]
(b) Commencing with the fiscal quarter ending March 31, 2002, on or
before 45 days after the end of each fiscal quarter of the Company, the Company
shall deliver an Officers' Certificate to the Trustee to the effect that a
review of the activities of the Company during the Company's preceding fiscal
quarter has been made under the supervision of the officers executing such
Officers' Certificate with a view to determining whether during such period the
Company and the Servicer have performed and observed all of their obligations
under this Indenture, and either (A) stating that to the best of their knowledge
no Default by the Company or the Servicer under this Indenture has occurred and
is continuing, or (B) if such a Default has occurred and is continuing,
specifying such Default and the nature and status thereof.
(c) The Company will deliver to the Trustee an Officers' Certificate
stating whether or not the signee knows of any default by the Company in
performing its covenants under this Indenture within 15 days of a written
request by the Trustee. The Company will perform, execute, acknowledge and
deliver, all such further acts, instruments, and assurances as may reasonably be
requested by the Trustee. The certificates required under this Section 5.6 need
not comply with Section 11.4.
(d) The Company will deliver to the Trustee within 15 days after the
occurrence thereof written notice of any Default.
SECTION 5.7 REPORTING.
(a) Commencing with the fiscal year ending December 31, 2002, the
Company shall file with the Trustee copies of any annual reports and other
information, documents, and
33
statements (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) that the Company may be required to file with
the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
within 15 days after it files them with the SEC. The Company also shall comply
with the other provisions of TIA Section 314(a).
(b) Until the Company has a class of equity securities registered under
the Securities Exchange Act of 1934, the Company will prepare, for the first
three quarters of each fiscal year, commencing with the fiscal quarter ending
March 31, 2002, summary reports containing unaudited cash basis financial
statements of the Company. In addition, the Company will prepare, for each
fiscal year, an annual report containing complete audited financial statements
of the Company including, but not limited to, a balance sheet, a statement of
income and shareholders' equity, a statement of changes in financial position
and all appropriate notes. The annual financial statements will be prepared in
accordance with generally accepted accounting principles consistently applied,
except for changes with which the Company's independent public accountants
concur. Quarterly statements may be subject to year-end adjustments. The Company
will cause a copy of the respective quarterly or annual report to be mailed to
the Trustee and to each of the Holders of the Securities within 45 days after
the close of each of the first three quarters of each fiscal year and within 120
days after the close of each fiscal year, at such Xxxxxx's address appearing on
the Note Register.
SECTION 5.8 PROTECTION OF TRUST ESTATE.
The Company will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as is necessary or advisable to:
(i) grant more effectively all or any portion of the Trust
Estate,
(ii) maintain or preserve the lien of this Indenture or carry
out more effectively the purposes hereof,
(iii) perfect, publish notice of, or protect the validity of,
any Grant made or to be made by this Indenture,
(iv) enforce any of the Contract Documents, or
(v) preserve and defend title to the Trust Estate and the
rights of the Trustee and the Securityholders in such Trust Estate
against the claims of all persons and parties.
The Company shall take such action in regard to the recording, filing
re-recording and/or re-filing of this Indenture, any indenture supplements
hereto, and any other requisite documents and with respect to the execution and
filing of any financing statements and continuation statements as is necessary
to maintain the lien and security interest created by this Indenture.
34
The Company authorizes the Trustee to file and, if necessary execute,
financing statements on behalf of the Company in regard to the perfection of the
lien of this Indenture in the Trust Estate.
SECTION 5.9 OPINIONS AS TO TRUST ESTATE.
(a) Upon the initial Company Order to the Trustee for the
authentication of Notes under this Indenture, the Company shall deliver to the
Trustee an Opinion of Counsel (i) that this Indenture, together with the filing
referred to in the next sentence, creates as security for the Notes a security
interest in the Contracts, and identifiable cash proceeds thereof in the
Operating Account and the Sinking Fund Account; (ii) that a financing statement
with respect to the Contracts has been filed with the
Texas Secretary of State
pursuant to the
Texas Uniform Commercial Code, as amended, or with the
appropriate government official of the state(s) in which title(s) to the Leased
Vehicle(s) may be registered; (iii) that the security interest in the Trust
Estate has been perfected and is a valid first priority security interest; and
(iv) that no other filings in any jurisdiction or any other actions are
necessary to perfect the security interest of the Trustee in the Trust Estate,
as constituted as of the date of such opinion, as against any third parties.
(b) On or before December 15, in each calendar year commencing with
2002, the Company shall furnish to the Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and re-filing of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and re-filing of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien and security interest
of this Indenture until December 15 in the following calendar year. In rendering
such opinion, such counsel may rely upon an Officers' Certificate of the
Servicer as to the filing of any financing statements and to the effect that no
further assignment of the related Contract or satisfaction and discharge thereof
has been recorded and that the original financing statements so filed have not
been discharged.
SECTION 5.10 PERFORMANCE OF OBLIGATIONS; Servicing Agreements.
(a) The Company will punctually perform and observe all of its
obligations and agreements contained in the Servicing Agreements.
(b) The Company will not take any action or permit any action to be
taken by others that would release any Person from any of such Person's
covenants or obligations under any of the Contract Documents or under any
instrument included in the Trust Estate, or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as
35
expressly provided in this Indenture, the Servicing Agreements or such Contract
Documents or other instrument.
(c) If the Company shall have knowledge of the occurrence of a default
by the Servicer of any of its material obligations under the Servicing
Agreements, the Company shall promptly notify the Trustee thereof, and shall
specify in such notice the action, if any, the Company is taking in respect of
such default. If such default arises from the failure of the Servicer to perform
any of its obligations under the Servicing Agreements with respect to the
Contracts, the Company may remedy such failure. So long as any such default
under the Servicing Agreements shall be continuing, the Trustee may, and upon
the direction of the Holders of Securities representing more than 25% of the
aggregate principal amount of the Outstanding Securities the Trustee shall,
direct the Company to, and the Company shall, terminate all of the rights and
powers of the Servicer under the Servicing Agreements. Unless directed or
permitted by the Trustee or the Holders of Securities representing not less than
50% of the aggregate principal amount of the Outstanding Securities, the Company
may not waive any such default under the Servicing Agreements or terminate the
rights and powers of the Servicer under the Servicing Agreements.
(d) Upon any termination of the Servicer's rights and powers, all
rights, powers, duties, obligations and responsibilities of the Servicer with
respect to the related Contracts (except for any obligations of the Servicer to
indemnify the Company) shall vest in and be assumed by the Company, or any
servicing agent that the Company may designate, and the Company or its servicing
agent shall be the successor in all respects to the Servicer in its capacity as
servicer with respect to such Contracts under the Servicing Agreements (except
for any obligations of the Servicer to indemnify the Company). The Company may
resign as the Servicer by giving written notice of such resignation to the
Trustee and in such event will be released from such duties and obligations,
such release not to be effective until the date a new servicer enters into a
servicing agreement with the Company as provided below and has been approved in
writing by the Trustee. Any successor servicer shall enter into a servicing
agreement with the Company substantially similar to the Servicing Agreement. The
Company may make such arrangements for the compensation of such successor
servicer as it and such successor servicer shall agree, provided that such
compensation of the successor servicer shall not be in excess of that payable to
the Servicer under the Servicing Agreements, unless the Servicer or the Company
agrees to pay such additional compensation. Under no circumstances shall the
Trustee have a duty or obligation to act as servicer, assume the duties of the
Servicer or to select a Servicer if the Company fails to do so, and nothing in
this Indenture shall be construed to mean that the Trustee has a duty or
obligation to perform any of the rights, powers, duties, obligations or
responsibilities of the Servicer.
SECTION 5.11 NEGATIVE COVENANTS.
The Company will not:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Indenture;
36
(ii) obtain or carry insurance relating to the Contracts
separate from that required by the Servicing Agreement, unless the
Trustee shall be named therein as a loss payee;
(iii) claim any credit on, or take any deduction from, the
principal of or interest payable in respect to the Securities by reason
of the payment of any taxes levied or assessed upon any part of the
Trust Estate;
(iv) engage in any business or activity other than in
connection with the purchase, collection and servicing of lease
Contracts or consumer obligations secured by motor vehicles, the
repossession and resale of motor vehicles and the raising of capital,
both debt and equity, and any other incidental businesses or
activities, without the consent of the Holders of a majority of the
aggregate principal amount of the Securities then outstanding;
(v) without the consent of the Holders of a majority of the
aggregate principal amount of the Securities then outstanding, create,
incur, assume or in any manner become liable in respect of any
indebtedness other than the Securities, any indebtedness incurred for
the purpose of the purchase of lease Contracts or consumer obligations
relating to or secured by motor vehicles (including any related
borrowing and transactional costs), any Allowed Expenses and any other
amounts incurred in the ordinary course of the Company's business;
(vi) dissolve or liquidate in whole or in part;
(vii) merge or consolidate with any corporation, partnership
or other entity other than another direct or indirect wholly-owned
Subsidiary of an Affiliate of the Company or the Servicer; any such
merger or consolidation with another Subsidiary of the Servicer shall
be subject to the following conditions:
(1) the surviving or resulting entity shall be a
corporation organized under the laws of the United States or any state
thereof whose business and activities shall be limited as set forth in
paragraph (iv) above;
(2) the surviving or resulting corporation (if other
than the Company) shall expressly assume by an indenture supplemental
hereto all of the Company's obligations hereunder;
(3) the surviving or resulting corporation shall have
the same fiscal year as the Company; and
(4) immediately after consummation of the merger or
consolidation no Event of Default or Default shall exist with respect
to the Securities;
(viii) (to the extent that it may lawfully so covenant and to
the extent that such covenant is lawfully enforceable) institute any
bankruptcy, insolvency or receivership proceedings with respect to
itself or its properties;
37
(ix) (1) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
under this Indenture, except as may be expressly permitted hereby, (2)
permit any lien, charge, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof, or (3)
permit the lien of this Indenture not to constitute a valid first
priority security interest in the Trust Estate; or
(x) originate or acquire any Contract with an Obligor located
in any jurisdiction unless at the time of such origination or
acquisition of such Contract by the Company or the Servicer, both the
Company and the Servicer shall have obtained all licenses, permits and
governmental approvals, if any (1) necessary to comply with the laws of
such jurisdiction with respect to their respective operations and
businesses, (2) necessary to perform their respective obligations as
contemplated by the Indenture and the Servicing Agreements with respect
to such Contract, (3) necessary to maintain the enforce ability of such
Contract and the security interest in the related Leased Vehicle and to
prevent such Contract or any portion thereof from becoming void or
voidable by the Obligor or any other person, and (4) if such Contract
has been assigned to the Company, necessary for such assignment to be a
lawful and binding assignment on the assignor and the Obligor.
(xi) enter into any transaction with the Servicer, or any
Affiliate of the Servicer on terms less favorable to the Company than
could be obtained from an independent third party in an arms-length
transaction.
SECTION 5.12 SUBSTITUTION OR RELEASE OF COLLATERAL OR WITHDRAWAL OF CASH IN
TRUST ESTATE.
(a) The Company shall furnish to the Trustee an Officer's Certificate
stating the fair value of any property or securities the deposit of which with
the Trustee is to be the basis for the withdrawal or release of any cash,
property or securities constituting a part of the Trust Estate. If the fair
value to the Company of any such securities and all other such securities made
the basis for the withdrawal or release of any cash, property or securities
constituting part of the Trust Estate since the commencement of the then current
calendar year, as set forth in the Officer's Certificates with respect thereto,
is 10% or more of the aggregate principal amount of the Notes at that time
Outstanding, and if the fair value of such securities so delivered is at least
$25,000 and one percent of the aggregate principal amount of the Notes at that
time outstanding, the Company shall furnish a certificate of an Independent
appraiser or financial expert as to the fair value of the securities so
delivered. If the property so delivered has been used or operated by a Person
other than the Company, within six months prior to the date of acquisition by
the Company, in a business similar to that in which it has been or is to be used
or operated by the Company, and if the fair value to the Company of such
property is not less than $25,000 and not less than one percent of the aggregate
principal amount of the Notes at that time Outstanding, the Company shall
furnish an opinion of an Independent engineer, appraiser or other expert
covering the fair value to the Company of the property so subjected to the lien
of the Indenture.
38
(b) The Company shall furnish to the Trustee an Officer's Certificate
as to the fair value of any property or securities to be released from the lien
of this Indenture and stating that in the opinion of the signer the proposed
release will not impair the security under this Indenture in contravention of
its provisions. If the fair value of such property or securities and of all
other property or securities released since the commencement of the then current
calendar year, as set forth in such Officer's Certificates required by the
preceding sentence, is 10% or more of the aggregate principal amount of the
Notes at the time Outstanding and if the fair value of the property or
securities proposed to be released is at least $25,000 and one percent of the
aggregate principal amount of the Notes at the time Outstanding, the Company
shall furnish an opinion of an Independent engineer, appraiser or other expert
with respect to the same subject matter required to be set forth in such
Officer's Certificate.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at the Stated
Maturity, upon redemption or otherwise;
(3) the Company falls to comply with any of its other
agreements in the Securities or this Indenture (other than a covenant
or warranty, a default in the observance of which is elsewhere in this
section specifically dealt with) and the default continues for a period
of 30 days alter receipt by the Company of written notice of such
default from the Trustee specifying such default and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder or after receipt by the Company and the Trustee of such
notice from the Holders of not less than 25% in aggregate principal
amount of the Securities then Outstanding;
(4) if any representation or warranty of the Company made in
this Indenture or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall prove to be incorrect m
any material respect as of the time when the same shall have been made
and, within 30 days after receipt by the Company of written notice from
the Trustee specifying such inaccuracy and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder or
after receipt by the Company and the Trustee of such notice from the
Holders of Securities representing at least 25% of the aggregate
principal amount of the Outstanding Securities, the circumstance or
condition in respect of which such representation or warranty was
incorrect shall not have been eliminated or otherwise cured;
39
(5) if (i) the validity or effectiveness of this Indenture or
any Grant under this Indenture shall be impaired, or this Indenture
shall be amended, hypothecated, subordinated, terminated or discharged,
or any Person shall be released from any covenants or obligations under
this Indenture or the Servicing Agreements, in each case except as may
be expressly permitted hereby and thereby, (ii) any lien, charge,
security interest, mortgage or other encumbrance (exclusive of any
mechanic's lien on any Leased Vehicle) shall be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof, or (iii) this
Indenture shall not constitute a valid first priority security interest
in the Trust Estate, and if any of the foregoing Defaults shall
continue for a period of 30 days after receipt by the Company of
written notice from the Trustee specifying such Default and requiring
it to be remedied and stating that such notice is a "Notice of Default"
hereunder or after receipt by the Company and the Trustee of such
notice from the Holders of Securities representing at least 25% of the
aggregate principal amount of the Outstanding Securities; or
(6) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a receiver,
trustee, assignee, liquidator or similar official of it or for all or
substantially all of its property; or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or
decree, which remains unstayed and in effect for 60 days, under any
Bankruptcy Law against the Company:
(A) for relief in an involuntary case;
(B) appointing a receiver, trustee, assignee,
liquidator or similar official for all or substantially all of its
property; or
(C) ordering its liquidation.
The term "Bankruptcy Law" means title 11, U.S. Code, or any similar
Federal or State law for the relief of debtors.
SECTION 6.2 ACCELERATION.
If an Event of Default occurs and is continuing, the Trustee may, or at
the direction of the Holders of at least 25 % in principal amount of the
Securities shall, by notice to the Company, declare the principal amount of all
the Securities together with accrued interest thereon to be due and payable
immediately, and upon any such declaration such principal and accrued and unpaid
40
interest shall become immediately due and payable, notwithstanding anything
contained in this Indenture or the Securities to the contrary. The Holders of a
majority in principal amount of the Outstanding Securities may, by written
notice to the Trustee, rescind an acceleration and its consequences if all
existing Events of Default have been cured or waived, all expenses relating to
the Default have been paid and if the rescission would not conflict with any
judgment or decree.
SECTION 6.3 REMEDIES.
(a) If an Event of Default shall have occurred and be continuing, the
Trustee may, subject to Section 6.2, do one or more of the following:
(i) make demand and institute judicial proceedings in equity
or law for the collection of all amounts then payable on the
Securities, or under this Indenture, whether by declaration or
otherwise, enforce all judgments obtained, and collect from the Company
the Trust Estate securing the Securities and moneys adjudged due;
(ii) subject to Section 6.14, sell the Trust Estate securing
the Securities or any portion thereof or rights or interest therein, at
one or more public or private Sales called and conducted in any manner
permitted by law;
(iii) institute judicial proceedings in equity or at law from
time to time for the complete or partial foreclosure of this Indenture
with respect to the Trust Estate; and
(iv) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Trustee or the Holders of the Securities hereunder.
(b) The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceedings. A
delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or an acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4 WAIVER OF PAST DEFAULTS.
Subject to Section 9.2, the Holders of a majority in principal amount
of the Outstanding Securities may, by written notice to the Trustee, waive an
existing Default and its consequences. When a Default is waived in accordance
herewith, it is cured and shall stop continuing.
SECTION 6.5 CONTROL BY MAJORITY.
Subject to Section 7.1(d)(iv), the Holders of a majority in aggregate
principal amount of the Outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture,
41
that is unduly prejudicial to the rights of Securityholders not joining in such
direction, or that would involve the Trustee in personal liability.
SECTION 6.6 LIMITATION ON SUITS.
(a) A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of the Outstanding Securities make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity and the
Event of Default has not been waived; and
(v) the Trustee has received no contrary direction from the
Holders of a majority in principal amount of the Outstanding Securities
during such 60-day period.
(b) A Securityholder may not use this Indenture to prejudice the rights
Of another Securityholder or to obtain a preference or priority over another
securityholder.
SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of interest or principal specified in
Section 6.1(1) or (2) occurs and is continuing, the Trustee may recover judgment
in its own name and as trustee of an express trust against the Company for the
whole amount of principal and interest remaining unpaid.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
(a) The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Company, its creditors or its property.
42
(b) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
FIRST to the Trustee for the amounts due under Section 7.7;
SECOND, to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities
for principal and interest, respectively;
THIRD, to the Servicer for any unpaid Allowed Expenses owed to or
incurred by it with respect to the Contracts; and
FOURTH, to the Company.
The Trustee shall fix a Special Record Date and payment date pursuant to Section
2.11 hereof for any payment to Securityholders under this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than 10% in principal
amount of the Outstanding Securities.
SECTION 6.12 STAY, EXTENSION OR USURY LAWS.
The Company agrees (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefits or
advantage of any stay or extension law or any usury or other law, wherever
enacted, now or at any time hereafter in force, which would prohibit or forgive
the Company from paying all or any portion of the principal of and/or interest
on the Securities as contemplated herein, or which may affect the covenants or
performance of this Indenture, and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and agrees that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of any
such power as though no such law has been enacted.
43
SECTION 6.13 OPTIONAL PRESERVATION OF TRUST ESTATE.
(a) If the Securities have been declared due and payable following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Trustee may, in its sole discretion, refrain from
selling the Trust Estate and may apply all amounts received with respect to such
Trust Estate to the payment of the principal of and interest on the Securities
as and when such principal and interest would have become due pursuant to the
terms hereof and of the Securities if there had not been a declaration of
acceleration of the maturity of the Securities, provided that:
(i) the Trustee shall have determined that the amounts
receivable with respect to such Trust Estate are sufficient to provide
the funds required to pay the principal of and interest on the
Securities as and when such principal and interest would have become
due pursuant to the terms hereof and of the Securities if there had not
been a declaration of acceleration of the maturity of the Securities;
and
(ii) the Securityholders shall not have directed the Trustee
in accordance with Section 6.5 (subject, however, to Section 6.14(b))
to sell the Trust Estate securing the Securities.
(b) the Trustee may, but need not, obtain and rely upon an opinion of
an independent investment banking firm as to the feasibility of any action
proposed to be taken in accordance with Section 6.13(a) and as to the
sufficiency of the amounts receivable with respect to the Trust Estate to make
the required payments of principal of and interest on the Securities, which
opinion shall be conclusive evidence as to such feasibility or sufficiency.
(c) If the conditions of Section 6.13(a) are not satisfied after the
Securities have been declared due and payable following an Event of Default or
the Trustee does not determine to take the action specified in Section 6.13(a),
then all amounts collected by the Trustee with respect to the Securities
pursuant to this Article 6 or otherwise shall be applied in accordance with
Section 6.10.
(d) Notwithstanding anything in this Indenture to the contrary, if the
Securities have been declared due and payable, then Trustee may, in its sole
discretion, retain the Trust Estate without compliance with this Section 6.13
and apply all amounts received with respect to the Trust Estate to the payment
of principal and interest on the Securities as and when such principal and
interest would have become due pursuant to the terms hereof and of the
Securities if there had not been a declaration of acceleration of the maturity
of the Securities.
SECTION 6.14 SALE OF TRUST ESTATE.
(a) The power to effect any sale (a "Sale") of any portion of the Trust
Estate pursuant to Section 6.3 shall not be exhausted by any one or more Sales
as to any portion of such Trust Estate remaining unsold, but shall continue
unimpaired until the entire such Trust Estate shall have been sold or all
amounts payable on the Securities secured thereby and under this Indenture with
respect thereto shall have been paid. The Trustee may from time to time postpone
any Sale
44
by public announcement made at the time and place of such Sale. The Trustee
hereby expressly waives its rights to any amount fixed by law as compensation
for any Sale.
(b) (i) Without the consent or direction to the contrary by the Holders
of a majority in principal amount of the Securities then Outstanding, the
Trustee shall not sell or otherwise dispose of the Trust Estate following an
Event of Default for an amount less than the sum of (x) the amount of fees and
expenses of such sale that are reimbursable to the Trustee and (y) the entire
amount that would be distributable to the Holders of the Securities, in full
payment thereof in accordance with Section 6.10, and (ii) without the consent of
or direction to the contrary by the Holders of a majority in principal amount of
the Securities then Outstanding, at any public Sale at which no other Person
bids an amount equal to or greater than the amount described in clause (y)
above, the Trustee shall bid an amount at least equal to $1.00 more than the
highest other bid.
(c) The Trustee may bid for and acquire any portion of the Trust Estate
in connection with a public Sale thereof. The Securities need not be produced in
order to complete any such sale. The Trustee may, subject to this Indenture,
hold, lease, operate, manage or otherwise deal with any property so acquired in
any manner permitted by law.
(d) The Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Trust Estate in
connection with a Sale thereof. In addition, the Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Company to transfer and convey
its interest in any portion of the Trust Estate in connection with a Sale
thereof (including changing the designation of the secured party on any
certificate of title or financing statements), and to take all action necessary
to effect such Sale. No purchaser or transferee at such a Sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(e) Notwithstanding anything in this Indenture to the contrary, if an
Event of Default specified in Section 6.1(1) or (2) is the Event of Default, or
one of the Events of Default, on the basis of which the Securities have been
declared due and payable, then the Trustee may, in its sole discretion, sell the
Trust Estate without compliance with this Section 6.14.
ARTICLE 7
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE.
(a) For so long as any Notes remain outstanding, the Trustee shall:
(i) maintain the custodianship of the documentation delivered
to it evidencing title or perfected security interest in the Company's
assets;
(ii) verify all funds deposited in the trust account for the
benefit of the Securityholders and use its best efforts to verify all
payments called for under the terms of this Indenture;
45
(iii) verify the delivery to it of all reports and other
instruments required to be delivered to it pursuant to the terms of
this Indenture and the Securities Exchange Act of 1934; and
(iv) examine all reports or other instruments furnished to the
Trustee pursuant to the terms of this Indenture and determine whether
on their face they are in compliance with the terms of this Indenture;
(b) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or duties shall be read into this Indenture against the
Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee.
(d) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, breach of this Indenture or
its own willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (c)
of this Section.
(ii) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it from the Holders of not less than a majority in principal amount
of the Notes at the time Outstanding.
(iv) The Trustee may refuse to perform any duty or exercise
any right or power unless it receives written indemnity and security
satisfactory to it against any loss, liability or expense and no provision of
this Indenture or any other document shall require the Trustee to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder or in the exercise of any of its rights or powers, if it
shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it; provided, however, that in the event that the Trustee determines that there
has been an Event of Default, the Trustee shall not be entitled to such
indemnification and security other than that provided in this Indenture as a
condition to providing notice of such default to the Securityholders.
46
(e) The Trustee does not have a duty or obligation to inquire as to the
performance by the Servicer of its duties and obligations hereunder and shall
not be liable for any action or omission taken or not taken by the Servicer of
any kind or nature.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with the Company. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.
(g) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraph (a), (b) and (c) of this Section.
SECTION 7.2 RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document. The Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records, and premises of the Company, personally
or by agent or attorney, to the extent reasonably required by such inquiry or
investigation.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Certificate or Opinion.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers.
(e) The Trustee may consult with counsel of its selection and the
advice of such counsel or any opinion of counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(f) The Trustee shall not be required to take notice, or be deemed to
have notice of any Default or Event of Default except a Default or Event of
Default under Section 6.1(1) or Section 6.1(2), unless written notice of any
event which is in fact such a default is received by the Trustee at the
principal corporate trust office of the Trustee from the Company, a Paying
Agent, or the holders of at least 25% of the Securities outstanding, and such
notice references the Securities and this Indenture.
47
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or its
Affiliate with the same rights it would have if it were not the Trustee. Any
Paying Agent, Registrar or Co-registrar may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities. It shall not be accountable for the Company's
use of the proceeds from the Securities and shall not be responsible for any
statement in the Securities, other than its certificate of authentication, or in
any prospectus used in the sale of the Securities, other than statements
provided in writing by the Trustee for use in such prospectus.
SECTION 7.5 NOTICE OF DEFAULTS.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it obtains actual knowledge of the Default. Except in the
case of a Default in payment on any Security, the Trustee may withhold the
notice if and so long as the board of directors, the executive committee or a
trust committee of the directors and/or responsible officers of the Trustee in
good faith determines that withholding notice is in the interests of
Securityholders.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.
(a) Within 60 days after each December 31 beginning with December 31,
2002, the Trustee shall, to the extent required by TIA Section 313(a), mail to
each Securityholder a brief report dated as of such December 31 that complies
with TIA Section 313(a). The Trustee also shall also, to the extent required by
TIA Section 313(b), comply with TIA Section 313(b)(l) and (2).
(b) If this Indenture is qualified with the SEC under the TIA, a copy
of each report at the time of its mailing to Securityholders shall be filed with
the SEC and each national securities exchange on which the Securities are
listed. The Company shall notify the Trustee if and when the Securities are
listed on any national securities exchange (as defined in the Securities
Exchange Act of 1934) or quoted on NASDAQ.
SECTION 7.7 COMPENSATION AND INDEMNITY.
(a) The Company shall pay to the Trustee from time to time as
compensation for its services the amounts set forth on the Trustee's Fee
Schedule attached hereto as Exhibit C, as may be agreed upon from time to time
by the Trustee and the Company. In addition, the Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it.
Such expenses may include the reasonable compensation and expenses of the
Trustee's agents and counsel. The Company shall indemnify and hold harmless the
Trustee and its successors and their respective officers, directors, employees,
agents and attorneys against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
48
disbursements of any kind or nature whatsoever (including, reasonable attorneys'
fees) that may be imposed on, incurred by or asserted against Trustee or its
successors, or their respective officers, directors, employees, agents and
attorneys, in connection with the performance of its duties hereunder. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent. The Company need not reimburse any expense
or indemnify against any loss or liability incurred by the Trustee through the
Trustee's negligence or bad faith, other than to the extent that such negligence
or bad faith is excused pursuant to Sections 7.1 and 7.2, and where negligence
and or bad faith are so excused, such reimbursement and indemnity WILL INCLUDE
LOSSES OR LIABILITIES RESULTING FROM THE NEGLIGENT ACTS OR OMISSIONS OF THE
TRUSTEE.
(b) To secure the Company's payment of these obligations, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on the Securities. Such obligations shall survive the satisfaction and
discharge of this Indenture.
(c) When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(7) or (8), the expenses and the compensation
for the services are intended to constitute expenses of administration under any
Bankruptcy Law.
(d) The provisions of this Section 7.7 shall survive the satisfaction
and discharge or other termination of this Indenture.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
(a) The Trustee may resign at any time upon 30 days prior written
notice to the Company. The Holders of a majority in principal amount of the
Outstanding Securities may remove the Trustee at any time upon 30 days prior
written notice to the removed Trustee and may appoint a successor Trustee with
the Company's consent. The Company shall remove the Trustee if:
(i) The Trustee falls to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent; or
(iii) a receiver or other public officer takes charge of the
Trustee or its property.
(b) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. The resignation or removal of the Trustee shall not be effective until
a successor Trustee has been appointed and has assumed the responsibilities of
Trustee hereunder.
(c) A successor Trustee shall deliver a written acceptance of this
appointment to the retiring Trustee and to the Company. Immediately thereafter,
the retiring Trustee shall transfer
49
all property held by it as Trustee to the successor Trustee. Upon delivery of
such written acceptance, the resignation or removal of the retiring Trustee
shall become effective and the retiring Trustee shall cease to be Trustee
hereunder and shall be discharged from any responsibility or obligations for
actions taken by any successor Trustee. The successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Securityholder.
(d) If a successor Xxxxxxx does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in principal amount of the Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets to, another Person or if
the Trustee consolidates with, merges or converts into, or transfers a
substantial portion of its corporate trust assets to a Person that is
wholly-owned by the Trustee or by the Trustee's parent (of which the Trustee is
a wholly-owned subsidiary), the resulting, surviving or transferee Person
without any further act shall be the successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (5). The Trustee shall have a combined
capital and surplus of at least $1,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 7.12 WITHHOLDING TAXES.
Whenever it is acting as a Paying Agent for the Securities, the Trustee
shall comply with all requirements of the Internal Revenue Code of 1986, as
amended (or any successor or amendatory statutes), and all regulations
thereunder, with respect to the withholding from any payments made on such
Securities of any withholding taxes imposed thereon and with respect to any
reporting requirements in connection therewith.
50
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect, except as to
surviving rights of transfer or exchange of Securities herein expressly provided
for, and the Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than Securities that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.8) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company, and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose an amount in cash sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, the principal at Stated
Maturity of such Securities, or the applicable Redemption Price with
respect thereto upon redemption.
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company under Sections 7.7 and 8.3 shall survive.
SECTION 8.2 APPLICATION OF TRUST MONEY.
All money deposited with the Trustee pursuant to Section 8.1 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent as the Trustee shall be directed by
51
Company Order, to the Persons entitled thereto of the principal at Stated
Maturity, or the Redemption Price, or the Securities for whose payment such
money has been deposited with the Trustee; but such money need not be segregated
from other funds except to the extent required by law.
SECTION 8.3 REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any money or securities held by them at any time in excess of the
amounts needed to pay and discharge the Securities in full. The Trustee and the
Paying Agent shall pay to the Company upon request any money or securities held
by them for the payment of principal or interest that remains unclaimed for two
years. After such payment to the Company, Securityholders entitled to such funds
must look to the Company for the payment of such unclaimed principal or
interest.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 WITHOUT CONSENT OF HOLDERS.
(a) The Company and the Trustee may amend or supplement this Indenture
or the Securities without notice to or consent of any Securityholder:
(i) to cure any ambiguity, defect or inconsistency in this
Indenture or the Securities;
(ii) to effect a merger or consolidation in conformance with
Section 5.11(vii);
(iii) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(iv) to make any change that does not materially adversely
affect the rights of any Securityholder; or
(v) to modify or add to the provisions of this Indenture to
the extent necessary to qualify it under the TIA or under any similar
federal statute hereafter enacted.
(b) The Trustee may waive compliance by the Company with any provision
of this Indenture or the Securities without notice to or consent of any
Securityholder if the waiver does not adversely affect the rights of any
Securityholder, provided that the Indenture or the Securities reflect the terms
of such waiver.
SECTION 9.2 WITH CONSENT OF HOLDERS.
(a) The Company and the Trustee may amend or supplement this Indenture
or the Securities without notice to any Securityholder but with the written
consent of the Holders of at least a majority in principal amount of the
Securities. The Holders of a majority in principal
52
amount of the Securities may waive compliance by the Company with any provision
of this Indenture or the Securities without notice to any Securityholder.
However, without the consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.4, may not:
(i) reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(ii) reduce the rate of or extend the time for payment of
interest on any Security;
(iii) reduce the principal of or extend the Stated Maturity of
any Security;
(iv) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of a
Trust Estate or terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security afforded by the lien of this Indenture; or
(v) make any Security payable in money other than that stated
in the Security.
(b) After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect so long as this Indenture shall then
be qualified under the TIA.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.
(a) A consent to an amendment, supplement or waiver by a Holder of a
Security shall bind the holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security. The Trustee must receive the notice of revocation
before the date the amendment, supplement or waiver becomes effective.
(b) After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder unless it makes a change described in clause
(ii), (iii), (iv) or (v) of Section 9.2(a). In that case the amendment,
supplement or waiver shall bind each Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
SECTION 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security concerning the
change terms and return it to the Holder.
53
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue, and the Trustee shall authenticate, a new
Security that reflects the changed terms.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver does not
adversely affect the rights of the Trustee or Securityholders. If it does, the
Trustee may but need not sign it. The Company may not sign an amendment or
supplement until such amendment or supplement is approved by the Chairman of the
Board, President or any Vice President of the Company or any other officer of
the Company customarily performing functions similar to those performed by any
of the above designated officers, and such approval shall evidence the Company's
determination that such amendment, supplement or waiver does not adversely
affect the rights of the Securityholders. The Trustee may obtain, at the expense
of the Company, and shall be protected in relying on, an Opinion of Counsel to
the effect that such supplement and/or amendment is authorized or permitted by
this Indenture and complies with the terms hereof and the TIA.
ARTICLE 10
MEETINGS OF SECURITYHOLDERS
SECTION 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Securityholders may be called for the following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any direction to the Trustee, or to waive or to consent to the
waiving of any default hereunder and its consequences;
(b) to remove the Trustee, or appoint a successor Trustee or
apply to a court for a successor Trustee;
(c) to consent to the execution of a supplemental indenture;
or
(d) to take any other action (i) authorized to be taken by or
on behalf of the Holders of any specified aggregate principal amount of
the Securities under this Indenture, or authorized or permitted by law,
or (ii) which the Trustee deems necessary or appropriate in connection
with the administration of the Indenture.
SECTION 10.2 MANNER OF CALLING MEETINGS.
(a) The Trustee may call a meeting of Securityholders to take any
action specified in Section 10.1. Notice setting forth the time and place of,
and the action proposed to be taken at, such meeting shall be mailed by the
Trustee to the Company and to the Holders of the Securities not less than ten or
more than 60 days prior to the date fixed for the meeting.
54
(b) Any meeting shall be valid without notice if the Holders of all
Securities are present in person or by proxy, or if notice is waived before or
alter the meeting by the Holders of all Securities outstanding, and if the
Company and the Trustee are either present or have, before or after the meeting,
waived notice.
SECTION 10.3 CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS.
In case at any time the Company or the Holders of not less than 50% in
aggregate principal amount of the Securities then outstanding shall have
requested in writing that the Trustee call a meeting of Securityholders to take
any action specified in Section 10.1, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such request, then the
Company or the Holders of Securities in the amount above specified may determine
the time and place for such meeting and may call such meeting by mailing notice
thereof.
SECTION 10.4 WHO MAY ATTEND AND VOTE AT MEETINGS.
To be entitled to vote at any meetings of Securityholders, a person
shall (a) be a Holder of one or more Securities, or (b) be a person appointed by
an instrument in writing as proxy for the Holder of Securities. The only persons
who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and the Company and their
counsel.
SECTION 10.5 REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE MEETING;
VOTING RIGHTS.
(a) The Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, to prove the holding of
Securities, the appointment of proxies, and other evidence of the right to vote,
to fix a record date and to provide for such other matters concerning the
conduct of the meeting as it shall deem appropriate.
(b) At any meeting each Securityholder or proxy shall be entitled to
one vote for each $1,000 principal amount of Securities held by him; provided,
however, that the Company shall not be entitled to vote any Securities held of
record by it. At any meeting of Securityholders, the presence of persons holding
or representing any number of Securities shall be sufficient for a quorum.
SECTION 10.6 EXERCISE OF RIGHTS OF TRUSTEE OR SECURITYHOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING.
Nothing in this Article shall be deemed or construed to authorize or
permit, by reason of any call of a meeting of Securityholders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any rights conferred upon or reserved to the Trustee or
to the Securityholders or by the Securities.
55
SECTION 10.7 EVIDENCE OF ACTIONS BY SECURITYHOLDERS.
Whenever the Holders of a specified percentage in aggregate principal
amount of the Securities may take any action, the fact that the holders of such
percentage have acted may be evidenced by (a) instruments of similar tenor
executed by securityholders in person or by attorney or written proxy, or (b)
the Holders of Securities voting in favor thereof at any meeting of
Securityholders called and held in accordance with the provisions of this
Article 10, or (c) by a combination thereof. The Trustee may require proof of
any matter concerning the execution of any instrument by a Securityholder or his
attorney or proxy as it shall deem necessary.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed on any Person by Sections 310 through 317, inclusive, of the
TIA, the duties imposed under such Sections shall control.
SECTION 11.2 NOTICES.
(a) Any notice or communication shall be sufficiently given if in
writing and delivered in person or mailed by first class mail addressed as
follows:
if to the Company: Transition Auto Finance IV, Inc.
0000 Xxxxxx Xxxx Xxxx, Xxxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxx Xxxx, President
if to the Trustee: Trust Management, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, President
if to the Servicer: Transition Leasing Management, Inc.
0000 Xxxxxx Xxxx Xxxx, Xxxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxx Xxxx, President
(b) The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(c) Any notice or communication mailed to a Securityholder shall be
mailed first class, postage prepaid to him at his address as it appears on the
Note Register of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed. If the Company mails a notice or
communication to Securityholders, it shall mail a copy to the Trustee at the
same time.
56
(d) Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
(a) Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
(b) Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include (i) a
statement that the person making such certificate or opinion has read such
covenant or condition; (ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (iii) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (iv) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 11.5 RULES BY PAYING AGENT AND REGISTRAR.
The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 11.6 LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking
institutions are not required to be open in the State of
Texas. If a Payment
Date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday.
SECTION 11.7 GOVERNING LAW.
The laws of the State of Texas shall govern this Indenture and the
Securities.
57
SECTION 11.8 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or an Affiliate of the Company. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.9 NO RECOURSE AGAINST OTHERS.
No recourse may be taken, directly or indirectly, against any
incorporator, subscriber to the capital stock, stockholder, officer, director,
agent or employee of the Company or the Servicer or of any predecessor or
successor of the Company or the Servicer with respect to the obligations of the
Company or the Servicer with respect to the Securities or under this Indenture
or any certificate or other writing delivered in connection herewith or
therewith, and all such liability is waived and released by the Trustee and all
Securityholders.
SECTION 11.10 SUCCESSORS.
All agreements of the Company and the Servicer in this Indenture and
the Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.11 DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
ARTICLE 12
AGREEMENTS OF SERVICER
SECTION 12.1 GENERAL.
The Servicer agrees that all covenants, representations and warranties
made by the Servicer in the Servicing Agreements with respect to the Contracts
shall also be for the benefit of the Trustee and the Holders.
SECTION 12.2 SERVICER ACTING AS CUSTODIAN.
The Servicer acknowledges that any collections or proceeds from the
Contracts in the Master Collections Account, or otherwise in the possession or
control of the Servicer, are the Company's property. In holding such proceeds
and collections, the Servicer agrees to act as custodian and bailee of the
Company and the Additional Lender, if any, at all times.
SECTION 12.3 REPRESENTATIONS AND WARRANTIES CONCERNING THE SERVICER.
The Servicer represents and warrants to the Company and the Trustee as
follows:
58
(a) The Servicer (i) has been duly organized and is validly
existing and in good standing as a corporation organized and existing
under the laws of the State of Texas, (ii) has qualified to do business
as a foreign corporation and is in good standing in each jurisdiction
where the character of its properties or the nature of its activities
makes such qualification necessary, and (iii) has full power, authority
and legal right to own its property, to carry on its business as
presently conducted, and to enter into and perform its obligations
under this Indenture.
(b) The execution and delivery by the Servicer of this
Indenture are within the corporate power of the Servicer and have been
duly authorized by all necessary corporate action on the part of the
Servicer. Neither the execution and delivery of this Indenture, nor the
consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach
of, or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Servicer or its properties or the charter or bylaws of the Servicer, or
any of the provisions of any indenture, mortgage, contract or other
instrument to which the Servicer is a party or by which it is bound or
result in the creation or imposition of any lien, charge or encumbrance
upon any of its property pursuant to the terms of any such indenture,
mortgage, contract or other instrument.
(c) The Servicer is not required to obtain the consent of any
other party or consent, license, approval or authorization of, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance,
validity or enforceability of this Indenture.
(d) This Indenture has been duly executed and delivered by the
Servicer and the provisions of Article Twelve hereof constitute legal,
valid and binding covenants enforceable against the Servicer in
accordance with their terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of
creditors' rights generally).
(e) There are no actions, suits or proceedings pending or, to
the knowledge of the Servicer, threatened against or affecting the
Servicer, before or by any court, administrative agency, arbitrator or
governmental body with respect to any of the transactions contemplated
by the Servicing Agreements or this Indenture.
SECTION 12.4 CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER.
(a) The Servicer shall keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Texas, and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Contract Documents, this
Indenture and the Servicing Agreements.
(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any person unless the
59
corporation formed by such consolidation or into which the Servicer has merged
or the person which acquires by conveyance, transfer or lease substantially all
the assets of the Servicer as an entirety is an entity organized and existing
under the laws of the United States or any state or the District of Columbia and
executes and delivers to the Company and the Trustee an agreement in form and
substance reasonably satisfactory to the Company and the Trustee, which contains
an assumption by such successor entity of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer under this Indenture and the Servicing Agreements.
SECTION 12.5 PERFORMANCE OF OBLIGATIONS.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture and the Servicing
Agreements.
(b) The Servicer shall not take any action, or permit any action to be
taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents, or which would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
SECTION 12.6 THE SERVICER NOT TO RESIGN; ASSIGNMENT.
(a) The Servicer shall not resign from the duties and obligations
hereby imposed on it unless, by reason of change in applicable legal
requirements, the continued performance by the Servicer of its duties under this
Indenture would cause it to be in violation of such legal requirements in a
manner which would result in a material adverse effect on the Servicer or its
financial condition. No such resignation shall become effective unless and until
a new industry qualified servicer acceptable to the Company is willing to
service the Contracts and enters into a servicing agreement with the Company in
form and substance substantially similar to the Servicing Agreement and assumes,
pursuant to a written instrument reasonably satisfactory to the Trustee, the
obligations and duties of the Servicer arising under this Indenture. No such
resignation shall affect the obligation of the Servicer to repurchase any
Contract pursuant to Section 12.9.
(b) The Servicer may not assign this Indenture or the Servicing
Agreement or any of its rights, powers, duties or obligations hereunder,
provided that the Servicer may assign this Indenture and the Servicing Agreement
in connection with a consolidation, merger, conveyance, transfer or lease made
in compliance with Section 12.5 (b), and provided further that the Servicer may
contract with industry qualified third parties for the performance of its duties
under the Servicing Agreements and this Indenture, except that any such contract
shall not relieve the Servicer from liability for its obligations under the
Servicing Agreements and this Indenture.
(c) For a period of 90 days after the occurrence of any Subsidiary
Payment Default (as hereinafter defined), the Trustee shall have the right to
remove the Servicer and terminate the Servicing Agreement upon delivery of
written notice of removal and termination to the Servicer. As used in this
Section 12.7(c), the term "Subsidiary Payment Default" shall mean any default in
the payment of principal and interest on any other Asset-Backed Securities (as
hereinafter
60
defined) issued (i) by an entity owned or controlled by Transition Leasing or
any affiliate of Transition Leasing and formed for the purpose of issuing
Asset-Backed Securities, (ii) in connection with the same business plan as that
of the Company and (iii) in connection with a business plan utilizing Transition
Leasing as servicer. As used in this Section 12.7(c), the term "Asset-Backed
Securities" means securities that provide a stated rate of return to holders of
such securities and that are primarily paid, as to both return of investment and
return on investment, by the cash flow from the collateral securing such payment
obligations.
SECTION 12.7 REPRESENTATIONS AND WARRANTIES AS TO THE CONTRACTS.
With respect to each Contract, the Servicer represents and warrants to
the Company, effective as of the date each such Contract is executed by the
Company, as follows:
(a) All of the representations and warranties with respect to
the Servicer set forth in Section 12.4 continue to be true and correct;
(b) In acting with respect to each Contract, Servicer shall
comply in all material respects with, all applicable Federal, state and
local laws, regulations and official rulings;
(c) Each Contract (i) shall have been originated in the United
States of America by the Servicer in the ordinary course of an
automobile dealer's business, shall have been fully and properly
executed by the parties thereto, (ii) shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the Contract lessee
for the benefits of the Contract, (iii) shall have met, at the time of
its execution, in all material respects all purchasing criteria set
forth on EXHIBIT A attached hereto and in the Servicing Agreements, and
(iv) shall not be a Defaulted Contract.
(d) (i) The Title Document for the related Leased Vehicle
shows (or if a new or replacement Title Document is applied for with
respect to such Leased Vehicle, the official receipt from the
responsible state or local governmental authority indicating that an
application has been made and that the Title Document, when issued,
will show) the Company as the owner of the Leased Vehicle and the
Trustee, on behalf of the Trust, as the holder of a first priority
security interest in such Leased Vehicle, (ii) within 120 days after
the Purchase Date for the Contract relating to the Leased Vehicle, the
Title Document for such Leased Vehicle will show the Company as the
owner of the Leased Vehicle and the Trustee, on behalf of the Trust, as
the holder of a first priority security interest in such leased
Vehicle, and (iii) the Company, upon execution of the Contract, will
own the Leased Vehicle and the Trustee, on behalf of the Trust,
delivery of the Assignment, will have a valid and enforceable security
interest in the Leased Vehicle.
(e) Each Contract and the sale or lease of each Leased Vehicle
shall have complied at the time it was originated in all material
respects with all requirements of applicable federal, state, and local
laws, and regulations thereunder, including without limitation, usury
laws, the Federal Truth-In-Lending Act, the Equal Credit Opportunity
61
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Federal Reserve Board's
Regulations B and Z, and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code, and other consumer laws and
equal credit opportunity and disclosure laws.
(f) Each Contract shall represent the genuine, legal, valid,
and binding payment obligation in writing of the Obligor, enforceable
by the holder thereof in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditor's rights generally.
(g) No provision of a Contract shall have been waived, amended
or modified, except as disclosed in writing by Servicer.
(h) No right of rescission, set off, counterclaim, or defense
shall have been asserted or threatened with respect to any Contracts.
(i) It is the intention of the Servicer that the beneficial
interest in and title to the Contracts not be part of Servicer's estate
in the event of the filing of a bankruptcy petition by or against
Servicer under bankruptcy law.
(j) No Contract shall have been originated in, or shall be
subject to the laws of, any jurisdiction under which the execution of
such Contract would be unlawful, void, or voidable.
SECTION 12.8 PURCHASE OF CERTAIN CONTRACTS.
(a) The representations and warranties of the Servicer set forth in
Section 12.8 with respect to each Contract shall survive delivery of the
Contract Documents to the Company and shall continue so long as such Contract
remains outstanding. Upon discovery by the Company, the Servicer or the Trustee
that any of such representations or warranties was incorrect as of the time made
or that any of the Contract Documents relating to any such Contract has not been
properly executed by the Obligor or the Servicer or contains a material defect
or has not been received by the Company, the party making such discovery shall
give prompt notice to the Trustee (other than in cases where the Trustee has
given notice thereof) and to the other party (or parties in cases where the
Trustee has given notice thereof). If any such defect, incorrectness or omission
materially and adversely affects the interest of the Holders in and to the
related Contracts, the Servicer shall, within 90 days after discovery thereof or
receipt of notice thereof, cure the defect or eliminate or otherwise cure the
circumstances or condition in respect of which the representation or warranty
was incorrect as of the time made. If the Servicer is unable to do so, it shall
purchase such Contract from the Company through a deposit into the Master
Collections Account no later than the end of the calendar month after which such
90-day period expired of an amount equal to the product of (x) the
Price/Payments Ratio multiplied by (y) the aggregate unpaid installments on the
Contract. Upon any such purchase, the Company shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in the Servicer any Contract purchased hereunder.
62
(b) It is understood that, without limiting the meaning of the term
"materially and adversely affects", the interest of the Holders shall be deemed
materially and adversely affected if (i) the Company, the Trustee or any of such
Holders are put under any obligation to pay any other Person any sum of money as
a result of a defect or misrepresentation described in subsection (a) above, or
(ii) the Trustee or the Majority Holders, acting reasonably, determine, by
written notice to the Company, that such defect or misrepresentation materially
and adversely affects the interests of the Holders in and to a Contract.
(c) At the time of any purchase by the Servicer of any Contract,
pursuant to the provisions of subparagraph (a) above or otherwise, the Servicer
shall certify to the Trustee in writing that (i) such purchase is not for the
purpose of recognizing gains or decreasing losses resulting from market value
changes in the Company's portfolio of Contracts and Leased Vehicles (ii) such
purchase is at the price determined by the following formula: the purchase price
paid by the Company for the Contract (and the Leased Vehicle related thereto),
less the amount of any lease payments received by the Company after the
acquisition of the Contract.
SECTION 12.9 INDEMNIFICATION.
Servicer hereby indemnifies and holds harmless Trustee and its
successors and their respective officers, directors, employees, agents and
attorneys against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Trustee or its successors, or their respective officers,
directors, employees, agents or attorneys, due to (i) any breach by Servicer of
its representations, warranties or covenants provided for in the Servicing
Agreements or this Indenture, or (ii) any action or inaction of Servicer, or
through Servicer, in any way relating to, or arising out of, the Servicing
Agreements or this Indenture, any and all transfers or assignments of the
Contracts, or any of the transactions contemplated herein or therein or the
creation or collection or enforcement of any of the Contracts. Servicer,
however, does not assume the risk of uncollectibility and does not indemnify
Trustee and/or its successors, or their officers, directors, employees, agents
or attorneys, against the uncollectibility of all or any part of the Contracts
as against the Obligor thereof, except for uncollectibility resulting from a
breach by Servicer of any warranty, representation or covenant contained herein.
The indemnities contained in this Section shall survive any termination of this
Indenture or the Servicing Agreements.
SECTION 12.10 TERMINATION.
The respective duties and obligations of the Servicer under this
Article Twelve shall terminate upon the earlier of (i) the satisfaction and
discharge of this Indenture pursuant to Article Eight, or (ii) the latest to
occur of (A) the final payment or other liquidation of the last Outstanding
Contract owned by the Company, and (B) the disposition of all property acquired
upon repossession or comparable conversion of any Leased Vehicle securing a
Contract.
63
SECTION 12.11 AMENDMENT.
(a) The provisions of this Article Twelve may be amended from time to
time by the Company, the Servicer and the Trustee, without the consent of any
Holder, provided that such action shall not adversely affect in any material
respect the interests of any Holder.
(b) The provisions of this Article Twelve may also be amended from time
to time by the Company, the Servicer and the Trustee, with the consent of the
Majority Holders for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Article, provided, however,
that no such amendment shall, without consent of each Holder, (i) alter the
priorities with which any allocation of funds shall be made under this Article;
(ii) deprive any such Holder of the benefit of this Indenture; or (iii) modify
this Section.
(c) Promptly after the execution of any amendment pursuant to Section
12.12(b), the Company shall cause to be sent to each Holder a notice setting
forth in general terms the substance of such amendment. Any failure to do so
shall not affect the validity of such amendment.
(d) It shall not be necessary, in any consent of Holders under this
Section, to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Holders shall be subject to such reasonable regulations as the
Trustee may prescribe.
(e) Any amendment or modification effected contrary to the provisions
of this Section shall be void.
(f) The Trustee may obtain, at the expense of the Company, and shall be
protected in relying on, an Opinion of Counsel to the effect that such amendment
or modification is authorized or permitted by this Indenture and complies with
the terms hereof.
SECTION 12.12 INSPECTION AND AUDIT RIGHTS.
The Servicer agrees that, upon reasonable prior notice, it will permit
any representative of the Trustee, during the Servicer's normal business hours,
to examine all of the books of account, records, reports and other papers of the
Servicer relating to the Contracts, to make copies and extracts therefrom, to
cause such books to be audited by independent accountants selected by the
Trustee, and to discuss the affairs, finances and accounts relating to the
Contracts with the Servicer's officers, employees and independent accountants
(and by this provision the Servicer hereby authorizes said accountants to
discuss with such representatives such affairs, finances and accounts), all at
such reasonable times and as often as may be reasonably requested. Any expense
incident to the reasonable exercise by the Trustee of any right under this
Section shall be borne by the Trustee and reimbursed to it by the Company under
Section 7.7.
64
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, as of the date and year first above written.
TRUST MANAGEMENT, INC., as trustee
Attest:
By:
------------------------------- -------------------------------------
Title: Title:
------------------------- ----------------------------------
Attest: TRANSITION AUTO FINANCE IV, INC.
By:
------------------------------- -------------------------------------
Title: Xxx Xxxx, President
-------------------------
The undersigned Transition Leasing Management, Inc. joins in this
Indenture for the sole purpose of evidencing its agreement to the covenants,
representations and warranties pertaining to it that are set forth in Article
Twelve of this Indenture and not for the purpose of guaranteeing or otherwise
covenanting to pay the Notes or perform any of the Company's obligations
hereunder.
Attest: Transition Leasing Management, Inc.
By:
------------------------------- -------------------------------------
Title: Xxx Xxxx, President
-------------------------
65
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Xxx Xxxx, President of Transition Auto Finance IV, Inc., a Texas corporation,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated and
as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of
__________, 2001.
[SEAL]
---------------------------------------------
Notary Public in and for the State of Texas
---------------------------------------------
Notary Public Printed or Typed Name
My Commission Expires:
----------------------
STATE OF TEXAS )
)
COUNTY OF TARRANT )
BEFORE ME, the undersigned authority, on this day personally appeared
____________ _____________________, ____________________ of Trust Management,
Inc., known to me to be the person and officer whose name is subscribed to the
foregoing instrument, and acknowledged to me that he or she executed the same
for the purposes and consideration therein expressed, in the capacity xxxxxxx
stated and as the act and deed of said trust company.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of
___________, 2001.
[SEAL]
---------------------------------------------
Notary Public in and for the State of Texas
---------------------------------------------
Notary Public Printed or Typed Name
My Commission Expires:
----------------------
66
EXHIBIT A
LEASED VEHICLE AND CONTRACT PURCHASE CRITERIA
TRANSITION AUTO FINANCE IV, INC.
The following purchasing criteria shall govern all purchases of Leased
Vehicles and Eligible Additional Contracts by Transition Auto Finance IV, Inc.
(the "Company") and by Transition Leasing Management, Inc. (the "Buyer") acting
on behalf of the Company, and no Leased Vehicle or Contract shall be purchased
that does not meet such criteria in all material respects.
I. VEHICLE CRITERIA
a. No vehicle that is to become a Leased Vehicle may be purchased
by the Buyer if the vehicle is more than four model years old.
No Contract may be acquired by the Buyer if the Contract is
secured by a Leased Vehicle that, at the time of lease, was
more than four model years old.
b. The purchase price payable by the Buyer for each vehicle that
is to become a Leased Vehicle (and thus to become subject to a
Contract) shall never exceed that amount that the Dealer shall
have received by bank draft upon the delivery of the Leased
Vehicle.
II. DOWN PAYMENT RATIO
Obligors on all Contracts must have made a down payment in cash and/or
net trade-in allowance of not less than 15% of the actual price paid by
draft to the selling automobile Dealer for the related Leased Vehicle;
provided, however, that the down payment for any Leased Vehicle which
is more than three model years old shall equal at least 20% of the
actual purchase price.
III. CONTRACT TERMS
A. Each Contract must have an original term of 48 months or less.
B. Each Contract shall be in the form of industry-standard
consumer automobile lease Contracts.
IV. CREDIT CRITERIA
A. With respect to each Obligor on each Contract, the Buyer shall
perform all credit checks and reviews that are standard for
the motor vehicle lease industry and shall supply the
verification information to the Company at the time of
acquisition of each Contract.
EXHIBIT A - Page 1
B. In addition to the credit checks and reviews set forth in
paragraph IV.A. above, each Obligor must satisfy the following
criteria:
1. Verifiable home telephone number in Obligor's
residence;
2. Residence:
(a) Evidence of purchase, lease or rental
agreement in Obligor's name;
(b) Stability - Review length of time at last
two addresses, as well as time in area;
3. Employment: At least one year with last two
employers;
4. Obligor has verifiable income (check stub, W-2, 1099,
tax return, or bank statements);
5. Ratio of Obligor's net disposable income to gross
generally should exceed 60%;
6. References:
(a) Five relatives;
(b) Five personal.
7. Valid Texas driver's license;
8. If a previous bankruptcy, must have been
discharged, or if open, need letter of
permission from bankruptcy trustee.
9. Certain exceptions for first-time buyers
permitted.
EXHIBIT A - Page 2
EXHIBIT B
MONTHLY REPORT CERTIFICATE
For Month: _______________, ________ (the "Collection Period")
(year)
Company: Transition Auto Finance IV, Inc.
Servicer: Transition Leasing Management, Inc.
Indenture: Dated as of __________________, 2001
Trustee: Trust Management, Inc.
I. INTEREST PAYMENTS ON NOTES (INDENTURE SECTION 5.1)
A. EXHIBIT I hereto sets forth a listing of the interest and any
principal payable to each Noteholder on the next Payment Date. The Company
certifies that computation of interest has been made in conformance with the
Indenture.
All capitalized terms used herein and not otherwise herein defined
shall have the same meaning as set forth in the Indenture.
Company and Servicer certify that, to the best of their knowledge, the
foregoing and attached information is true and correct.
Dated: , .
-------------------- --------
TRANSITION LEASING MANAGEMENT, INC.
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
TRANSITION AUTO FINANCE IV, INC.
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
EXHIBIT B - Page 1
EXHIBITS DESCRIPTION
I Noteholder Interest Report
EXHIBIT B - Page 2
EXHIBIT C
TRUSTEE'S FEE SCHEDULE
TRANSITION AUTO FINANCE IV, INC.
9.0% SECURED REDEEMABLE PROMISSORY NOTES
DUE ___________, 2006
Acceptance Fee $12,000.00
Annual Administration Fee $15,000.00
Paying Agent/Registrar Services $5.00 (per year per Note)
Interest Checks $1.00 each
Annual Collateral Custodial Services $5.00 (per year per Vehicle)
Collateral Acceptance Release $2.50 each item
All out-of-pocket expenses such as long distance telephone, stationery,
insurance, courier, attorney or accountant expense, etc., will be billed at cost
to the Company. The Trustee understands that the closing of the Note issuance
will be completed in Fort Worth and there will not be any travel expenses
charged to the Company. These fees do not include servicing responsibilities
should the Trustee be involved due to a removal of the Servicer. The Trustee
would present servicing fees at that time. These fees do not include arbitrage
accounting or excess yield calculations, if required. If the common trust funds
of Trustee are utilized, there will be 0.5% annual fee deducted from the
account. If Trustee's duties are modified to any great extent, Trustee reserves
the right to re-evaluate its fees. Extraordinary services will be charged
according to time and scope of services.
EXHIBIT C - Page 1
SCHEDULE A
SCHEDULE OF CONTRACTS OWNED BY
TRANSITION AUTO FINANCE IV, INC.
SCHEDULE A - Page 1
