EXECUTION COPY
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AUTOBOND MASTER FUNDING CORPORATION
(as Borrower),
AUTOBOND ACCEPTANCE CORPORATION
and
DAIWA FINANCE CORPORATION
(as Initial Lender)
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CREDIT AGREEMENT
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Dated as of June 30, 1997
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TABLE OF CONTENTS
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SECTION 1. COMMITMENT
Section 1.1 Advances.................................................. 1
Section 1.2 Borrowings; Closings...................................... 2
Section 1.3 Notices of Advances....................................... 3
Section 1.4 Use of Proceeds........................................... 3
Section 1.5 Security Agreement........................................ 3
Section 1.6 Increased Costs........................................... 3
Section 1.7 Taxes..................................................... 5
Section 1.8 Definitions............................................... 8
Section 1.9 Term...................................................... 8
Section 1.10 Payment Instructions...................................... 8
SECTION 2. REPRESENTATIONS AND WARRANTIES
Section 2.1 General Representations and Warranties of the Borrower.... 8
Section 2.2 General Representations and Warranties of AutoBond........ 12
Section 2.3 Representations and Warranties with Respect to the
Specified Auto Loans...................................... 16
SECTION 3. CONDITIONS OF OBLIGATION TO MAKE INITIAL ADVANCE ON
INITIAL CLOSING DATE
Section 3.1 Other Agreements.......................................... 22
Section 3.2 Opinion of Special Counsel................................ 23
Section 3.3 Opinions of Local Counsel................................. 23
Section 3.4 Fitch Rating Letter....................................... 23
Section 3.5 Officer's Certificates.................................... 23
Section 3.6 Organizational and Other Documents........................ 23
Section 3.7 Financing Statements...................................... 23
Section 3.8 Necessary Consents........................................ 23
Section 3.9 Payment of Commitment Fee................................. 23
SECTION 4. CONDITIONS OF OBLIGATION TO MAKE ADVANCES ON ANY
CLOSING DATE
Section 4.1 Performance of Obligations; No Old Advances............... 24
Section 4.2 Representations True; No Event of Default................. 24
Section 4.3 Taxes..................................................... 24
Section 4.4 No Merger or Change in Control............................ 24
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Section 4.5 Searches.................................................. 24
Section 4.6 Consents and Approvals.................................... 24
Section 4.7 Proceedings, Instruments, etc............................. 25
Section 4.8 Loan Sale Agreement; Use of Proceeds...................... 25
Section 4.9 Other Documents........................................... 25
Section 4.10 Continuance of a Funding Termination Event or an Event of
Default................................................... 25
SECTION 5. COVENANTS OF AUTOBOND AND THE BORROWER WITH RESPECT TO
THE SPECIFIED AUTO LOANS
Section 5.1 Additional Covenants...................................... 26
SECTION 6. [Reserved]
SECTION 7. CERTAIN SPECIAL RIGHTS.
Section 7.1 Home Office Payment....................................... 26
Section 7.2 Certain Taxes............................................. 27
Section 7.3 Substitution of Initial Lender............................ 27
SECTION 8. ADVANCE MATURITY; ADVANCE PREPAYMENTS.
Section 8.1 Advance Maturity.......................................... 28
Section 8.2 Mandatory Prepayments..................................... 28
SECTION 9. ASSIGNMENTS AND PARTICIPATIONS
Section 9.1 Assignments............................................... 28
Section 9.2 Participations............................................ 29
SECTION 10. CERTAIN COVENANTS OF THE BORROWER
Section 10.1 Maintenance of Office.................................... 30
Section 10.2 Existence................................................ 30
Section 10.3 General Maintenance of Business, Etc..................... 30
Section 10.4 Inspection............................................... 30
Section 10.5 Compliance with Law, etc................................. 31
Section 10.6 Payment of Taxes and Claims.............................. 31
Section 10.7 Limitations on Indebtedness.............................. 31
Section 10.8 Restricted Investments................................... 31
Section 10.9 Nature of Business....................................... 31
Section 10.10 Independence............................................. 31
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Section 10.11 Other Agreements and Parties............................ 33
Section 10.12 Investment Company Act.................................. 33
Section 10.13 Purchases of Auto Loans................................. 33
Section 10.14 Liens................................................... 34
SECTION 11. CERTAIN COVENANTS OF AUTOBOND
Section 11.1 Existence................................................ 34
Section 11.2 Compliance with Law, etc................................. 34
Section 11.3 Payment of Taxes and Claims.............................. 35
Section 11.4 Inspection............................................... 35
Section 11.5 Consolidation and Merger................................. 35
Section 11.6 Further Assurances....................................... 35
Section 11.7 Independence............................................. 35
Section 11.8 Other Agreements and Parties............................. 37
Section 11.9 Servicing Arrangements................................... 37
Section 11.10 Preservation of Quality of Auto Loans.................... 37
SECTION 12. INFORMATION TO BE FURNISHED TO LENDER.
Section 12.1 Information to be Furnished by the Borrower.............. 38
Section 12.2 Information to be Furnished by AutoBond.................. 38
SECTION 13. DEFAULTS, REMEDIES AND TERMINATION
Section 13.1 Events of Default........................................ 38
SECTION 14. INTERPRETATION OF AGREEMENT
Section 14.1 Definitions.............................................. 39
Section 14.2 Accounting Terms......................................... 52
Section 14.3 Governing Law............................................ 52
Section 14.4 Headings................................................. 52
Section 14.5 Independence of Covenants, etc........................... 52
SECTION 15. INDEMNIFICATION AND FUNDING LOSSES
Section 15.1 Indemnification.......................................... 52
Section 15.2 Indemnification with respect to the Specified Auto Loans. 55
Section 15.3 Funding Losses........................................... 56
SECTION 16. MISCELLANEOUS
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Section 16.1 Notices.................................................. 57
Section 16.2 Survival................................................. 57
Section 16.3 Successors and Assigns................................... 57
Section 16.4 Amendment and Waiver..................................... 57
Section 16.5 Counterparts............................................. 58
Section 16.6 Reproduction of Documents................................ 58
Section 16.7 Consent to Jurisdiction and Venue........................ 59
Section 16.8 No Petition.............................................. 59
Section 16.9 Acts of Lender........................................... 59
Section 16.10 Confidentiality.......................................... 60
EXHIBITS
EXHIBIT A Form of Borrowing Notice
EXHIBIT B Form of Trust Indenture
EXHIBIT C Form of Xxxxx Xxxxxxxxxx Opinion
EXHIBIT D Form of Texas Counsel Opinion
EXHIBIT E Form of Nevada Counsel Opinion
EXHIBIT F Form of Collection Agent Statement
CREDIT AGREEMENT dated as of June 30, 1997 among AutoBond Master
Funding Corporation, a Nevada corporation (the "Borrower"), AutoBond Acceptance
Corporation, a Texas corporation ("AutoBond") and Daiwa Finance Corporation (the
"Initial
Lender").
The Borrower has requested that the Initial Lender make advances to
it in an aggregate amount not exceeding up to $50,000,000 at any time
outstanding and the Initial Lender is prepared to make such advances upon the
terms and subject to the conditions hereof. The advances hereunder shall be
evidenced by the Borrower's Variable Funding Note, Series A (the "Note"), issued
to the Initial Lender under the Trust Indenture, dated as of June 30, 1997 (the
"Indenture"), among the Borrower, AutoBond and Norwest Bank (Minnesota), N.A.,
as trustee (the"Trustee"). The Note shall be entitled to the benefits of the
Indenture. Accordingly, the parties hereto agree as follows:
SECTION 1. COMMITMENT.
Section 1.1 Advances. The Initial Lender agrees, on the terms of
this Agreement and subject to the conditions hereof, to make Advances to the
Borrower at the sole discretion of the Initial Lender, in an aggregate principal
amount at any one time outstanding up to but not exceeding the amount of the
Commitment as then in effect. Each Advance shall (a) mature on the related
Maturity Date and (b) bear interest from the date thereof until such Advance
shall be paid in accordance with the terms hereof (whether at maturity,
mandatory prepayment, by acceleration or otherwise) at the per annum rate with
respect to each Interest Period at the Interest Rate, payable on each Interest
Payment Date in accordance with the provisions of Section 13.04 of the
Indenture. Interest shall be computed on the basis of the actual number of days
in such Interest Period and a three hundred and sixty day year and on each
Interest Payment Date shall equal all unpaid interest accrued in respect of each
prior Interest Period. Each Advance shall bear interest during any Interest
Period during such time as an Event of Default has occurred and is continuing
and to the extent permitted by applicable law on any overdue installment of
interest, at the per annum rate with respect to each Interest Period equal to
the lesser of (x) the Interest Rate plus 2.00% and (y) 11%. If the Borrower
shall have paid or agreed to pay any interest on any Advance in excess of that
permitted by law, then it is the express intent of the parties hereto with
respect thereto that (i) to the extent possible given the term of such Advance,
all excess amounts previously paid or to be paid by the Borrower be applied to
reduce the principal amount of such Advance and the provisions thereof
immediately be deemed reformed and the amounts thereafter collectable thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for thereunder and (ii) to the extent that the
reduction of the principal amount of, and the amounts collectible under, such
Advance and the reformation of the provisions thereof described in the
immediately preceding clause (i)
are not possible given the term of such Advance, such excess amount shall be
deemed to have been paid with respect to such Advance as a result of an error
and upon the Lender obtaining actual knowledge of such error, such amount shall
be refunded to the Borrower. Each Advance shall be subject to mandatory
prepayment as set forth in Section 8.2 hereof. Except as provided in Section 1.7
hereof, all sums payable by the Borrower under this Credit Agreement and the
Advances shall be paid without counterclaim, set-off, deduction or defense and
without abatement, suspension, deferment, diminution or reduction.
Section 1.2 Borrowings; Closings. (a) This Agreement and the other
Program Documents shall be executed and the initial Advance is to be made at a
closing to be held on June 30, 1997 (the "Initial Closing Date"), at the offices
of Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Additional Advances will be made no more frequently than once each calendar week
on the first Business Day of each calendar week (each, a "Subsequent Closing
Date", the Subsequent Closing Dates, together with the Initial Closing Date, the
"Closing Dates," and, either the Initial Closing Date or a Subsequent Closing
Date, a "Closing Date") to the extent the Lender has received prior notice
thereof in accordance with the provisions of Section 1.3 hereof.
(b) The Advances shall be evidenced by the Note, dated the date of
the delivery of such Note to the Initial Lender under the Indenture, payable to
the Initial Lender in a principal amount equal to the amount of the Commitment
as in effect from time to time and otherwise duly completed. The date and amount
of each Advance made by the Initial Lender to the Borrower and each payment made
on account of the principal thereof, shall be recorded by the Initial Lender on
its books and, prior to any transfer of the Note, endorsed by the Initial Lender
on the schedule attached to the Note or any continuation thereof.
(c) The Initial Lender shall be entitled to have the Note
subdivided, by exchange for Notes of lesser denominations or otherwise in
connection with an assignment of all or any portion of the Advances and the Note
pursuant to the terms of this Agreement; provided that in no event may the Note
be subdivided into denominations of less than $500,000.
(d) Each Advance shall be made by wire transfer of immediately
available funds to the Loan Purchase Account.
Section 1.3 Notices of Advances. The Borrower will give notice
substantially in the form of Exhibit A hereto of each Advance (a "Borrowing
Notice") to the Initial Lender and the Trustee, which notice shall be
irrevocable and effective only upon receipt by the Initial Lender and the
Trustee, and which shall specify the date (at least two Business Days prior to
the proposed date of such Advance) upon which such borrowing is to occur and the
amount of such Advance, which amount, unless otherwise agreed to by the Initial
Lender, (a) in the case of the initial Advance, shall not be less than
$1,000,000 and (b) in
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the case of all other Advances, shall not be greater than $5,000,000 nor less
than the lesser of (i) the Available Facility Amount and (ii) $1,000,000. Such
notice shall be given not later than 12:00 (noon) New York time on the day which
is two (2) Business Days prior to the related Closing Date. Any notice received
by the Initial Lender after 12:00 (noon) New York time on any Business Day shall
be deemed to have been received on the next succeeding Business Day. On the date
specified in such notice, the Initial Lender will, subject to the conditions set
forth and in accordance with the terms of this Agreement, make an Advance in the
aggregate principal amount set forth in such notice. Notwithstanding the
foregoing, if any of the Auto Loans subject to such Advance were acquired from
an Originator other than AutoBond, then AutoBond shall afford the Initial Lender
reasonable opportunity to review such Auto Loans and related Loan Files in
advance of the related Borrowing Notice.
Section 1.4 Use of Proceeds. The proceeds of each Advance (net of
expenses and costs) will be used as contemplated by Section 4.8.
Section 1.5 Security Agreement. The Advances are to be secured
pursuant to the Trust Indenture, dated as June 30, 1997 (the"Indenture
Agreement"), among the Borrower, AutoBond and Norwest Bank (Minnesota), N.A., as
Trustee (together with any successors thereto, the "Trustee"), substantially in
the form of Exhibit C (as from time to time amended, supplemented or modified).
Section 1.6 Increased Costs. (a) In the event that any change after
the date upon which the Lender makes an Advance or acquires an interest in an
Advance in any Requirement of Law (including any change to the certificate of
incorporation, articles of association, by-laws or other organizational or
governing documents of the Lender, but only to the extent that such change is
the result of the compliance by the Lender with any request or directive
reflecting a change in Requirement of Law from any central bank or other
Governmental Authority in the United States of America), or in the
interpretation or application thereof or compliance by the Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority in the United States of America made after
the date upon which the Lender makes its Advances or acquires an interest in an
Advance:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Agreement or the Note, or change the basis of taxation of
payments in respect thereof (except for taxes referred to in Section
1.7(a) and Section 15.1(a)(iii) and changes in the rate of tax on the
overall net income of the Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other
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liabilities in or for the account of, advances, loans or other extensions
of credit by, or any other acquisition of funds by the Lender; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to reduce the amount receivable
hereunder in respect of the Advance below that which such Lender would have
received but for such change or compliance, then after submission by the Lender
to the Borrower and the Trustee of a written request therefor, the Trustee
shall, subject to Section 1.6(c), on behalf of the Borrower, pay to the Lender
any additional amounts necessary to compensate the Lender for such reduced
amount receivable.
(b) In the event that the Lender shall have determined that any
change after the date upon which the Lender makes an Advance or acquires an
interest in an Advance in any Requirement of Law (including any change to the
certificate of incorporation, articles of association, by-laws or other
organizational or governing documents of the Lender, but only to the extent that
such change is the result of the compliance by the Lender with any request or
directive reflecting a change in Requirement of Law from any central bank or
other Governmental Authority in the United States of America) regarding capital
adequacy or in the interpretation or application thereof or compliance by the
Lender or any corporation controlling the Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority in the United States of America made subsequent to the
date upon which such Lender makes its Advances or acquires its interest in an
Advance does or shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of the transactions
contemplated hereby to a level below that which the Lender or such corporation
would have achieved but for such change or compliance (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy) by
an amount reasonably deemed thereby to be material, then, from time to time,
after submission by the Lender to the Borrower and the Trustee of a written
request therefor, the Trustee shall, subject to Section 1.6(c), on behalf of the
Borrower, pay to the Lender such additional amount or amounts as will compensate
the Lender for such reduction; provided that to the extent that six months or
more pass between the date upon which the Lender obtains actual knowledge of the
liability resulting in such reduction and the date upon which the Lender
provides notice of such reduction to the Borrower hereunder, the Borrower shall
not be liable for amounts relating to the period six months or more prior to the
date of such notice.
(c) The Lender agrees that it shall use its best efforts to take any
actions that will avoid the need for, or reduce the amount of, any increased
amounts referred to in Section 1.6(a) or (b); provided, that no Lender shall be
obligated to take any actions that would, in the sole opinion of the Lender, be
disadvantageous to the Lender in any material respect.
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(d) If the Lender claims the increased amounts described in Section
1.6(a) or (b) ("Increased Cost"), the Lender will furnish to the Borrower and
the Trustee a certificate setting forth the basis and amount of each request by
the Lender for any such Increased Cost.
(e) Failure on the part of the Lender to demand compensation for any
Increased Cost or amount pursuant to Section 1.6(a) with respect to any period
shall not constitute a waiver of the Lender's right to demand compensation with
respect to such period; provided that to the extent that six months or more pass
between the date upon which the Lender obtains actual knowledge of the liability
resulting in such reduction and the date upon which the Lender provides notice
of such reduction to the Borrower hereunder, the Borrower shall not be liable
for amounts relating to the period six months or more prior to the date of such
notice.
(f) The Borrower shall have the right, and the Lender shall
cooperate fully, to replace any Lender which makes a claim pursuant to this
Section 1.6 with a new lender that will succeed to the rights of such Lender
under this Agreement; provided, that such Lender shall not be replaced hereunder
with a new lender until such Lender has been paid in full all amounts owed to it
pursuant to this Agreement; provided, further, that the Borrower shall provide
such Lender with an Officer's Certificate stating that such new lender is not
subject to, or has agreed not to seek, such increased costs.
Section 1.7 Taxes. (a) All payments made by the Trustee on behalf of
the Borrower, under this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority in the United States of America, excluding, in the case of the Lender,
net income taxes and franchise taxes imposed on the Lender as a result of a
present or former connection between the jurisdiction of the government or
taxing authority imposing such tax and the Lender (excluding a connection
arising solely from the Lender having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement) or any
political subdivision or taxing authority thereof or therein, and also excluding
United States of America withholding taxes to the extent that a Lender
incorporated in or under the laws of a jurisdiction other than the United
States, any state thereof or the District of Columbia fails to provide to the
Trustee at such times as are required by law a duly completed and executed
Internal Revenue Service form 1001 or 4224, as applicable (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"), provided that the Lender is not subject to backup
withholding or provides the Trustee with a duly completed and executed Internal
Revenue Service form W-8 or W-9, as appropriate. If any Taxes are required to be
withheld from any amounts payable to the Lender hereunder, after submission by
the Lender to the Borrower and the Trustee of a written request therefor, the
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amounts so payable to the Lender shall be increased by the Trustee, subject to
Section 1.7(c), on behalf of the Borrower, to the extent necessary to yield to
the Lender (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
except that no increase shall be made if the Lender is subject to backup
withholding and fails to provide the Trustee with a duly completed and executed
Internal Revenue Service form W-8 or W-9, as appropriate. Any Lender shall
utilize available tax credits to decrease amounts payable with respect to any
such withholding which the Lender in its sole judgment believes are directly
related to this Agreement, except that no increase shall be made if the Lender
is subject to backup withholding and fails to provide the Trustee with a duly
completed and executed Internal Revenue Service form W-8 or W-9, as appropriate.
Nothing in the preceding sentence shall give the Borrower or any other third
party rights to inspect, audit or otherwise request information regarding Lender
records, including records relating to available tax credits. If the Borrower
fails to pay any Taxes when due to the appropriate taxing authority the Trustee
shall, subject to Section 1.7(c), on behalf of the Borrower, pay the Lender for
any incremental taxes, interest or penalties that may become payable by the
Lender as a result of any such failure.
(b) If the Lender claims the amounts for Taxes referred to in
Section 1.7(a), the Lender will furnish to the Borrower and the Trustee an
officer's certificate setting forth the basis and amount of each request by the
Lender for such Taxes. If the Borrower, within 30 days after receiving a notice
of the basis and amount of such Taxes, disputes the basis or amount set forth in
such notice, the Lender and the Borrower shall consult in good faith to resolve
such dispute. If such consultation does not resolve such dispute within 45 days
(or such longer period as the Lender and the Borrower may then agree) after the
Lender shall have provided the Borrower with such notice, the Borrower may
request that the Lender furnish to an Independent Accountant all information
reasonably necessary to permit the confirmation of the accuracy of the Lender's
computation of the Taxes described in such notice. Within 30 days of the receipt
of such information, the Independent Accountant either shall confirm the
accuracy of such computation or shall notify the Lender and the Borrower that
such computation proposed by the Lender is inaccurate. In the latter event, the
Lender shall consult with the Borrower and the Independent Accountant as to the
proper computation of the Taxes, whereupon the Lender shall recompute the Taxes
in such a manner as shall enable the Independent Accountant to confirm their
accuracy. The Borrower and the Lender agree that the sole responsibility of the
Independent Accountant shall be to verify the calculation of the Taxes and that
matters of interpretation of the Program Documents are not within the scope of
its responsibilities. All expenses incurred by the Lender and the Borrower in
connection with the verification procedures described in this Section 1.7
(including the fees and expenses of the Independent Accountant) shall be paid by
the Borrower. Any information provided to the Independent Accountant by the
Lender shall be and remain the exclusive property of the Lender and shall be
deemed by the parties to be (and the Independent Accountant shall confirm in
writing that it will treat such information as) the private, proprietary and
confidential property of the Lender, and no Person other than
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the Lender and the Independent Accountant shall be entitled thereto or to any
review thereof, and all such information shall be returned to the Lender
contemporaneously with the completion of the verification procedure.
Notwithstanding the foregoing, the Lender shall not be obligated to disclose to
any Person (other than the Independent Accountant, subject to the agreement by
the Independent Accountant to keep all information therein confidential), or
permit any Person (other than the Independent Accountant, subject to the
agreement by the Independent Accountant to keep all information contained
therein confidential) to examine, any federal, state or local income tax returns
of the Lender or any of its Affiliates.
(c) The Lender agrees that it shall use its best efforts to take any
actions that will avoid the need for, or reduce the amount of, any increased
amounts referred to in Section 1.7(a); provided, that no Lender shall be
obligated to take any actions that would, in the sole reasonable opinion of the
Lender, be disadvantageous to the Lender in any material respect.
(d) The Lender, by its making of an Advance or acceptance of any
interest in any Advance, agrees to treat the interests evidenced by the Advances
as indebtedness for all tax purposes, and further agrees that any Person
acquiring an interest in any Advance from or through it may do so only subject
to the obligation to comply with this Agreement as to the treatment of such
Advance as indebtedness for all tax purposes.
Section 1.8 Definitions. Capitalized terms used in this Agreement
are defined in Section 14.1 hereof. References to a "Section ", "Schedule" or
"Exhibit" are, unless otherwise specified, to the appropriate Section, Schedule
or Exhibit of this Agreement.
Section 1.9 Term. The Commitment will terminate on March 31, 1998
unless terminated prior to such date in accordance with the terms hereof.
Section 1.10 Payment Instructions. Each of the Lender and AutoBond
shall provide written payment instructions (including the account number of the
bank account to which payments are to be directed and the name, address and ABA
number of the bank in which such account is maintained, if payments are to be
made to such party by the wire transfer of immediately available funds) to the
Trustee. Failure to provide such notice shall not affect such party's right to
receive any funds to which it is otherwise entitled in accordance with the
Program Documents, but failure to deliver such notice may result in a delay in
the receipt of such funds.
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SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender, as of the date
hereof, and as of each Closing Date, as follows:
Section 2.1 General Representations and Warranties of the Borrower.
(a) Organization and Authority. The Borrower:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted by the Program Documents to enter into the
Program Documents to which it is a party, to issue and deliver the Note
and to perform its obligations under the Program Documents to which it is
a party and the Note;
(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or
the nature of its activities makes such filings, franchises, licenses,
permits or registrations necessary.
(b) Place of Business. The address of the principal place of
business and chief executive office of the Borrower is 000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000 and there have been no other such locations
during the immediately preceding four months, except as may have been previously
disclosed in writing to the Initial Lender.
(c) Compliance with Other Instruments, etc. The Borrower is not in
violation of any term of its certificate of incorporation or by-laws. Neither
the execution, delivery or performance by the Borrower of the Program Documents
to which it is a party or the Note nor the borrowings hereunder does or will (i)
conflict with or violate the certificate of incorporation or by-laws of the
Borrower, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any Lien on any of the Properties of the Borrower pursuant to the
terms of any instrument or agreement to which the Borrower is a party or by
which it is bound, or (iii) require any consent of or other action by any
trustee or any creditor of, any lessor to or any investor in the Borrower.
(d) No Materially Adverse Contracts, etc. The Borrower is not a
party to or bound by (nor are any of its Properties affected by) any contract or
agreement, or subject to any order, writ, injunction or decree or other action
of any court or any
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governmental department, commission, bureau, board or other administrative
agency or official, or any charter or other corporate or contractual
restriction, which materially and adversely affects, or in the future will
materially and adversely affect, the business, earnings, prospects, properties
or condition (financial or other) of the Borrower.
(e) Compliance with Law. The Borrower is in compliance with all
statutes, laws and ordinances and all governmental rules and regulations to
which it or any of its Properties are subject. The policies and procedures set
forth in the AutoBond Program Manual are in compliance with all applicable
statutes, laws and ordinances and all governmental rules and regulations.
Neither the execution, delivery or performance of the Program Documents to which
it is a party or the Note nor the borrowings hereunder does or will cause the
Borrower to be in violation of any law or ordinance, or any order, rule or
regulation, of any federal, state, municipal or other governmental or public
authority or agency.
(f) Pending Litigation, etc. There is no action at law, suit in
equity or other proceeding or investigation (whether or not purportedly on
behalf of the Borrower) in any court, tribunal or by or before any other
governmental or public authority or agency or any arbitrator or arbitration
panel, pending or, to the best knowledge of the Borrower, threatened against or
affecting the Borrower or any of its respective Properties (i) an adverse
determination of which could materially and adversely affect the business,
earnings, prospects, Properties or condition (financial or other) of the
Borrower, each taken as a whole or (ii) that could question the validity of any
Program Document to which it is a party or the Note or the priority or
perfection of any Liens created under the Indenture. The Borrower is not in
default with respect to any order, writ, injunction, judgment or decree of any
court or other governmental or public authority or agency or arbitrator or
arbitration panel.
(g) Taxes. The Borrower and each entity which might have tax
liabilities for which the Borrower is or may be liable, has filed all tax
returns and paid all taxes required by law to be filed or paid, which are due
pursuant to said returns (or which to the knowledge of the Borrower are due and
payable) and on all assessments received by the Borrower or such entity, as the
case may be, other than taxes being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
established in accordance with generally accepted accounting principles. No
extensions of the time for the assessment of deficiencies have been granted by
the Borrower. There are no material Liens on any Properties of the Borrower
imposed or arising as a result of the delinquent payment or the nonpayment of
any tax, assessment, fee or other governmental charge. There are no applicable
taxes, fees or other governmental charges due and payable by the Borrower in
connection with the execution and delivery by the Borrower of the Program
Documents to which it is a party or the Note or the borrowings hereunder.
9
(h) Investment Company Act. The Borrower is not an "investment
company", or an "affiliated person" of an "investment company", or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and the Borrower is not an
"investment adviser" or an "affiliated person" of an "investment adviser" as
such terms are defined in the Investment Advisers Act of 1940, as amended.
(i) Margin Rules. Without limiting the foregoing, the application in
accordance with the Program Documents of any part of the proceeds from the
Advances by the Borrower pursuant to this Agreement will not violate or result
in a violation of Section 7 of the Securities Exchange Act or any regulations
issued pursuant thereto, including, without limitation, Regulation G (12 C.F.R.,
Part 207), as amended, Regulation T (12 C.F.R., Part 220), as amended, and
Regulation X (12 C.F.R., Part 224), as amended, of the Board of Governors of the
Federal Reserve System. The assets of the Borrower do not include any "margin
stock" within the meaning of such Regulation G, and the Borrower does not have
any intention of acquiring any such margin stock.
(j) Proceedings. The Borrower has taken all action necessary to
authorize the execution and delivery of the Program Documents to which it is a
party and the Note and the borrowings hereunder and the performance of all
obligations to be performed by it hereunder and thereunder.
(k) No Event of Default or Default. No event has occurred, and no
condition exists, that constitutes a Default or an Event of Default.
(l) No Consents. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is or
will be required for (i) the valid execution, delivery and performance by the
Borrower of the Program Documents to which it is a party or the Note, (ii) the
perfection or maintenance of the Liens intended to be created by the Indenture
(including the first priority status thereof) or (iii) the borrowings hereunder,
other than such UCC filings as have been provided to the Initial Lender. The
Borrower has obtained all consents, approvals or authorizations of, made all
declarations or filings with, or given all notices to, all federal, state or
local governmental or public authorities or agencies which are necessary for the
continued conduct by the Borrower of its business as now conducted and as
proposed to be conducted as contemplated by the Program Documents.
(m) Validity of Program Documents and Note. The Program Documents to
which it is a party have each been duly executed and delivered by the Borrower
and constitute legal, valid and binding obligations of the Borrower, enforceable
in accordance with their respective terms. Upon receipt by the Borrower of the
proceeds of the initial
10
Advance as provided in this Agreement, the Note will have been duly issued and
will constitute the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, and entitled to
the benefits of the Indenture.
(n) Representations and Warranties in Program Documents. The
representations and warranties of the Borrower contained in each of the Program
Documents to which it is a party and in any document, certificate or instrument
delivered pursuant to any such Program Document are true and correct and the
Lender may rely on such representations and warranties, if not made directly to
the Lender, as if such representations and warranties were made directly to the
Lender.
(o) Solvency. The Borrower is Solvent and, immediately after giving
effect to the issue of the Note and the consummation of the other transactions
contemplated by this Agreement, the Borrower will be Solvent.
(p) Full Disclosure. The Program Documents to which it is a party
and any certificate, report, statement or other writing furnished to the Lender
by or on behalf of the Borrower in connection with the negotiation of any such
Program Document are accurate and complete with respect to the information
purported to be set forth therein. There is no fact known to the Borrower that
has not been disclosed to the Lender in writing that (i) materially and
adversely affects, or in the future may materially and adversely affect, the
business, earnings, prospects, properties or condition (financial or other) of
the Borrower, or (ii) materially and adversely affects, or in the future could
materially and adversely affect, the ability of the Borrower to perform its
obligations under the Program Documents or the Note.
(q) Non-Consolidation. The Borrower has been operated in such a
manner that it would not be substantively consolidated in the bankruptcy trust
estate of any Affiliate, such that the separate existence of the Borrower and
any Affiliate would be disregarded.
(r) Representations and Warranties Updated. The representations and
warranties set forth above shall be deemed repeated on, and as of, each Closing
Date.
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Section 2.2 General Representations and Warranties of AutoBond.
AutoBond represents and warrants to the Lender, as of the date
hereof, and as of each Closing Date, as follows:
(a) Organization and Authority. AutoBond:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted as contemplated by the Program Documents to which
it is a party, to enter into the Program Documents to which it is a party
and to perform its obligations under the Program Documents to which it is
a party.
(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or
the nature of its activities makes such filings, franchises, licenses,
permits or registrations necessary.
(b) Place of Business. The address of the principal place of
business and chief executive office of AutoBond is 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxx 00000 and there have been no other such locations during the immediately
preceding four months except as may have been previously disclosed in writing to
the Initial Lender.
(c) Compliance with Other Instruments, etc. AutoBond is not in
violation of any term of its articles of incorporation or by-laws. The
execution, delivery and performance by AutoBond of the Program Documents to
which it is a party do not and will not (i) conflict with or violate the
articles of incorporation or by-laws of AutoBond, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation of any Lien on any of the Properties or
assets of AutoBond pursuant to the terms of any instrument or agreement to which
AutoBond is a party or by which it is bound, or (c) require any consent of or
other action by any trustee or any creditor of, any lessor to or any investor in
AutoBond.
(d) No Materially Adverse Contracts, etc. AutoBond is not a party to
or bound by (nor are any of its Properties affected by) any contract or
agreement, or subject to any order, writ, injunction or decree or other action
of any court or any governmental department, commission, bureau, board or other
administrative agency or official, or any charter or other corporate or
contractual restriction, which materially and adversely affects,
12
or in the future will materially and adversely affect, the business, earnings,
prospects, Properties or condition (financial or other) of AutoBond.
(e) Compliance with Law. AutoBond is in compliance with all
statutes, laws and ordinances and all governmental rules and regulations to
which it is subject, the violation of which, either individually or in the
aggregate, could materially adversely affect the business, earnings, Properties
or condition (financial or other) of AutoBond, each taken as a whole. The
policies and procedures set forth in the AutoBond Program Manual are in
compliance with all applicable statutes, laws and ordinances and all
governmental rules and regulations. The execution, delivery and performance of
the Program Documents to which it is a party do not and will not cause AutoBond
to be in violation of any law or ordinance, or any order, rule or regulation, of
any federal, state, municipal or other governmental or public authority or
agency.
(f) Pending Litigation, etc. There is no action at law, suit in
equity or other proceeding or investigation (whether or not purportedly on
behalf of AutoBond) in any court, tribunal or by or before any other
governmental or public authority or agency or any arbitrator or arbitration
panel, pending or, to the best knowledge of AutoBond, threatened against or
affecting AutoBond or any of its respective Properties (i) an adverse
determination of which could materially and adversely affect the business,
earnings, prospects, Properties or condition (financial or other) of AutoBond,
each taken as a whole or (ii) that could question the validity of the Program
Documents. AutoBond is not in default with respect to any order, writ,
injunction, judgment or decree of any court or other governmental or public
authority or agency or arbitrator or arbitration panel.
(g) Taxes. AutoBond and each entity which might have tax liabilities
for which AutoBond is or may be liable, has filed all tax returns and paid all
taxes required by law to be filed or paid, which are due pursuant to said
returns (or which to the knowledge of AutoBond are due and payable) and on all
assessments received by AutoBond or such entity, as the case may be, other than
taxes being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been established in accordance
with generally accepted accounting principles. No extensions of the time for the
assessment of deficiencies have been granted by AutoBond. There are no material
Liens on any Properties of AutoBond imposed or arising as a result of the
delinquent payment or the nonpayment of any tax, assessment, fee or other
governmental charge. There are no applicable taxes, fees or other governmental
charges due and payable by AutoBond in connection with the execution and
delivery of the Program Documents to which it is a party.
(h) Investment Company Act. AutoBond is not an "investment company",
or an "affiliated person" of an "investment company", or a company "controlled"
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, and AutoBond is not an "investment adviser" or an
"affiliated person" of an
13
"investment adviser" as such terms are defined in the Investment Advisers Act of
1940, as amended.
(i) Proceedings. AutoBond has taken all action necessary to
authorize the execution and delivery by it of the Program Documents to which it
is a party and the performance of all obligations to be performed by it under
the Program Documents.
(j) No Event of Default. No event has occurred and is continuing,
and no condition exists, that constitutes a Default or an Event of Default.
(k) No Consents. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is,
was or will be required for the valid execution, delivery and performance by
AutoBond of the Program Documents to which it is a party. AutoBond has obtained
all consents, approvals or authorizations of, made all declarations or filings
with, or given all notices to, all federal, state or local governmental or
public authorities or agencies which are necessary for the continued conduct by
AutoBond of its respective businesses as now conducted, other than such
consents, approvals, authorizations, declarations, filings and notices which,
neither individually nor in the aggregate, materially and adversely affect, or
in the future will materially and adversely affect, the business, earnings,
prospects, properties or condition (financial or other) of AutoBond.
(l) Validity of Agreement. The Program Agreements to which it is a
party have been duly executed and delivered by AutoBond and constitute the
legal, valid and binding obligation of AutoBond, enforceable in accordance with
their terms.
(m) Representations and Warranties in Program Documents. (i) The
representations of AutoBond contained in any document, certificate or instrument
delivered pursuant to the Program Documents are true and correct in all material
respects and the Lender may rely on such representations and warranties, if not
made directly to the Lender, as if such representations and warranties were made
directly to the Lender.
(ii) Each acquisition of a Specified Auto Loan by the Borrower has
been or will be made in compliance with all requirements specified in the
Program Documents; and AutoBond has performed all of its obligations with
respect to such Specified Auto Loan, including, without limitation, the payment
to the related Dealer of all amounts then owing to such Dealer by AutoBond in
respect of such Specified Auto Loan.
(n) Solvency. AutoBond is Solvent.
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(o) Full Disclosure. The Program Documents to which it is a party
and any certificate, report, statement or other writing furnished to the Lender
by or on behalf of AutoBond in connection with the negotiation of any such
Program Document and the issuance of the Note are accurate and complete with
respect to the information purported to be set forth therein. The reports of
AutoBond filed with the Securities and Exchange Commission did not, as of their
respective dates, contain any misstatements of any material facts or fail to
state any material facts necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and since the
balance sheet date contained in AutoBond's most recently publicly filed
financial statements, there has been no material adverse change in the financial
condition or results of operations of AutoBond or event that materially and
adversely affects the ability of AutoBond to perform its obligations under the
Program Documents.
(p) Representations and Warranties Updated. The representations and
warranties set forth above shall be deemed repeated on, and made as of, each
Closing Date.
Section 2.3 Representations and Warranties with Respect to the
Specified Auto Loans. (a) With respect to each Auto Loan, each of AutoBond and
the Borrower represents and warrants to the Lender, as of the Closing Date on
which such Auto Loan becomes a Specified Auto Loan, that:
(i) such Auto Loan complies in full with, and has been
acquired by AutoBond in accordance with, AutoBond's customary
underwriting guidelines and procedures;
(ii) AutoBond has conducted each of the procedures set forth
in the AutoBond Program Manual to evaluate the Obligor's application
in accordance with the criteria set forth in the AutoBond Program
Manual;
(iii) on and after such Closing Date, there shall exist under
each such Auto Loan a valid, subsisting and enforceable security
interest in the Financed Vehicle securing each such Auto Loan and at
such time an enforcement of such security interest is sought and at
all times there shall exist a valid, subsisting and enforceable
first priority perfected security interest in such Financed Vehicle
in favor of AutoBond;
(iv) such Auto Loan has not been satisfied, subordinated or
rescinded; and no provision of such Auto Loan has been waived,
altered or modified in any respect, except as identified in the Loan
File and made in accordance with the AutoBond Program Manual and the
Credit and Collection Policies;
15
(v) such Auto Loan is not and will not be subject to any right
of rescission, set-off, recoupment, counterclaim or defense, whether
arising out of transactions concerning such Auto Loan between the
Obligor and the Dealer, the Dealer and AutoBond, the Dealer and an
Originator, or otherwise and no such right has been asserted with
respect thereto; the operation of the terms of such Auto Loan or the
exercise of any right thereunder will not render any such Auto Loan
unenforceable in whole or in part;
(vi) upon assigning such Auto Loan to the Borrower, AutoBond
had full right to transfer such Auto Loan to the Borrower, and
AutoBond conveyed sole ownership of and good and marketable title to
such Auto Loan to the Borrower; upon assigning such Auto Loan to the
Trustee, the Borrower had full right to assign such Auto Loan to the
Trustee;
(vii) such Auto Loan is not a Defaulted Auto Loan on the date
of its transfer and there is no default, breach, violation, or event
permitting acceleration under such Auto Loan, and no event has
occurred which, with notice and the expiration of any grace or cure
period or both, would constitute a default, breach, violation, or
event permitting acceleration under such Auto Loan;
(viii) the Loan File related to such Auto Loan contains each
of the documents required by the AutoBond Program Manual and the
contractual documents contained in such Loan File constitute the
entire agreement with respect to such Auto Loan between the Obligor
and the related Dealer and, with the exception of the related Dealer
Agreement, between the Dealer and AutoBond;
(ix) the down payment described in the Loan File relating to
such Auto Loan was paid to the related Dealer in the manner stated
therein at the time of the origination of such Auto Loan, the
proceeds thereof were fully disbursed; there is no requirement for
further advances thereunder; and all fees and expenses in connection
thereof have been paid;
(x) the Financed Vehicle securing the Obligor's obligation to
pay under such Auto Loan has been delivered to and accepted by the
Obligor;
(xi) such Auto Loan is denominated and payable in United
States dollars;
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(xii) the documents evidencing such Auto Loan contain
customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization of
the security afforded by the related collateral;
(xiii) the Dealer Agreement relating to such Auto Loan is in
effect, whereby the related Dealer warrants delivery of title to
such Financed Vehicle, indemnifies AutoBond or the related
Originator against fraud and misrepresentation by the related Dealer
and its employees and represents and warrants that such Dealer did
not accept any side notes as any part of the down-payment portion of
the related Obligor's purchase price, and AutoBond's or the
Originator's (as the case may be) rights thereunder with regard to
such Auto Loan have been validly assigned to the Borrower, and are
enforceable against the related Dealer by, the Borrower or its
assignee, along with any other rights of recourse which AutoBond or
the Originator has against the related Dealer;
(xiv) each Auto Loan was acquired by AutoBond or an Originator
from an "Eligible Dealer"; each Auto Loan was acquired by the
Borrower from AutoBond, and the acquisition by AutoBond or an
Originator of any Auto Loan from a Dealer was not an extension of
financing to such Dealer but was acquired in a transaction
constituting a "true sale" under applicable state law;
(xv) AutoBond has no knowledge of any fact which should have
led it to expect at the time of sale of such Auto Loan, that (A)
such Auto Loan was made by the Selling Dealer and sold by such
Dealer to AutoBond with any conduct constituting fraud or
misrepresentation on the part of such Dealer or (B) that such Auto
Loan would not be paid in full when due because of fraud or
misrepresentation on the part of the related Obligor;
(xvi) such Auto Loan was not originated in any jurisdiction
the laws of which prohibit the Selling Dealer from transferring such
Auto Loan to AutoBond or an Originator, or prohibit AutoBond from
transferring such Auto Loan to the Borrower, or the Borrower from
assigning such Auto Loans to the Trustee, nor is such Auto Loan
subject to the laws of any such jurisdiction;
(xvii) the Indenture and each related Collateral Assignment
constitutes a valid sale, transfer, assignment set-over and
conveyance to the Trustee of all right, title and interest of the
Borrower, AutoBond, any Originator and the Selling Dealer in and to
such Auto Loan now existing and hereafter created, and upon its
receipt of such Auto Loan and payment of the
17
related Loan Acquisition Price to AutoBond, the Borrower will have
good and marketable title to such Auto Loan free and clear of any
Adverse Claim (other than that of the Trustee) and such Auto Loan
shall be freely transferable by the Borrower without the required
consent of any party (other than the Trustee); each Assignment is in
a form sufficient to (i) convey such Auto Loan to the Borrower under
all applicable law in the state in which the related Financed
Vehicles is located and (ii) permit the assignee or its agents to
exercise all rights granted by the Obligor under such Auto Loan and
such other documents and all rights available under applicable law
to the obligee under such Auto Loan;
(xviii) such Auto Loan does not (A) contravene in any material
respect any state and federal laws, rules or regulations applicable
thereto in connection with the origination of such Auto Loan,
including without limitation, usury, disclosure, truth in lending,
equal credit and similar laws, the Federal Trade Commission Act and
applicable state laws governing motor vehicle installment sale or
loan contracts, (but specifically excluding laws, rules or
regulations applicable thereto in connection with post-origination
compliance, including, but not limited to, laws, rules and
regulations applicable thereto in connection with fair credit
billing, fair credit reporting and fair debt collection practices)
or (B) except as required by applicable law, impose any liability or
obligation of the Dealer, AutoBond or the Borrower on the Trustee or
its assignee with respect to such Auto Loan;
(xix) there are no proceedings or investigations pending or,
to the best of the Borrower's or AutoBond's knowledge, threatened
before any Governmental Authority (A) asserting the invalidity of
such Auto Loan or the bankruptcy or insolvency of the related
Obligor, (B) seeking the payment of such Auto Loan or (C) seeking
any determination or ruling that might materially and adversely
affect the validity or enforceability of such Auto Loan;
(xx) the Borrower and AutoBond have duly fulfilled all
obligations on their part to be fulfilled under or in connection
with such Auto Loan and have done nothing to impair the rights of
the Trustee in such Auto Loan or the rights of the Borrower or the
Trustee in the proceeds with respect thereto; the Borrower and
AutoBond have paid in full all taxes and other charges payable in
connection with such Auto Loan and the transfer of such Auto Loan to
the Borrower, which could impair or become a lien prior to the
Borrower or Trustee's interest in such Auto Loan; there are no prior
liens for work performed affecting any Financed Vehicle which are or
may become a lien prior to or equal with the security interest
granted in the related Auto Loan;
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(xxi) the applicable Assignment has been duly executed and
delivered by AutoBond and the information regarding the Auto Loans
in such Sale Assignment and Schedules attached thereto is true and
correct as of the Cut-Off Date relating to such Closing Date;
(xxii) the residence of the related Obligor is located within
the borders of the United States of America;
(xxiii) there is only one original of the retail installment
sale contract or promissory note and security agreement evidencing
such Auto Loan, such original has been delivered to the Trustee
pursuant to the Indenture and there are no custodial agreements in
effect that would adversely affect the ability of the Trustee to
maintain possession thereof pursuant to the Indenture;
(xxiv) the Obligor is not a Governmental Authority;
(xxv) the retail installment sale contract or promissory note
and security agreement evidencing such Auto Loan constitute "chattel
paper" within the meaning of the UCC in effect in the States of
Texas and Nevada and all filings required to be made and all actions
required to be taken or performed by any Person in any jurisdiction
to give the Borrower an ownership interest in such Auto Loan have
been made, taken or performed;
(xxvi) each such Auto Loan constitutes and shall continue to
constitute a legal, valid and binding obligation of the Obligor
thereunder and is enforceable in accordance with its terms, except
only as such enforcement may be limited by laws affecting the
enforcement of creditors' rights generally;
(xxvii) at the origination date of each such Auto Loan, the
related Financed Vehicle was covered by a comprehensive and
collision insurance policy (a) in an amount at least equal to the
lesser of (1) the actual cash value of the related Financed Vehicle
or (2) the unpaid balance owing on such Auto Loan and (b) insuring
against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and
collision coverage;
(xxviii) the total amount financed by such Auto Loan does not
exceed $40,000;
(xxix) such Auto Loan was not purchased from the related
Dealer at a discount greater than 19%;
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(xxx) the APR for such Auto Loan is not less than 14.5% per
annum; and
(xxxi) no selection procedures believed by AutoBond to be
adverse to the interest of the Lenders shall have been utilized in
selecting such Auto Loans for inclusion as Collateral;
(xxxii) such Auto Loan shall have not less than 12 monthly
payments annually scheduled at origination;
(xxxiii) such Auto Loan shall have a remaining maturity of not
more than 60 months; such Auto Loan shall have an original maturity
date not later than 72 months from its origination date;
(xxxiv) the first scheduled payment on such Auto Loan was
made, or, if the first scheduled payment on an Auto Loan has not yet
been made as of the related Closing Date preceding its transfer,
such Scheduled Payment will be made on or prior to the 60th day
after the due date for such Scheduled Payment;
(xxxv) each Auto Loan is eligible for coverage under and is
covered by a VSI Policy;
(xxxvi) no more than 10% of the aggregate Unpaid Principal
Balance of the Specified Auto Loans owned by the Borrower at any
time shall represent Financed Vehicles purchased from Dealers who
are not franchised new car Dealers; provided, however, that the
Borrower shall not be deemed to have breached this representation if
it cures any violation of the immediately preceding clause within 30
days of the earlier to occur of (A) the first Determination Date on
which the requirements specified in the immediately preceding clause
was determined to have been breached and (B) the date on which the
Borrower has actual knowledge that the requirements set forth in the
second preceding clause have been breached;
(xxxvii) the weighted average purchase discount with respect
to all such Specified Auto Loans owned by the Borrower shall not
exceed 15% and the weighted average APR shall not be less than 16%
per annum; provided, however, that the Borrower shall not be deemed
to have breached this representation if the Borrower cures any
violation of the immediately preceding clause within 30 days of the
earlier to occur of (A) the first Determination Date on which the
requirements specified in the immediately preceding clause was
determined to have been breached and (B) the date on
20
which the Borrower has actual knowledge that the requirements set
forth in the second preceding clause have been breached; and
(xxxviii) no more than 2% of the aggregate Unpaid Principal
Balance of the Specified Auto Loans owned by the Borrower at any time
shall be in respect of Financed Vehicles with a model year prior to 1989;
provided, however, that the Borrower shall not be deemed to have breached
this representation if it cures any violation of the immediately preceding
clause within 30 days of the earlier to occur of (A) the first
Determination Date on which the requirements specified in the immediately
preceding clause was determined to have been breached and (B) the date on
which the Borrower has actual knowledge that the requirements set forth in
the second preceding clause have been breached;
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.3 shall survive the sale or contribution
of a Specified Auto Loan to the Borrower and any assignment of such Specified
Auto Loan by the Borrower to the Trustee pursuant to the Indenture and shall
continue so long as any such Specified Auto Loan shall remain outstanding until
such time as such Specified Auto Loan is repurchased pursuant to the Indenture.
SECTION 3. CONDITIONS OF OBLIGATION TO MAKE INITIAL ADVANCE
ON INITIAL CLOSING DATE.
The Initial Lender's obligation to make the initial Advance
hereunder on the Initial Closing Date shall be subject to the satisfaction,
prior to or concurrently with the making of such Advance, of the conditions set
forth in Section 4 hereof, as well as the following conditions:
Section 3.1 Other Agreements. The Program Documents and the Note
shall each have been duly authorized by all necessary action. The Borrower and
AutoBond shall have duly executed and delivered the Program Documents to which
they are a party and, in the case of the Borrower, the Note and such Program
Documents are in full force and effect.
Section 3.2 Opinion of Special Counsel. The Initial Lender shall
have received from Xxxxx Xxxxxxxxxx, who are acting as special New York counsel
for the Lender in connection with the transactions contemplated by this
Agreement, an opinion, dated the Initial Closing Date, in the form attached
hereto as Exhibit E.
Section 3.3 Opinions of Local Counsel. The Initial Lender shall have
received from Xxxxxx & Xxxxxx and Xxxxxxxx & Wedge, who are acting as special
Texas counsel for AutoBond and special Nevada counsel for the Borrower,
respectively, in
21
connection with the transactions contemplated by this Agreement, opinions, dated
the Initial Closing Date, in the form attached as Exhibit F and Exhibit G,
respectively.
Section 3.4 Fitch Rating Letter. The Lender shall have received
written confirmation from Fitch that Fitch has assigned a rating of no less than
"A" to the Note.
Section 3.5 Officer's Certificates. The Initial Lender shall have
received (a) an officer's certificate from the Borrower with respect to the
matters set forth in Sections 4.1 and 4.2 and (b) an officer's certificate from
AutoBond with respect to the matters set forth in Sections 4.1, 4.2 and 4.6.
Section 3.6 Organizational and Other Documents. The Initial Lender
shall have received certified copies of the organizational documents of the
Borrower and of AutoBond and of all formalities authorizing the execution,
delivery and performance hereof and of the Program Documents to which each is a
party and, in the case of the Borrower, the Note.
Section 3.7 Financing Statements. Financing statements naming the
Borrower as debtor and the Trustee on behalf of the Lender as secured party
(each, a "Financing Statement") shall have been executed and delivered to the
Trustee for filing in accordance with the applicable Uniform Commercial Code
with the Secretary of State of the State of Nevada and with such other filing
officer within or without Nevada as the Initial Lender shall request, which
Financing Statements constitute all of the filings required to perfect the
security interests intended to be created by the Indenture.
Section 3.8 Necessary Consents. The Lender shall have received a
copy of all consents to, or releases of any lien in respect to any Specified
Auto Loans subject or to be subject hereto, in form and substance satisfactory
to the Lender.
Section 3.9 Payment of Commitment Fee. The Lender shall have
received the Commitment Fee.
SECTION 4. CONDITIONS OF OBLIGATION TO MAKE ADVANCES
ON ANY CLOSING DATE.
The Initial Lender's obligation to make Advances hereunder on any
Closing Date shall be subject to the satisfaction, prior to or concurrently with
the making of such Advances, of the following conditions:
Section 4.1 Performance of Obligations; No Old Advances. The
Borrower and AutoBond shall each have performed all of their respective
obligations to be performed
22
hereunder prior to or on such Closing Date. No Advances shall have been
outstanding in excess of 120 days.
Section 4.2 Representations True; No Event of Default. The
representations and warranties of the Borrower pursuant to Section 2.1 and of
AutoBond pursuant to Section 2.2 shall be true on and as of such Closing Date
and the representations and warranties with respect to the Specified Auto Loans
shall be true on and as of the related Closing Date with the same effect as
though such representations and warranties had been made on and as of such
Closing Date. There shall exist on such Closing Date no Default or Event of
Default.
Section 4.3 Taxes. Any taxes, fees and other charges due in
connection with the borrowings hereunder or the issuance of the Note (other than
any income or franchise taxes incurred by the Lender) shall have been paid in
full by the Borrower.
Section 4.4 No Merger or Change in Control. Neither AutoBond nor the
Borrower shall have dissolved or liquidated or consolidated or merged with, or
been wound up into, or sold, leased or otherwise disposed of all or
substantially all of its Properties to, any Person (other than a merger into a
wholly-owned Subsidiary for the purposes of reincorporation); unless the
surviving or transferee entity has assumed all the obligations of AutoBond or
the Borrower hereunder, as applicable.
Section 4.5 Searches. The Borrower shall have delivered to the
Initial Lender such evidence (including without limitation, Uniform Commercial
Code search certificates, releases and termination statements) as the Initial
Lender may request to establish that there are no financing statements filed
against the Collateral other than with respect to Permitted Liens.
Section 4.6 Consents and Approvals. The Borrower and AutoBond shall
have obtained any necessary consents, waivers, approvals, authorizations,
registrations, filings, licenses and notifications (including, if necessary,
qualifying to do business in, and qualifying under the applicable consumer laws
of, each jurisdiction where the Borrower and AutoBond is then doing business, or
is expected to be doing business utilizing the proceeds of such Advance) and the
same shall be in full force and effect.
Section 4.7 Proceedings, Instruments, etc. All proceedings and
actions taken on or prior to such Closing Date in connection with the
transactions contemplated by this Agreement, the Program Documents and the Note,
and all instruments incident thereto, shall be in form and substance reasonably
satisfactory to the Initial Lender, and the Initial Lender shall have received
copies of all documents that the Initial Lender may reasonably request in
connection with such proceedings, actions and transactions.
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Section 4.8 Loan Sale Agreement; Use of Proceeds. The Borrower shall
have entered into the Loan Sale Agreement and the proceeds of the Advances shall
not exceed the amount the Trustee, on behalf of the Borrower, is required to pay
on the date of making of such Advances in respect of Loan Acquisition Prices;
provided, that, so long as (after giving effect to the application of the
Advance proceeds) the aggregate amount of Permitted Investments is no greater
than $1,000,000, at the direction of AutoBond, as Administrator, a portion of
the Proceeds of the Advances may be applied to purchase Permitted Investments,
pending application to the acquisition of Eligible Auto Loans. The Loan Sale
Agreement shall have been duly authorized, executed and delivered by the parties
thereto. Copies of the duly executed Loan Sale Agreement, together with the
opinions of counsel and officer's certificates delivered in connection
therewith, shall have been delivered to the Initial Lender and to the Trustee.
Section 4.9 Other Documents. The Borrower and AutoBond shall have
delivered to the Initial Lender such other documents, instruments, approvals
(and if requested certified duplication of executed copies thereof) and opinions
as the Initial Lender may have reasonably requested. Each of the Program
Documents shall remain in full force and effect.
Section 4.10 Continuance of a Funding Termination Event or an Event
of Default. No Funding Termination Event or Event of Default shall have occurred
and be continuing; provided, however, that if the Lenders designate a Funding
Termination Event based upon clause (b) of the definition thereof, then the
Initial Lender shall return to the Borrower a pro-rated portion of the
Commitment Fee.
SECTION 5. COVENANTS OF AUTOBOND AND THE BORROWER WITH
RESPECT TO THE SPECIFIED AUTO LOANS.
Section 5.1 Additional Covenants. In addition to the covenants set
forth in Section 10 with respect to the Borrower and Section 11 with respect to
AutoBond, each of the Borrower and AutoBond hereby make the following additional
covenants, which shall be determined on each Determination Date:
(a) to their knowledge, there is no Borrowing Base Deficiency; and
(b) to calculate the Borrowing Base and determine the existence of
any Borrowing Base Deficiency on each Determination Date and to provide
such information to the Lender in the Monthly Servicer Report.
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SECTION 6. [Reserved]
SECTION 7. CERTAIN SPECIAL RIGHTS.
Section 7.1 Home Office Payment. Notwithstanding any provision to
the contrary in the Program Documents, the Trustee, on behalf of the Borrower,
will punctually pay in immediately available funds prior to noon, New York City
time, all amounts payable with respect to the Advances in accordance with the
provisions of this Agreement and the Security Agreement (without the necessity
for any presentation or surrender thereof or any notation of such payment
thereon) in the manner and at any address as the Lender may from time to time
direct in writing. The Initial Lender agrees that, as promptly as practicable
after the payment or prepayment of any Advance, the Initial Lender will record
such payment or prepayment on the Note. The Borrower will afford the benefits of
this Section 7.1 to any Assignee, each of which, by its receipt and acceptance
of a Note, will be deemed to have made the same agreement relating to the
Advances as the Initial Lender has made in this Section 7.1. The Borrower shall
only be obligated to make payments on any Advance to an Assignee in the manner
provided in this Section 7.1 from and after the time such Assignee provides to
the Borrower and the Trustee written notice of its election to receive payments
in such manner and the address to which payments are to be directed (including
the account number of Assignee's bank account to which payments are to be
directed and the name, address and ABA number of the bank in which such account
is maintained, if payments are to be made to such Assignee by the wire transfer
of immediately available funds).
Section 7.2 Certain Taxes. The Borrower will pay all taxes (other
than income or franchise taxes incurred by the Lender) in connection with the
execution and delivery of this Agreement and the Security Agreement, the
issuance of the Note(s) by the Borrower, the borrowings hereunder and any
modification of the Program Documents or the Note requested or required by the
Borrower and will save the Lender harmless, without limitation as to time,
against any and all liabilities (including, without limitation, any interest or
penalty for nonpayment or delay in payment, or any income taxes paid by the
Lender or any Assignee in connection with any reimbursement by the Borrower for
the payment by any other Person of any such taxes) with respect to all such
taxes. The obligations of the Borrower under this Section 7.2 shall survive the
payment in full of the Advances and the termination of the Program Documents.
Section 7.3 Substitution of Initial Lender. The Initial Lender shall
have the right to substitute any of the Initial Lender's Affiliates as the maker
of all or any portion of the aggregate principal amount of Advances to be made
by the Initial Lender (so long as any such Affiliate is not engaged in any
principal line of business substantially similar to the general nature of the
business presently conducted by the Borrower), by written notice delivered to
the Borrower, which notice shall be signed by both the Initial Lender and such
25
Affiliate and shall contain such Affiliate's agreement to be bound by this
Agreement. The Borrower agrees that upon receipt of such notice (a) wherever the
word "the Initial Lender" is used in this Agreement (other than in this Section
7.3) such word shall be deemed to refer to such Affiliate in addition to or
instead of to the Initial Lender, as the case may be, and (b) the Initial Lender
shall, to the extent of the assumption by such Affiliate of the Initial Lender's
obligations hereunder, be released from its obligations under this Agreement.
The Borrower also agrees that if the Initial Lender, at any time, acquires from
any Affiliate all or any portion of such Affiliate's rights under this
Agreement, wherever the word "the Initial Lender" is used in this Agreement such
word shall thereafter be deemed to refer to the Initial Lender in addition to or
instead of to such Affiliate, as the case may be, and such Affiliate shall, to
the extent of the assumption by the Initial Lender of such Affiliates
obligations hereunder, be released from all of its obligations under this
Agreement. Notwithstanding any other provision of this Section 7.3, neither the
Initial Lender nor any Affiliate thereof shall be entitled to substitute any
other party as the maker of any Advances if as a result of such substitution the
Borrower would be required to register as an "investment company" under the
Investment Company Act of 1940, as amended.
SECTION 8. ADVANCE MATURITY; ADVANCE PREPAYMENTS.
Section 8.1 Advance Maturity. Each Advance shall be due and payable
on the related Maturity Date. On March 31, 1998, the remaining unpaid principal
amount of the Advances, together with accrued interest thereon and unpaid fees
with respect thereto, shall be due and payable.
Section 8.2 Mandatory Prepayments. The Borrower shall immediately
prepay, or (in the case of an Exchange) be deemed to have prepaid, the Advances,
without premium, together with interest accrued on the amount to be prepaid to
the date of prepayment and any unpaid fees with respect thereto, (a) to the
extent required on each Payment Date pursuant to Section 13.05 of the Indenture
and (b) upon the occurrence of an Exchange. No prepayment pursuant to this
Section 8.2 shall in and of itself have any effect on the obligation of the
Initial Lender to make Advances under this Agreement nor the right of the
Borrower to reborrow an amount equal to such repayment. Upon the occurrence of
an Event of Default, the Borrower will make payments on the Advances in
accordance with Section 13 hereof and Section 13.05 of the Indenture.
26
SECTION 9. ASSIGNMENTS AND PARTICIPATIONS.
Section 9.1 Assignments. (a) The Borrower may not assign its rights
or obligations hereunder or under the Note without the prior consent of the
Lender in its sole discretion (or, if multiple Lenders, the Lenders in respect
of a majority in aggregate principal amount of Advances outstanding).
(b) The Lender may assign to any commercial lending or financial
institution familiar with the asset-backed securities market (each, an
"Assignee"), all or any portion of the Advances and the Notes; provided that any
assignment of a portion of the Advances and the Notes shall be in an amount not
less than the Minimum Assignment Denomination. Upon written notice to the
Borrower of an assignment in accordance with the preceding sentence (which
notice shall identify the Assignee and the amount and the identity of the
Advances and Notes assigned), the Assignee shall have, to the extent of such
assignment (unless otherwise provided in such assignment), the obligations,
rights and benefits of the Lender hereunder with respect to the Advance(s)
assigned to it. For all purposes of this Agreement, the Assignee shall, so long
as the Advance(s) assigned to such Assignee remain unpaid, be entitled to the
rights and benefits of this Agreement with respect to the Advance(s) assigned to
it as if (and the Borrower shall be directly obligated to such Assignee under
this Agreement as if) such Assignee were the "Lender" for purposes of this
Agreement. Accordingly, unless otherwise provided, whenever any action, waiver,
notice or consent is to be provided to or by the Lender as herein specified,
such action, waiver, notice or consent shall (unless otherwise expressly
specified herein) also be provided to or by each Assignee.
(c) The Lender shall provide notice of each assignment to the
Trustee and AutoBond; provided that failure to provide such notice shall not
affect the validity of any assignment.
(d) Notwithstanding the provisions of this Section 9.1, no
assignment of an interest in an Advance to an entity outside the United States
of America shall be effective unless the prospective Assignee thereof certifies
to the Borrower and AutoBond that payments to it in respect of the Advances will
not be subject to withholding taxes imposed by any Governmental Authority in the
United States of America or any political subdivision or taxing authority
thereof or therein or that if it is subject to such withholding taxes it will
not seek reimbursement or gross-up from the Borrower or AutoBond.
Section 9.2 Participations. (a) The Lender may sell or agree to sell
to any commercial lending or financial institution familiar with the
asset-backed securities market a participation in all or any part of any Advance
held by it or Advances made or to be made by it, in which event each such
participant shall be entitled to the rights and benefits of the provisions of
Sections 12.1(f) and 12.2(i) hereof with respect to its participation in such
27
Advance as if (and the Borrower and AutoBond shall be directly obligated to such
participant under such provisions as if) such participant were the "Lender" for
purposes of said Sections, but shall not have any other rights or benefits under
this Agreement or any Note (the participant's rights against the Lender in
respect of such participation to be those set forth in the agreement executed by
the Lender in favor of the participant). All amounts payable by the Borrower to
the Lender under this Agreement shall be determined as if the Lender had not
sold or agreed to sell any participations in such Advance and as if the Lender
were funding all of such Advance in the same way that it is funding the Advance
in which no participations have been sold.
(b) The Lender may furnish any information concerning the Borrower,
AutoBond or any of their other Affiliates in the possession of the Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided, however, that, prior to receipt of any such
information, and prior to any inspection by a Lender, other than the Initial
Lender, pursuant to Sections 12.4 or 13.4 hereof, such assignees and
participants or prospective assignees and participants, as the case may be, may
be required by the Borrower to execute a confidentiality agreement in form and
substance reasonably acceptable to the Borrower.
SECTION 10. CERTAIN COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that so long as any Advance shall
remain unpaid:
Section 10.1 Maintenance of Office. The Borrower will maintain at
its office located at its address shown at the head of this Agreement an office
where notices, presentations and demands in respect of this Agreement and the
Note may be given to and made upon it; provided, however, that it may, upon
fifteen (15) Business Days prior written notice to the Lender, move such office
to any other location within the boundaries of the continental United States of
America.
Section 10.2 Existence. The Borrower will take and fulfill, or cause
to be taken and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary to
qualify, and to preserve and keep in full force and effect its qualification, to
do business in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification.
28
Section 10.3 General Maintenance of Business, Etc. The Borrower
will:
(a) keep proper books of record and accounts in which entries will
be made of its business transactions in accordance with and to the extent
required by generally accepted accounting principles;
(b) enforce (or cause the Collection Agent or the Trustee, as the
case may be, to enforce) all of its rights under each of the Program
Documents to which it is a party and each other agreement entered into in
connection with the transactions contemplated hereby.
Section 10.4 Inspection. The Borrower will permit, upon reasonable
notice to it, the Lender, by its representatives, agents or attorneys: (a) to
examine all books of account, records, reports and other papers of the Borrower
(including the Loan Files), (b) to make copies and take extracts from any
thereof, (c) to discuss the affairs, finances and accounts of the Borrower with
its respective officers and independent certified public accountants (and by
this provision the Borrower hereby authorizes said accountants to discuss with
the Lender the finances and accounts of the Borrower) and (d) to visit and
inspect, at reasonable times during normal business hours, the properties of the
Borrower. It is understood and agreed by the parties hereto that all reasonable
expenses in connection with any such inspection or discussion incurred by the
Lender or the Borrower, any officers and employees thereof and the independent
certified public accountants therefor shall be expenses payable by the Person
making the inspection or discussion.
Section 10.5 Compliance with Law, etc. The Borrower will not (i)
violate any laws, ordinances, governmental rules or regulations to which it is
or may become subject, or (ii) fail to obtain or maintain any patents,
trademarks, service marks, trade names, copyrights, design patents, licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business except to the extent
that any such violation or failure could not materially and adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Borrower.
Section 10.6 Payment of Taxes and Claims. The Borrower will pay, and
discharge, promptly when due all taxes, assessments and governmental charges and
levies imposed upon it, its income or profits or any of its properties;
provided, however, that the foregoing need not be paid while the same is being
contested in good faith by appropriate proceedings diligently conducted so long
as:
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
29
(b) the right of the Borrower to use the particular property shall
not be materially and adversely affected thereby.
Section 10.7 Limitations on Indebtedness. The Borrower will not at
any time incur, create, assume or guarantee, or otherwise become or be liable in
any manner with respect to, any Indebtedness, except (i) the Advances and (ii)
Non-recourse Indebtedness.
Section 10.8 Restricted Investments. With respect to amounts on
deposit in the Collateral Account, the Borrower will not make any Restricted
Investments except in accordance with the Program Documents.
Section 10.9 Nature of Business. The Borrower will not engage in any
business or activity (whether or not pursued for gain or other pecuniary
advantage) other than financing, purchasing and disposing of Eligible Auto Loans
and Permitted Investments.
Section 10.10 Independence. Until 367 days have elapsed following
payment and satisfaction of all obligations of the Borrower hereunder and under
the Note, the Borrower shall be required to observe the applicable legal
requirements for the recognition of the Borrower as a legal entity separate and
apart from AutoBond and each other Affiliate of AutoBond, including, without
limitation, assuring that each of the following is complied with:
(a) the Borrower shall maintain separate records, books of account
and financial statements (each of which shall be sufficiently full and
complete to permit a determination of the Borrower's assets and
liabilities separate and apart from those of AutoBond and each other
Affiliate of AutoBond and to permit a determination of the obligees
thereon and the time for performance of each of the Borrower's obligations
separate and apart from those of AutoBond and each other Affiliate of
AutoBond) from those of AutoBond and each other Affiliate of AutoBond;
(b) the Borrower shall not commingle any of its assets or funds with
those of AutoBond or any of the other Affiliates of AutoBond;
(c) the Borrower shall maintain a separate board of directors
(including an "independent director" (as such term is defined in the
Borrower's Certificate of Incorporation)) and shall observe all separate
corporate formalities, and all decisions with respect to the Borrower's
business and daily operations shall be independently made by the officers
of the Borrower pursuant to resolutions of its board of directors;
(d) other than payment of dividends and return of capital, no
transactions shall be entered into between the Borrower and AutoBond or
between the Borrower
30
and any of the other Affiliates of AutoBond except such transactions as
are contemplated by the Loan Acquisition Agreement;
(e) except for such origination, collection and servicing functions
as AutoBond may perform on behalf of the Borrower pursuant to the Program
Documents, the Borrower shall act solely in its own name and through its
own authorized officers and agents and the Borrower will not act as agent
of AutoBond or any other person in any capacity;
(f) except for any funds received from AutoBond as a capital
contribution, the Borrower shall not accept funds from AutoBond or any of
the other Affiliates of AutoBond; and the Borrower shall not allow
AutoBond or any of the other Affiliates of AutoBond otherwise to supply
funds to, or guarantee any obligation of, the Borrower;
(g) the Borrower shall not guarantee, or otherwise become liable
with respect to, any obligation of AutoBond or any of the other Affiliates
of AutoBond; and
(h) the Borrower shall at all times hold itself out to the public
under the Borrower's own name as a legal entity separate and distinct from
AutoBond and the other Affiliates of AutoBond.
Section 10.11 Other Agreements and Parties. The Borrower will comply
with all terms of the Program Documents to which it is a party. The Borrower
will not (a) enter into any agreements other than the Program Documents to which
it is a party without the consent of the Lender (or, if multiple Lenders, the
Lenders in respect of a majority in aggregate principal amount of Advances
outstanding), such consent not to be unreasonably withheld, (b) except as
otherwise expressly set forth herein and in the Indenture, agree to any
amendment, supplement or modification to or waiver of the terms of the Program
Documents to which it is a party, the AutoBond Program Manual or any document
related thereto without the consent of the Lender (or, if multiple Lenders, the
Lenders in respect of a majority in aggregate principal amount of Advances
outstanding), such consent not to be unreasonably withheld, (c) appoint any
Successor Servicer, without the consent of the Lender (or, if multiple Lenders,
the Lenders in respect of a majority in aggregate principal amount of the
Advances outstanding), such consent not to be unreasonably withheld or (d)
consent to the appointment of any Subservicer, without the consent of the Lender
(or, if multiple Lenders, the Lenders in respect of a majority in aggregate
principal amount of the Advances outstanding), such consent not to be
unreasonably withheld.
31
Section 10.12 Investment Company Act. The Borrower will not take any
action which would require it to be registered as an "investment company" under
the Investment Company Act of 1940, as amended.
Section 10.13 Purchases of Auto Loans. The Borrower will cease
purchasing Specified Auto Loans from AutoBond for financing hereunder, if the
Borrower or the Initial Lender shall have determined that any of the following
shall have occurred:
(i) any Event of Default described in Section 13.1(g) through
(k) shall occur with respect to AutoBond;
(ii) there shall have occurred an Event of Purchase
Termination (as such term is defined in the Loan Acquisition
Agreement) under the Loan Acquisition Agreement;
(iii) any Advance is outstanding hereunder after the Maturity
Date;
(iv) a Funding Termination Event shall have occurred
hereunder;
(v) the Borrower has received written notice from the Lender
(or if multiple Lenders, the Lenders in respect of a majority in
aggregate principal amount of the Advances) that the continuation of
the activities contemplated hereby may reasonably be expected to
cause the Lender or any of its Affiliates to suffer materially
adverse regulatory, accounting or tax consequences; provided, that
the Borrower may require that the Lender deliver an Opinion of
Counsel or an opinion of a nationally recognized independent
accounting firm supporting the position of the Lender.
Section 10.14 Liens. The Borrower will not permit any Lien to exist
on any of its Properties, whether now owned or hereafter acquired, other than
Permitted Liens.
SECTION 11. CERTAIN COVENANTS OF AUTOBOND.
AutoBond covenants and agrees that so long as any Advances shall
remain unpaid:
Section 11.1 Existence. AutoBond will take and fulfill, or cause to
be taken and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary to
qualify, and to preserve and keep in full force and effect its qualification, to
do
32
business in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification.
Section 11.2 Compliance with Law, etc. AutoBond will not (a) violate
any laws, ordinances, governmental rules or regulations to which it is or may
become subject or (b) fail to obtain or maintain any patents, trademarks,
service marks, trade names, copyrights, design patents, licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its Property or to the conduct of its business.
Section 11.3 Payment of Taxes and Claims. AutoBond will pay and
discharge promptly, as and when due, all taxes, assessments and governmental
charges and levies imposed upon it, its income or profits or any of its
properties; provided, however, that the foregoing need not be paid while the
same is being contested in good faith by appropriate proceedings diligently
conducted so long as:
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(b) the right of AutoBond, as the case may be, to use the particular
property shall not be materially and adversely affected thereby.
Section 11.4 Inspection. AutoBond will permit, upon reasonable
notice to it, the Lender, by its representatives, agents or attorneys, (a) to
examine all books of account, records, reports and other papers of AutoBond
relevant to its role as Collection Agent (including the Loan Files), (b) to make
copies and take extracts from any thereof, (c) to discuss the affairs, finances
and accounts of AutoBond with its respective officers and independent certified
public accountants (and by this provision AutoBond hereby authorizes said
accountants to discuss with the Lender the finances and accounts of AutoBond),
and (d) to visit and inspect, at reasonable times during normal business hours,
the properties of AutoBond. It is understood and agreed by the parties hereto
that all reasonable expenses in connection with any such inspection or
discussion incurred by the Lender or AutoBond, any officers and employees
thereof and the independent certified public accountants therefor shall be
expenses payable by AutoBond.
Section 11.5 Consolidation and Merger. AutoBond will not merge into
or consolidate with any other Person (or permit any other Person to merge into
or consolidate with it) or sell, transfer or otherwise dispose of all or
substantially all of its Properties to any Person unless (a) the surviving or
transferee corporation following any merger or consolidation or sale expressly
assumes the obligations of AutoBond hereunder and under the other Program
Documents and (b) Fitch confirms in writing to the Lender that such merger,
consolidation or sale will not result in the reduction or withdrawal of its
rating of the Note below "A".
33
Section 11.6 Further Assurances. AutoBond will promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary in order to give effect to the provisions of the Program
Documents and the transactions contemplated hereby.
Section 11.7 Independence. Until 367 days have elapsed following
payment and satisfaction of all obligations of the Borrower hereunder and in
respect of the Advances, AutoBond shall be required to (and shall assure that
each other Affiliate of AutoBond shall) observe the applicable legal
requirements for the recognition of the Borrower as a legal entity separate and
apart from AutoBond and each other Affiliate of AutoBond, including, without
limitation, assuring that each of the following is complied with:
(a) AutoBond and each other Affiliate of AutoBond shall maintain
separate records and books of account (each of which shall be sufficiently
full and complete to permit a determination of the assets and liabilities
of AutoBond or such Affiliate, as the case may be, separate and apart from
those of the Borrower and to permit a determination of the obligees
thereon and the time for performance on each of the obligations of
AutoBond or such Affiliate, as the case may be, separate and apart from
those of the Borrower) from those of the Borrower;
(b) neither AutoBond nor any of its other Affiliates shall commingle
any of its assets or funds with those of the Borrower;
(c) the board of directors of AutoBond shall not dictate decisions
with respect to the Borrower's business and daily operations and AutoBond
shall maintain its own corporate formalities and shall otherwise respect
the separate corporate identity of the Borrower;
(d) other than the making of capital contributions and the
transactions contemplated by the Loan Acquisition Agreement, neither
AutoBond nor any of its other Affiliates shall enter into any transactions
with the Borrower;
(e) neither AutoBond nor any of its other Affiliates shall accept
appointment as, or act as, an agent of the Borrower except, to the extent
AutoBond performs certain servicing and collection functions pursuant to
the Servicing Agreement;
(f) neither AutoBond nor any of its other Affiliates shall advance
funds to the Borrower (except for the making of capital contributions);
and neither AutoBond nor any of its other Affiliates will otherwise supply
funds to, or guarantee any obligation of, the Borrower;
34
(g) neither AutoBond nor any of its other Affiliates shall
guarantee, or otherwise become liable with respect to, any obligation of
the Borrower;
(h) AutoBond and each of its other Affiliates shall at all times
hold itself out to the public under its respective name as a legal entity
separate and distinct from the Borrower; and
(i) all financial reports prepared by AutoBond and each of its other
Affiliates shall comply with generally accepted accounting principles.
Section 11.8 Other Agreements and Parties. AutoBond will comply with
all terms of the Program Documents to which it is a party. AutoBond will not (a)
except as otherwise expressly set forth herein and in the Indenture, agree to
any amendment, supplement or modification to or waiver of the terms of the
Program Documents to which it is a party, the AutoBond Program Manual or any
document related thereto without the consent of the Lender (or, if multiple
Lenders, the Lenders in respect of a majority in aggregate principal amount of
Advances outstanding), such consent not to be unreasonably withheld, (b) appoint
any Successor Servicer, without the consent of the Lender (or, if multiple
Lenders, the Lenders in respect of a majority in aggregate principal amount of
the Advances outstanding), such consent not to be unreasonably withheld or (c)
consent to the appointment of any Subservicer, without the consent of the Lender
(or, if multiple Lenders, the Lenders in respect of a majority in aggregate
principal amount of the Advances outstanding), such consent not to be
unreasonably withheld.
Section 11.9 Servicing Arrangements. AutoBond will take any
necessary action to evidence that the Specified Auto Loans are to be serviced
and administered by the Servicer and AutoBond, as Collection Agent under the
Servicing Agreement. AutoBond will act as Collection Agent under the Servicing
Agreement and will perform its duties as Collection Agent thereunder in
accordance with the provisions of the Servicing Agreement, the AutoBond Program
Manual and this Agreement. So long as any Advances are outstanding, upon the
occurrence of an Event of Termination under the Servicing Agreement, AutoBond
agrees to provide prompt notice to the Lender of such Event of Termination and
to thereafter act in accordance with the instructions of the Lender, including
the appointment of a new Servicer and/or Collection Agent. Any optional
termination of the Servicer by AutoBond under the Servicing Agreement shall
require the prior written consent of Fitch and the Initial Lender.
Section 11.10 Preservation of Quality of Auto Loans. AutoBond will
use its best efforts to prevent a deterioration in the quality of the Specified
Auto Loans and will use its best efforts as Collection Agent to preserve the
credit quality and collectibility of the Specified Auto Loans.
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SECTION 12. INFORMATION TO BE FURNISHED TO LENDER.
Section 12.1 Information to be Furnished by the Borrower.
The Borrower will deliver or cause to be delivered to the Lender the
following:
(a) promptly, and in any event within five (5) days, after any
Executive Officer of the Borrower shall have obtained knowledge of any
Default or Event of Default, an Officer's Certificate from the Borrower
specifying the nature and period of existence thereof, what action the
Borrower has taken or is taking or proposes to take with respect thereto,
and an estimate of the time necessary to cure such condition or event;
(b) promptly upon the release or distribution thereof, copies of all
press releases and other written statements made available generally by
the Borrower to one or more financial news services concerning material
developments in the business of the Borrower; and
(c) promptly upon request therefor, such other data, filings and
information as the Lender may from time to time reasonably request.
Section 12.2 Information to be Furnished by AutoBond. AutoBond shall
deliver or cause to be delivered to the Lender the following:
(a) promptly, and in any event within five (5) days, after any
Executive Officer of AutoBond shall have obtained knowledge of any Default
or Event of Default, an Officer's Certificate from AutoBond specifying the
nature and period of existence thereof, what action AutoBond has taken or
is taking or proposes to take with respect thereto, and an estimate of the
time necessary to cure such condition or event; and
(b) promptly upon the release or distribution thereof, copies of all
press releases and other written statements made available generally by
AutoBond to one or more financial news services concerning material
developments in the business of AutoBond.
SECTION 13. DEFAULTS, REMEDIES AND TERMINATION.
Section 13.1 Events of Default. Events of Default and Remedies
therefor in respect of the Advances and the Note are as set forth in the
Indenture.
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SECTION 14. INTERPRETATION OF AGREEMENT.
Section 14.1 Definitions. Capitalized terms used herein but not
defined shall have the meaning set forth in the Indenture. Except as the context
shall otherwise require, the following terms shall have the following meanings
for all purposes of this Agreement (the definitions to be applicable to both the
singular and the plural form of the terms defined, where either such form is
used in this Agreement):
The term "Advances" means the advances provided for by Section 1.1.
The term "Affiliate," with respect to any Person (hereinafter "such
Person"), shall mean any other Person which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with, such Person or another Affiliate of such Person. The
term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or
otherwise.
The term "APR" shall mean the annual percentage rate of an Auto Loan
as determined according to the related contractual documents with the
Obligor thereof.
The term "Assignee" shall have the meaning set forth in Section
9.1(b).
The term "Authorized Officer" means, with respect to AutoBond or the
Borrower, any officer of AutoBond or the Borrower, as the case may be, who
is authorized to act for AutoBond or the Borrower, as the case may be, in
matters relating to transactions contemplated by this Agreement.
The term "AutoBond Program Manual" means the AutoBond Program Manual
(including the Credit and Collection Policies) attached hereto as Exhibit
J, as modified from time to time, with notice of each such modification to
Fitch, the Servicer, the Trustee and the Lender.
The term "Auto Loan" means a fixed-rate, fully amortizing,
closed-end installment loan (bearing interest calculable on a simple
interest basis or based upon the Rule of 78s, as set forth in Section 2(m)
of the Loan Acquisition Agreement) arising from the sale of a new or used
automobiles and light-duty trucks to a consumer which includes, without
limitation, (i) all security interests or liens and property subject
thereto from time to time purporting to secure payment by the obligor
thereunder, including, without limitation, AutoBond's rights under the
related dealer agreement, (ii) all guarantees, indemnities and warranties,
insurance policies, certificates of title and other agreements or
arrangements of whatever character from
37
time to time supporting or securing payment of such loan, (iii) all
collections and records with respect to the foregoing and (iv) all
proceeds of any of the foregoing.
The term "AutoBond" shall mean AutoBond Acceptance Corporation, a
Texas corporation.
The term "Available Facility Amount," on any date of determination,
shall mean the sum of (a) the Commitment on such date, minus (b) the
aggregate Advances outstanding on such day.
The term "Board" shall mean, with respect to any Person, its board
of directors or, if it does not have a board of directors, its governing
body which performs the same duties as a board of directors.
The term "Borrowing Base Deficiency" means, on any date of
determination, the excess of Advances outstanding on such Determination
Date over 91.74% of the sum of (a) the aggregate Unpaid Principal Balance
of all Specified Auto Loans other than Excluded Auto Loans and (b) all
amounts on deposit in the Loan Purchase Account, the Reserve Account and
Collection Account (to the extent allocable to principal).
The term "Borrowing Notice" shall have the meaning set forth in
Section 1.3 hereof.
The term "Business Day" shall mean any day other than a Saturday or
a Sunday, or another day on which commercial banks in the States of
Minnesota, New York or Texas (or in any other state in which the Servicer
or any Agent is located) are required, or authorized by law, to close or,
for purposes of calculating interest on the Advances, on which commercial
banks are not open for domestic and foreign exchange business in New York,
New York and London, England (as specified in writing from time to time by
the Borrower or an Agent).
The term "Capital Lease" shall mean any lease or other agreement for
the use of property which is required to be capitalized on a balance sheet
of the lessee or other user of property in accordance with generally
accepted accounting principles.
The term "Closing Date" shall have the meaning set forth in Section
1.2 hereof.
The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute, together with the
rules and regulations thereunder.
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The term "Collateral" shall mean that portion of the Trust Estate
allocated to the Note.
The term "Collateral Account" shall have the meaning set forth in
the Indenture.
The term "Collection Period' shall mean each calendar month;
provided, however, the initial Collection Period shall be the period from
the Closing Date to July 31, 1997.
The term "Commitment" shall mean the obligation of the Initial
Lender to make Advances in an aggregate amount at any one time outstanding
up to but not exceeding (a) $40,000,000 until August 15, 1997 and (b)
$50,000,000 from August 15, 1997 until March 31, 1998, in each case less
the amount of advances outstanding under the Funding II Credit Agreement.
The term "Commitment Fee" shall mean the fee payable to the Lender
pursuant to Section 3.9 hereof in the amount agreed to by the Borrower and
the Lender.
The term "Credit and Collection Policies" means written credit
procedures and policies consistent with the requirements of this Agreement
and the Servicing Agreement, in effect from time to time formulated by
AutoBond as to the requirements of certain servicing matters and
comprising part of AutoBond Program Manual.
The term "Dealer" shall mean each automobile dealer with whom
AutoBond has entered into a Dealer Agreement.
The term "Dealer Agreement" shall mean each agreement between
AutoBond and a Dealer, which provides for acquisition of the Auto Loans.
The term "Default" shall mean any event or condition that would
become an Event of Default after notice or passage of time or both.
The term "Defaulted Auto Loan" shall mean an Auto Loan which by its
terms has more than 10% of any installment of principal or interest which
is 60 or more days contractually past due.
The term "Determination Date" shall mean the 10th day of each month
(or the immediately preceding Business Days if such day is not a Business
Day).
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The term "Disposition" shall mean any pooling or disposition of
Specified Auto Loans by the Borrower, either (a) in structured-finance
securitization transactions, (b) pursuant to whole-loan sales or (c) in
some other form of disposition.
The term "Dollars" or "$" shall mean the lawful currency of the
United States of America, and in relation to any payment under this
Agreement, same day or immediately available funds.
The term "Eligible Auto Loan" shall mean any Auto Loan as to which
the representations and warranties set forth in Section 2.3(a) are true
and correct as of the related Closing Date.
The term "Eligible Dealer" shall mean a franchised Dealer (a) duly
licensed and authorized as a dealer in new or used Automobiles by
Governmental Authorities and (b) as to which AutoBond has entered into a
Dealer Agreement.
The term "Event of Collection Agent Termination" shall have the
meaning assigned thereto in Section 3.07 of the Servicing Agreement.
The term "Event of Default" shall have the meaning assigned thereto
in the Indenture.
The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
The term "Excluded Auto Loan" means, on any Determination Date, any
Specified Auto Loan (a) which is a Defaulted Auto Loan, (b) as to which
the Obligor is bankrupt or (c) as to which the related Auto has been
repossessed.
The term "Executive Officer" with respect to a Person shall mean the
Chief Executive Officer, Chief Operating Officer or Chief Financial
Officer.
The "fair valuation" of the Properties of any Person shall be
determined on the basis of the amount which may be realized within a
reasonable time, either through collection or sale of such assets at the
regular market value, conceiving the latter as the amount which could be
obtained for the property in question within such period by a capable and
diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions.
The term "Financing Statement" shall have the meaning set forth in
Section 3.8 hereof.
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The term "Fitch" shall mean Fitch Investors Service, L.P.
The term "Funding II Credit Agreement" shall mean the Credit
Agreement, dated as of February 1, 1997, among AutoBond Funding
Corporation II, AutoBond and the Initial Lender.
The term "Funding Termination Event" shall have occurred if (a)
Fitch shall have indicated in writing that it has reduced or withdrawn its
rating of the Note below "A" or (b) upon 30 days' prior written notice,
deterioration has taken place in the quality of the Specified Auto Loans
or in the collectibility thereof which the Lender, in its reasonable
discretion, determines to be material.
The term "generally accepted accounting principles" shall mean, as
of the date of any determination with respect thereto, generally accepted
accounting principles as understood and applied in the United States at
the time in question.
The term "Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
The term "Guarantee," with respect to any Person, shall mean all
obligations of such Person guaranteeing or in effect guaranteeing any
Indebtedness (including, without limitation, liability in respect of a
joint venture or a partnership), dividend or other obligation or
Investment of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations incurred through an
agreement, contingent or otherwise, by such Person (a) to purchase such
Indebtedness, obligation or Investment or any property or assets
constituting security therefor, (b) to advance or supply funds (i) for the
purchase or payment of such Indebtedness, obligation or Investment or (ii)
to maintain working capital or equity capital, or otherwise to advance or
make available funds for the purchase or payment of such Indebtedness,
obligation or Investment, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness,
obligation or Investment of the ability of the primary obligor to make
payment of such Indebtedness, obligation or Investment, or (d) otherwise
to assure the owner of such Indebtedness, obligation or Investment against
loss in respect thereof.
The terms "hereof," "herein," "hereunder" and other words of similar
import shall be construed to refer to this Agreement as a whole and not to
any particular Section or other subsection.
41
The term "Increased Cost" shall have the meaning set forth in
Section 1.6(d) hereof.
The term "Indebtedness," with respect to any Person, shall mean all
items (other than capital stock, capital surplus, retained earnings and
deferred credits and deferred income taxes), which in accordance with
generally accepted accounting principles would be included in determining
total liabilities as shown on the liability side of a balance sheet as at
the date on which Indebtedness is to be determined. The term
"Indebtedness" shall also include, whether or not so reflected, (a)
indebtedness, obligations and liabilities secured by any Lien on property
of such Person, whether or not the indebtedness secured thereby shall have
been assumed by such Person, (b) all obligations of such Person in respect
of Capital Leases, and (c) all Guarantees.
The term "Indemnifying Party" shall have the meaning set forth in
Section 15.1 hereof.
The term "Indenture" shall have the meaning set forth in Section 1.5
hereof.
The term "Independent Accountant" shall have the meaning set forth
in Section 1.6 hereof.
The term "Independent Public Accountant" shall mean any of (a)
Xxxxxx Xxxxxxxx & Co., (b) Deloitte & Touche, (c) Coopers & Xxxxxxx, (d)
Ernst & Young, (e) KMPG Peat Marwick and (f) Price Waterhouse (and any
successors thereof); provided, that such firm is independent with respect
to the Borrower or AutoBond, as the case may be, within the meaning of the
Securities Act of 1933, as amended.
The term "Initial Closing Date" shall have the meaning set forth in
Section 1.2 hereof.
The term "Initial Lender" shall mean, subject to Section 7.3, Daiwa
Finance Corporation.
The term "Interest Payment Date" means each Payment Date and each
date upon which Advances are repaid, either in whole or in part.
The term "Interest Period" shall mean, with respect to any Advance,
the period commencing with the date of such Advance to and excluding the
Payment Date occurring in the month following the date of such Advance,
and thereafter, the period commencing with each Payment Date, to and
excluding the following Payment Date; provided that the final Interest
Period in respect of an Advance shall end on (but exclude) the Maturity
Date or prepayment date in respect of such Advance.
42
The term "Interest Rate" shall mean, for any Interest Period, LIBOR
plus 1.15; provided, however, that in no event shall the Interest Rate be
greater than 11%.
The term "Investment" shall mean any loan, advance, extension of
credit (except for accounts and notes receivable for merchandise sold or
services furnished in the ordinary course of business, and amounts paid in
advance on account of the purchase price of merchandise to be delivered to
the payor within one year of the date of the advance), or purchase of
stock, notes, bonds or other securities or capital contribution to any
Person, whether in cash or other property. The amount of any Investment
shall be its cost (the amount of cash or the fair market value of other
property given in exchange therefor).
The term "Lender" shall mean the Initial Lender and any Assignees
thereof.
The term "LIBOR" shall mean the per annum rate for deposits in
United States dollars for a period of one month which appears on Telerate
Page 3750 as of 11:00 a.m., London time, on the related LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750 on
such day, the rate will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such day to prime banks in the
London interbank market for a period of one month commencing on that day.
The Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that day will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested,
the rate for that day will be the arithmetic mean of the rates quoted by
two or more major banks in New York City, selected by the Trustee, in its
sole discretion at approximately 11:00 a.m., New York City time, on that
day for loans in United States dollars to leading European banks for a
period of one month.
The term "LIBOR Determination Date" shall mean the second Business
Day prior to the commencement of each Interest Period; provided that with
respect to the first Interest Period such date shall be the first Business
Day prior to the Initial Closing Date.
The term "Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, civil
law, statute, civil code or contract, whether or not such interest shall
be recorded or perfected and whether or not such interest shall be
contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, and including the
lien, privilege, security interest or other encumbrance arising from a
mortgage, deed of trust, hypothecation, cession, transfer, assignment,
pledge, adverse claim or
43
charge, conditional sale or trust receipt, or from a lease, consignment or
bailment for security purposes. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. For the purposes of this Agreement, a
Person shall be deemed to be the owner of any property that such Person
shall have acquired or shall hold subject to a conditional sale agreement
or other arrangement (including a leasing arrangement) pursuant to which
title to the property shall have been retained by or vested in some other
Person for security purposes.
The term "Loan Acquisition Price" shall mean 91.74% of the Unpaid
Principal Balance for Specified Auto Loans as of the date of purchase
under the Loan Acquisition Agreement.
The term "Loan Documents" means, with respect to an Auto Loan (a) a
copy of the retail installment loan contract and security agreement
evidencing such Auto Loan, (b) a copy of the credit application, and (c) a
copy of an executed agreement to provide insurance signed by the Obligor,
a binder in respect thereof or the original confirmation of payment of
premiums required under the VSI Policy, if any.
The term "Loan File" means, with respect to any Auto Loan, the
original retail installment loan contract and security agreement
evidencing the Auto Loan and originals or copies of such other documents
and instruments relating to such Auto Loan and the security interest on
the selected Financed Vehicle as specified in the Credit and Collection
Policies.
The term "Loan Purchase Account" shall have the meaning set forth in
the Indenture.
The term "Loan Sale Agreement" shall mean the Loan Sale and
Contribution Agreement dated as of June 30, 1997 between the Borrower and
AutoBond, pursuant to which the Borrower agrees to acquire Eligible Auto
Loans, as from time to time further amended, supplemented or modified.
The term "Maturity Date" in respect of any Advance shall mean the
earlier to occur of (a) 120 days following the date of such Advance and
(b) March 31, 1998; provided, however, that the Maturity Dates for the
initial Advances made on the Issuance Date of the Note shall be the same
as the original maturity dates for the predecessor advances as incurred
under the Funding II Credit Agreement.
The term "Minimum Assignment Denomination" shall mean $500,000.
44
The term "Monthly Servicer Fee" shall have the meaning specified in
the Indenture.
The term "Moody's" shall mean Xxxxx'x Investors Service, Inc.
The term "Net Payoff Balance" means, in respect of any Precomputed
Auto Loans, the net payoff less any accrued but unpaid late charges, as
determined in accordance with the worksheet attached hereto as Schedule 2.
The term "Net Principal Balance" means, with respect to any
Precomputed Auto Loan, the Net Payoff Balance as of the due date of the
last full Scheduled Payment, or if more recent, the due date of the last
periodic payment of principal thereon.
The term "Net Unrealized Amount" means, (a) with respect to any Auto
Loan which is more than 90 days contractually past due or where the
Financed Vehicle is otherwise subject to repossession (including voluntary
or involuntary, or upon casualty), the Unpaid Principal Balance of such
Auto Loan minus the sum of (i) any repossession proceeds allocable to
principal actually received on such Auto Loan, (ii) any insurance proceeds
allocable to principal actually received from a claim with respect to such
Auto Loan and (iii) refunds received from the cancellation of any
insurance policies or service contracts with respect to such Auto Loan,
and (b) with respect to any Auto Loan where the related Obligor is in
bankruptcy, the amount of losses allocable to principal incurred thereon.
The term "Nondefaulted Auto Loan" shall mean an Auto Loan which is
not a Defaulted Auto Loan.
The term "Note(s)" shall have the meaning set forth in Section
1.2(b) hereof and shall include any subdivision of the Note issued in
accordance with Section 1.2(c).
The term "Obligor" shall mean, with respect to any Auto Loan, the
Person primarily obligated to make payments in respect thereto.
The term "Officer's Certificate" (i) with respect to the Trustee,
any officer within the structured capital division (or any successor
thereof) including any vice president, assistant vice president, or any
officer or assistant officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated
officers and (ii) with respect to AutoBond, the Trustee, the Servicer or
the Borrower shall mean a certificate executed on behalf of such party by
the Chairman of the Board, the President or any Vice President of the
relevant entity.
45
The term "Originator" means any Person, other than AutoBond, that
acquires Auto Loans directly from a Dealer.
The term "Payment Date" shall mean the 15th day of each month (or,
if such day is not a Business Day, the next succeeding Business Day),
commencing March 15, 1997.
The term "Permitted Liens" shall mean:
(a) Liens created under the Indenture;
(b) Liens securing taxes, assessments, governmental charges or
levies not yet due or the payment of which is not then required by
Section 10.6 hereof; and
(c) any Lien which is a mechanics lien assessed against an
Automobile securing a Specified Auto Loan.
The term "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government (or any agency or
political subsection thereof).
The term "Precomputed Auto Loan" shall mean any Auto Loan under
which earned interest (which may be referred to in the Auto Loan as the
add-on finance charge) and principal is determined according to the sum of
periodic balances or the sum of monthly balances or the sum of the digits
or any equivalent method commonly referred to as the "Rule of 78s".
The term "Program Documents" shall mean this Agreement, the
Indenture, the Servicing Agreement, the Collateral Assignments, the Note
and the Loan.
The term "Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible.
The term "Purchase Price" shall have the meaning set forth in the
Loan Acquisition Agreement.
The term "Reference Banks" shall mean four major banks in the London
interbank market selected by the Trustee.
The term "Repurchase Price" shall mean, with respect to any
Specified Auto Loan which AutoBond is obligated to repurchase, an amount
equal to (a) the Unpaid
46
Principal Balance of such Specified Auto Loan as of the end of the
preceding Collection Period, plus (b) accrued and unpaid interest in
respect thereof calculated at the Interest Rate from the last day to which
interest has been paid and credited to the Lockbox or Collateral Account
through the date of repurchase, minus (iii) the amount of any principal
deposited in the Lockbox or the Collection Account in respect of such Auto
Loan since the end of such Collection Period.
The term "Requirement of Law" shall mean, as to any Person, any law,
treaty, rule or regulation, or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject, whether federal, state or local
(including, without limitation, usury laws, the federal Truth in Lending
Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
The term "Restricted Investment" shall mean any Investment other
than a Permitted Investment.
The term "Securities" shall mean, with respect to any Person, any
shares of any class of such Person's capital stock, or any options or
warrants to purchase its capital stock or other security exchangeable for
or convertible into its capital stock.
The term "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
The term "Security Interest" shall mean the security interest and
rights created under the Indenture in the Collateral in favor of the
Trustee.
The term "Selling Dealer" shall mean with respect to each Specified
Auto Loan, the Dealer that sold such Specified Auto Loan to AutoBond.
The term "Servicer" means CSC Logic/MSA L.L.P., doing business as
"Loan Servicing Enterprises", a Texas limited liability partnership, or
any other entity, in the capacity as servicer under the Servicing
Agreement.
The term "Servicer Report" shall have the meaning set forth in the
Servicing Agreement.
The term "Servicing Agreement" shall mean the Servicing Agreement,
dated as of January 29, 1997 between AutoBond and the Servicer.
The term "Solvent" shall mean, with respect to any Person, that:
47
(a) the Properties of such Person, at a fair valuation, exceed
the total liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of such Person;
(b) based on current projections, which are based on
underlying assumptions which provide a reasonable basis for the
projections and which reflect such Person's judgment based on
present circumstances of the most likely set of conditions and such
Person's most likely course of action for the period projected, such
Person believes it has sufficient cash flow to enable it to pay its
debts as they mature; and
(c) such Person does not have an unreasonably small capital
with which to engage in its anticipated business.
The term "S&P" shall mean Standard & Poor's Ratings Group.
The term "Specified Auto Loan" shall mean each Auto Loan pledged by
the Borrower to the Trustee under the Indenture as security for its
obligations hereunder and under the Indenture.
The term "Subsequent Closing Date" shall have the meaning set forth
in Section 1.2 hereof.
The term "Successor Servicer" shall have the meaning set forth in
the Servicing Agreement.
The term "Telerate Page 3750" shall mean the display page so
designated on the Dow Xxxxx Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying comparable
rates or prices).
The term "this Agreement" shall mean this Credit Agreement
(including the annexed Exhibits and Schedules), as it may from time to
time be amended, supplemented or modified in accordance with its terms.
The term "Trustee" shall have the meaning set forth in Section 1.5
hereof.
The term "Unpaid Principal Balance" means, with respect to any Auto
Loan as of any Determination Date, (i) for an Auto Loan bearing interest
calculable on a simple interest basis, the unpaid principal amount for
such Auto Loan or (ii) for a Precomputed Auto Loan, the Net Principal
Balance, in each case as of the end of the most recent Collection Period;
provided that, for any Auto Loan where the Net Unrealized Amount equals
the Unpaid Principal Balance, such Unpaid Principal
48
Balance shall thereafter equal zero (other than for purposes of
calculating the Net Unrealized Amounts).
The term "VSI Policy" means a vendor's single interest insurance
policy insuring against risk of physical damage on the Financed Vehicles.
Section 14.2 Accounting Terms. All accounting terms used herein that
are not otherwise expressly defined shall have the respective meanings given to
them in accordance with generally accepted accounting principles at the
particular time.
Section 14.3 Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Section 14.4 Headings. The headings of the Sections and other
subsections of this Agreement have been inserted for convenience of reference
only and shall not affect the meaning of this Agreement.
Section 14.5 Independence of Covenants, etc. Each representation,
covenant or Event of Default herein shall be given independent effect so that if
any action or condition would violate any of such covenants, would breach any of
such representations or would constitute any of such Events of Default, the fact
that such action or condition would not violate or breach, any other covenant or
representation or constitute another Event of Default shall not avoid the
violation of such covenant or representation or the occurrence of such Event of
Default.
SECTION 15. INDEMNIFICATION AND FUNDING LOSSES.
Section 15.1 Indemnification. (a) The Borrower and AutoBond, jointly
and severally, agree to indemnify and hold harmless the Lender, the directors,
officers, employees and agents of the Lender and each Person who controls the
Lender within the meaning of the Securities Act or the Securities Exchange Act
from and against any and all claims, damages, losses, liabilities, costs or
expenses (including reasonable attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which any of them may become subject to the extent that any such claims,
damages, losses, liabilities, costs or expenses are attributable to the
transactions contemplated herein, including, without limitation, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise; provided, that the Borrower and AutoBond
shall not be liable to the Lender for any (i) credit losses incurred by the
Lender in its capacity as a
49
Lender with respect to the Advances resulting from the performance of the
Specified Auto Loans, (ii) losses incurred by the Lender as a result of breaches
by the Lender of any of its obligations hereunder or under any of the other
Program Documents, the fraudulent actions, misrepresentations, negligence or
willful misconduct of the Lender or (iii) losses, claims, damages, liabilities
and expenses arising out of the imposition by any taxing authority of any
federal income, state or local income or franchise taxes, or any other taxes
imposed on or measured by gross or net income, gross or net receipts, capital,
net worth and similar items (including any interest, penalties or additions with
respect thereto) upon the Lender (including any liabilities, costs or expenses
with respect thereto). The foregoing is in addition to any rights (including
without limitation rights to indemnity) to which the Lender may otherwise be
entitled.
(b) Promptly after receipt by the Lender of notice of the
commencement of any action, the Lender shall, if a claim in respect thereof is
to be made against the Borrower or AutoBond (each, an "Indemnifying Party")
under this Section 15.1, notify the Indemnifying Party in writing of the
commencement thereof; but the omission so to notify the Indemnifying Party will
not relieve it from any liability which it may have to the Lender except to the
extent such Indemnifying Party is prejudiced thereby. In case any action is
brought against the Lender, and it notifies the Indemnifying Party of the
commencement thereof, the Indemnifying Party will be entitled to appoint counsel
satisfactory to such Indemnifying Party (who shall not, except with the consent
of the Lender, be counsel to the Borrower or AutoBond) to represent the Lender
in such action; provided, however, that, if the defendants in any action include
both the Lender and an Indemnifying Party and the Lender shall have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to those available to the Indemnifying Party, the Lender
shall have the right to select separate counsel to defend such action on behalf
of it. Upon receipt of notice from the Indemnifying Party to the Lender of its
election so to appoint counsel to defend such action and approval by the Lender
of such counsel, the Indemnifying Party will not be liable to the Lender under
this Section 15.1 for any legal or other expenses subsequently incurred by the
Lender in connection with the defense thereof unless (i) the Lender shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence, (ii) the Indemnifying Party shall not have employed counsel
satisfactory to the Lender to represent the Lender within a reasonable time
after notice of commencement of the action or (iii) the Indemnifying Party has
authorized the employment of counsel for the Lender at the expense of the
Indemnifying Party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii).
(c) If the indemnification provided for in this Section 15.1 is
unavailable or insufficient to hold harmless the Lender under subsection (a) or
(b) above, then the Indemnifying Parties shall contribute to the amount paid or
payable by the Lender as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in
50
such proportion as is appropriate to reflect the relative benefits received by
the Indemnifying Parties on the one hand and the Lender on the other from the
transactions contemplated by this Agreement or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Parties on the one hand
and the Lender on the other in connection with the actions or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The Lender and the Indemnifying Parties agree
that it would not be just and equitable if contributions pursuant to this
subsection (c) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (c). The amount payable by
the Indemnifying Parties as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (c) shall be
deemed to include any legal or other expenses reasonably incurred by the Lender
in connection with investigating or defending any action or claim which is the
subject of this subsection (c). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The obligations of the Indemnifying Parties and the Lender under
this Section 15.1 shall be in addition to any liability which each of them may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the Lender within the meaning of the Securities
Act; and, with respect to the obligation of the Indemnifying Parties to the
Lender as indemnified party, shall extend, upon the same terms and conditions,
to each director of the Lender.
(e) The Lender agrees to notify the indemnifying party in writing of
the commencement of any action with respect to which indemnification may be owed
to it pursuant to this Section 15.1 or Article V of the Servicing Agreement
after receipt by the Lender of notice of commencement thereof, but the omission
so to notify the indemnifying party will not relieve such indemnifying party
from any liability which it may have except to the extent the indemnifying party
is prejudiced thereby. For purposes of this Section 15.1(e), the Servicer shall
be a third party beneficiary of the agreements herein contained.
(f) The agreement, indemnities and other statements of the parties
hereto in or made pursuant to this Section 15.1 will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any other parties hereto or any of the officers,
directors or controlling persons referred to in this Section 15.1. The
provisions of this Section 15.1 shall survive the termination or cancellation of
this Agreement.
Section 15.2 Indemnification with respect to the Specified Auto
Loans. Without limiting any other rights that the Trustee or the Lenders (each
an "Indemnified
51
Party") may have hereunder or under applicable law, AutoBond hereby agrees,
jointly and severally, to pay on demand to each Indemnified Party any and all
amounts necessary to indemnify such Indemnified Party from and against any and
all claims, losses, damages and liabilities and related costs and expenses,
including taxes and reasonable attorneys' fees and disbursements ("Indemnified
Amounts") which may be imposed on, incurred by or asserted against an
Indemnified Party in any way arising out of or resulting from:
(a) the use by AutoBond of proceeds of any sale or in respect of any
Auto Loan;
(b) any representation or warranty made or deemed made by AutoBond
(or any of its officers) under this Agreement, or any report delivered by
AutoBond pursuant hereto or any other information delivered by AutoBond
pursuant hereto, having been incorrect in any material respect when made
or deemed made or delivered (except with respect to any representation and
warranty arising under Section 2.3(a) (other than Section 2.3(a)(xxi)(A)
in respect of losses to or damages imposed on Borrower or the Trustee in
excess of the Repurchase Price of a Specified Auto Loan) in respect of a
Specified Auto Loan, as to which the remedies are set forth in Section
2.3(b));
(c) the failure by AutoBond to comply with any applicable law, rule
or regulation with respect to any Specified Auto Loan, or the
nonconformity of any Specified Auto Loan with any such applicable law,
rule or regulation;
(d) the failure to vest and maintain vested in the Borrower and its
assignees, legal, equitable and marketable title to and ownership of the
Auto Loans which are, or are purported to be, Specified Auto Loans,
together with all proceeds in respect thereof, free and clear of any
Adverse Claim (except as permitted hereunder) whether existing at the time
of the proposed sale of such Auto Loan or at any time thereafter and
without limitation to the remedies set forth in Section 2.3(c);
(e) the actions or inactions of AutoBond or any officer, director,
employee or agent of AutoBond; or
(f) the assessment of any tax or governmental fee or charge (and all
interest or penalties with respect thereto) as the result of the purchase
or ownership of any Auto Loan, other than taxes on or measured by the
gross income of any Person.
excluding, however, (i) recourse for any uncollectible Specified Auto Loan;
provided, that the foregoing shall not be deemed to limit the Borrower's or the
Trustee's rights under Sections 2.3(c), or this Section 15.2 and, with respect
to a breach in the representation and warranty set forth in Section
2.3(a)(xxi)(A), Section 9(b), and (b) Indemnified Amounts to
52
the extent resulting from the gross negligence or willful misconduct on the part
of any Indemnified Party. AutoBond acknowledges that the Borrower has assigned
its rights of indemnity granted hereunder to the Trustee. AutoBond agrees that,
upon such assignment, such assignee may enforce directly, without joinder of the
Borrower, the indemnities set forth in this Section 15.2. It is understood and
agreed that the indemnity obligations of AutoBond hereunder shall survive the
termination of this Agreement or of any Specified Auto Loan.
Section 15.3 Funding Losses. Except in connection with a mandatory
prepayment pursuant to Section 8.2(a) or (b), if the Borrower makes, or the
Lender otherwise receives, any payment in respect of principal of any Advance
other than on the first day of an Interest Period, the Borrower and AutoBond
shall, jointly and severally, indemnify the Lender for any loss, or expense
("Funding Loss") incurred by the Lender as a result thereof, including without
limitation, lost profit and any loss, cost or expense from employing, obtaining
or liquidating deposits from third parties. The amount of any Funding Loss shall
be determined in good faith by the Lender. If the Borrower, within 30 days after
receiving a notice of the amount of such Funding Loss, disputes, the amount set
forth in such notice, the Lender and the Borrower shall consult in good faith to
resolve such dispute. If such consultation does not resolve such dispute within
45 days (or such longer period as the Lender and the Borrower may then agree)
after the Lender shall have provided the Borrower with such notice, the Borrower
may request that the Lender furnish to an Independent Accountant all information
reasonably necessary to permit the confirmation of the accuracy of the Lender's
computation of the Funding Losses described in such notice. Within 30 days of
the receipt of such information, the Independent Accountant either shall confirm
the accuracy of such computation or shall notify the Lender and the Borrower
that such computation proposed by the Lender is inaccurate. In the latter event,
the Lender shall consult with the Borrower and the Independent Account as to the
proper computation of the Funding Losses, whereupon the Lender shall recompute
the Funding Losses in such a manner as shall enable the Independent Accountant
to confirm their accuracy. The Borrower and the Lender agree that the sole
responsibility of the Independent Accountant shall be to verify the calculation
of the Funding Losses and that matters of interpretation of the Program
Documents are not within the scope of its responsibilities. All expenses
incurred by the Lender and the Borrower in connection with the verification
procedures described in this Section 15.3 (including the fees and expenses of
the Independent Accountant) shall be paid by the Borrower. Any information
provided to the Independent Accountant by the Lender shall be and remain the
exclusive property of the Lender and shall be deemed by the parties to be (and
the Independent Accountant shall confirm in writing that it will treat such
information as) the private, proprietary and confidential property of the
Lender, and no Person other than the Lender and the Independent Accountant shall
be entitled thereto or to any review thereof, and all such information shall be
returned to the Lender contemporaneously with the completion of the verification
procedure.
53
SECTION 16. MISCELLANEOUS.
Section 16.1 Notices. (a) All communications under this Agreement or
the Notes shall be in writing and shall be delivered or mailed or sent by
facsimile transmission and confirmed in writing (i) if to the Lender, to the
Lender, at such address as the Lender may have furnished to the Borrower in
writing, and (ii) if to the Borrower, at the address set forth in Section 2.2(b)
or at such other address or facsimile number as it shall have furnished in
writing to the Lender and (iii) if to AutoBond to it at the address set forth in
Section 2.3(b) or at such other address or facsimile number as it shall have
furnished in writing to the Lender.
(b) Any written communication so addressed and mailed by certified
or registered mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof.
Section 16.2 Survival. All representations, warranties and covenants
made by the Borrower herein or by the Borrower in any certificate or other
instrument delivered under or in connection with this Agreement shall be
considered to have been relied upon by the Lender and shall survive regardless
of any investigation made by the Lender or on the Lender's behalf.
Section 16.3 Successors and Assigns. This Agreement shall be binding
upon the parties hereof and their respective successors and assigns, and shall
inure to the benefit of and be enforceable by the parties hereof and their
respective successors and assigns permitted hereunder. Whether or not expressly
so stated and subject to the restrictions set forth herein, the provisions of
Sections 5 through 16 of this Agreement are intended to be for the Lender's
benefit and shall be enforceable by the Lender; and, provided further, that the
provisions of Sections 7.2 and 10.1 hereof shall also be for the benefit of, and
shall be enforceable by, any Person who shall no longer be a Lender hereunder
but who shall have incurred any expense or been subjected to any liability
referred to therein while, or on the basis of being, a Lender.
Section 16.4 Amendment and Waiver. (a) This Agreement and the Notes
may be amended or supplemented, and the observance of any term hereof or thereof
may be waived, with the written consent of the Borrower, AutoBond and (i) on or
prior to the Initial Closing Date, the Initial Lender, and (ii) after the
Initial Closing Date, the Lender (or, if multiple Lenders, Lenders with respect
to at least 66-2/3% in aggregate unpaid principal amount of the Advances;
provided, however, that no such amendment, supplement or waiver shall, without
the written consent of all Lenders, (a) change, with respect to the Advances,
the amount or time of any required prepayment or payment of principal or premium
or the rate or time of payment of interest, or change the funds in which any
prepayment or payment
54
on the Advances is required to be made; (b) reduce the percentage of the
aggregate principal amount of Advances required for any amendment, consent or
waiver hereunder; or (c) release any material Lien of the Trustee, held for the
benefit of the Lender, on any of the Collateral or affect the priority thereof.
(b) Any amendment, supplement or waiver effected in accordance with
this Section 16.4 shall be binding upon the Lender, each Assignee and the
Borrower.
(c) The Borrower will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of the
Program Documents or the Note unless the Initial Lender (irrespective of the
amount of Advances made by it) shall be informed thereof by the Borrower and
shall be afforded the opportunity of considering the same and shall be supplied
by the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
effected pursuant to the provisions of this Section 16.4 shall be delivered by
the Borrower to the Lender forthwith following the date on which the same shall
have been executed and delivered by the Lender of the requisite percentage of
Advances.
Section 16.5 Counterparts. This Agreement may be executed and
delivered simultaneously in two (2) or more counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute but one
and the same instrument.
Section 16.6 Reproduction of Documents. This Agreement and all
documents relating hereto (other than the Note), including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Initial Lender at the closing of the Initial Lender's
making of Advances, and (c) financial statements, certificates and other
information heretofore or hereafter furnished to the Lender, may be reproduced
by the Lender by any photographic or other similar process and the Lender may
destroy any original document so reproduced. The Borrower agrees and stipulates
that, to the extent permitted by applicable law and court or agency rules, any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Lender in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall be admissible in evidence to the same
extent.
Section 16.7 Consent to Jurisdiction and Venue. The Borrower and
AutoBond each hereby irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to the Program Documents or any Note may
be brought in a court of record in the State of New York or in the courts of the
United States of America located in such State, (ii) consents to the
jurisdiction of each such court in any such suit, action or proceeding, and
(iii) waives any objection which it may have to the laying of venue of any such
claim that any such suit, action or proceeding has been brought in an
inconvenient
55
forum and covenants that it will not seek to challenge the jurisdiction of any
such court or seek to oust the jurisdiction of any such court, whether on the
basis of inconvenient forum or otherwise. The Borrower and AutoBond each
irrevocably consent to the service of any and all process in any such suit,
action or proceeding by mail copies of such process to the Borrower at its
address for notices provided in Section 16.1 hereof. The Borrower and AutoBond
each agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. All mailings under this Section 16.7 shall
be by registered or certified mail, return receipt requested. Nothing in this
Section 16.7 shall affect the Lender's right to serve legal process in any other
manner permitted by law or affect the Lender's right to bring any suit, action
or proceeding against the Borrower or any of its properties in the courts of any
other jurisdiction.
Section 16.8 No Petition. The Lender and each Assignee hereby
covenant and agree that, until the expiration of the date which is one year and
one day after the payment in full of all investor certificates or other
securities outstanding and issued pursuant to any Disposition, it will not
institute against the Borrower, or join in any institution against the Borrower
of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any applicable bankruptcy or similar law
in connection with any obligations relating to the Advances or the Program
Documents.
Section 16.9 Acts of Lender. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by the Lender may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by the Lender in person or by
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
is or are delivered to the Borrower. Proof of execution of any such instrument
or of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement if made in the manner provided in this Section 16.9.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Borrower deems
sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Lender or any Assignee shall bind the Lender and
such Assignee in respect of anything done, omitted or suffered to be done by the
Borrower in reliance thereon, whether or not notation of such action is made
upon such Note.
Section 16.10 Confidentiality. All non-public information relating
to this Agreement, the Program Documents and the transactions contemplated
thereby will be kept confidential by AutoBond, the Borrower and the Initial
Lender. The Initial Lender agrees to cause each assignee and Participant with
which it is a party to agree to keep such information
56
confidential. The provisions of this Section 16.10 shall survive the termination
of this Agreement.
57
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the day and year first above written.
AUTOBOND MASTER FUNDING
CORPORATION
By:
----------------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION
By:
----------------------------------------
Name:
Title:
DAIWA FINANCE CORPORATION
By:
----------------------------------------
Name:
Title:
58
EXHIBIT A
[Form of Note]
PROMISSORY NOTE
$50,000,000
February 19, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, AutoBond Funding Corporation II, a Nevada
corporation (the "Borrower") for value received, hereby promises to pay to Daiwa
Finance Corporation (the "Lender") or its assigns, the principal sum of Fifty
Million Dollars ($50,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Advances made by the Lender to the
Borrower under the Credit Agreement), in lawful money of the United States of
America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Advance, in like money and funds, for the period
commencing on the date of such Advance until such Advance shall be paid in full,
at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, interest rate and maturity date of each Advance
made by the Lender shall be recorded by the Lender on its books and, prior to
any transfer of this Note, endorsed by the Lender on the schedule attached
hereto or any continuation thereof.
This Note is the Note referred to in the Credit Agreement (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") dated as of February 1, 1997 among the Borrower, AutoBond Acceptance
Corporation and the Lender, and evidences Advances made by the Lender
thereunder. Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity
of this Note upon the occurrence of certain events and for prepayments of
Advances upon the terms and conditions specified therein.
This Note is secured in accordance with and entitled to the benefits
of the Indenture. Copies of the Indenture may be examined at the office of the
Borrower maintained pursuant to Section 16 of the Credit Agreement.
A-1
The Borrower agrees to perform and observe duly and punctually each
of the covenants and agreements set forth in the Credit Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
The Borrower hereby waives diligence, presentment and notice of any
kind. The non-exercise by the holder hereof of any right in any one instance
shall not limit the other (or further) exercise of that right in that (or any
other) circumstances.
By its holding of this Note, the Lender shall be deemed to accept
the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
This Note shall be governed by and construed in accordance with the
law of the State of New York.
A-2
IN WITNESS WHEREOF, AutoBond Funding Corporation II has caused this
Note to be duly executed on its behalf by its officers thereunto duly
authorized.
AUTOBOND FUNDING CORPORATION II
By:
----------------------------------------
Name:
Title:
A-3
SCHEDULE OF ADVANCES
The Note evidences Advances made under the within-described Credit
Agreement to the Borrower, on the dates, in the principal amounts, bearing
interest at the rates and maturing on the dates set forth below, subject to the
payments and prepayments of principal set forth below:
Principal Initial Maturity Amount Unpaid
Date of Amount of Interest Date of Paid or Principal Notation
Advance Advance Rate Advance Prepaid amount Made By
--------------------------------------------------------------------------------
EXHIBIT B
FORM OF BORROWING NOTICE
[Borrower's Letterhead]
[Date]
[Lender]
[Address]
Attention: __________________________
In accordance with Section 1.3 of the Credit Agreement, dated as of
February 1, 1997 (the "Credit Agreement"), among AutoBond Funding Corporation II
(the "Borrower"), AutoBond Acceptance Corporation and Daiwa Finance Corporation,
the undersigned hereby gives notice to the Lender that on ______________ the
Borrower proposes to borrow from the Lender $________________ in accordance with
and subject to the terms of the Credit Agreement. The Borrower hereby confirms
that all conditions to funding have been satisfied.
The Advance shall be wired to:
[insert wire instructions]
AUTOBOND FUNDING CORPORATION II
By:
-------------------------------
Name:
Title:
