[CONFORMED COPY]
================================================================================
SECURITY AGREEMENT
among
AUTOBOND FUNDING CORPORATION II
(as Borrower)
AUTOBOND ACCEPTANCE CORPORATION
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(as Collateral Agent)
Dated as of February 1, 1997
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS.................................................................. 1
SECTION 2. SECURITY INTERESTS............................................................. 6
SECTION 3. CERTAIN RIGHTS OF SECURED PARTIES WITH
RESPECT TO COLLATERAL.......................................................... 8
SECTION 4. REMEDIES UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT............................................................... 8
SECTION 5. REPRESENTATIONS, WARRANTIES AND
COVENANTS...................................................................... 10
SECTION 6. COLLATERAL ACCOUNT............................................................. 12
6.01. Establishment and Maintenance of Lockbox and
Collateral Account............................................................. 12
6.02. Required Deposits to the Accounts.............................................. 12
6.03. Right of Withdrawal from the Collateral Account................................ 14
6.04. Application of Funds in the Collateral Account;
Application of Proceeds of Realization on Collateral........................... 14
6.05. Investment of Funds Deposited in Collateral Account............................ 17
SECTION 7. DISPOSITIONS OF AUTO LOANS..................................................... 17
SECTION 8. THE COLLATERAL AGENT........................................................... 18
8.01. Appointment.................................................................... 18
8.02. Exculpatory Provisions......................................................... 18
8.03. Reliance by Collateral Agent................................................... 19
8.04. Notice of Default.............................................................. 19
8.05. Non-Reliance on Collateral Agent............................................... 20
8.06. Successor Collateral Agent..................................................... 20
8.07. Delivery of Collateral and Permitted Investments............................... 21
8.08. Duties and Covenants of Collateral Agent....................................... 21
8.09. Annual Report and Quarterly Certificate........................................ 23
SECTION 9. AMENDMENTS AND WAIVERS......................................................... 24
i
Page
----
SECTION 10. NOTICES........................................................................ 25
SECTION 11. LIMITATION ON COLLATERAL AGENT'S DUTY
IN RESPECT OF COLLATERAL....................................................... 26
SECTION 12. SEVERABILITY................................................................... 27
SECTION 13. NO WAIVER; CUMULATIVE REMEDIES................................................. 27
SECTION 14. PAYMENT OF EXPENSES AND TAXES.................................................. 27
SECTION 15. SUCCESSORS AND ASSIGNS; GOVERNING LAW.......................................... 29
SECTION 16. ENFORCEMENT RIGHTS OF LENDERS.................................................. 30
SECTION 17. BANKRUPTCY PETITION AGAINST THE
BORROWER....................................................................... 30
SECTION 18. MISAPPLICATION OF FUNDS........................................................ 30
SECTION 19. COUNTERPART SIGNATURES......................................................... 30
SECTION 20. THIRD PARTY BENEFICIARY........................................................ 30
SECTION 21. STATUS OF COLLATERAL AGENT..................................................... 31
SECTION 22. ACTS OF LENDERS................................................................ 31
EXHIBITS
EXHIBIT A - FORM OF COLLATERAL ASSIGNMENT
EXHIBIT B - FORM OF TRUST RECEIPT
EXHIBIT C - FORM OF COLLATERAL AGENT REPORT
ii
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of February 1, 1997 made by and
among AUTOBOND FUNDING CORPORATION II, a Nevada corporation (the "Borrower"),
AUTOBOND ACCEPTANCE CORPORATION, a Texas corporation ("AutoBond") and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, as collateral agent (in such capacity, the
"Collateral Agent").
W I T N E S S E T H
WHEREAS, the Borrower has entered into a Credit Agreement
dated as of February 1, 1997 (as may from time to time, be amended,
supplemented, or modified, the "Credit Agreement") with Daiwa Finance
Corporation, as lender (the "Initial Lender") and AutoBond, pursuant to which
advances will be made to the Borrower (the "Advances") from time to time; and
WHEREAS, it is a condition to the obligations of the Lenders
to make the Advances under the Credit Agreement that the Borrower and the
Collateral Agent shall have executed and delivered to the Initial Lender this
Security Agreement.
NOW, THEREFORE, to induce the Lenders to make the Advances,
the Borrower and AutoBond hereby agrees with the Collateral Agent, for the
benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS.
(a) The terms "inventory", "goods", "accounts", "contract
rights", "chattel paper", "general intangibles", "checks", "instruments",
"securities" and "documents" have the respective meanings ascribed in the UCC.
(b) Capitalized terms used herein undefined shall, unless
otherwise defined herein, have the respective meanings ascribed in the Credit
Agreement; and the following terms shall have the following meanings:
"Accounts" shall mean the Lockbox Account, the Collateral
Account, the Reserve Account, the Loan Purchase Account and the Collection
Account.
"Automobile" shall mean a new or used automobile, light-duty
truck or van.
"Collateral" shall have the meaning set forth in Section 2(a).
"Collateral Agent Fee" shall mean, as of any Payment Date, the
sum of (a) the product of (i) 1/12th, (ii) 0.20% and (iii) the daily average
aggregate principal balance of all Specified Auto Loans that are not Defaulted
Auto Loans during such Collection Period immediately preceding such Payment Date
and (b) any expenses reimbursable in accordance with the Collateral Agent's
activities under this Agreement and the Servicing Agreement, including, without
limitation, the costs and expenses incurred by the Collateral Agent in
connection with the assumption of the duties and obligations of the Servicer
pursuant to the Servicing Agreement.
"Collateral Assignment" shall mean a certificate of assignment
by the Borrower to the Collateral Agent, substantially in the form of Exhibit A
giving notice of, and evidencing the pledge of Specified Auto Loans and related
collateral to the Collateral Agent for the benefit of the Lenders.
"Collection Account" shall have the meaning assigned to such
term in Section 6.01 hereof.
"Collection Agent" shall mean AutoBond, as collection agent
under the Servicing Agreement.
"Collection Agent Fee" shall mean, a fee equal to the product
of (i) $7 and (ii) the total number of Specified Auto Loans which were
outstanding at any time during the preceding Interest Period, plus Reimbursable
Collection Agent Expenses.
"Collection Period" shall mean, (a) with respect to the
initial Collection Period, the period commencing on the Initial Closing Date and
ending on February 28, 1997, and (b) thereafter, with respect to any Payment
Date, the period commencing on the first day of the calendar month preceding the
calendar month in which such Payment Date occurs and ending on the last day of
the calendar month preceding the calendar month in which such Payment Date
occurs.
"Delinquency Ratio" shall mean, as of any Determination Date,
the percentage equivalent of a fraction (a) the numerator of which equals the
sum of (i) the aggregate Unpaid Principal Balance of Auto Loans which have
become Defaulted Auto Loans as of the end of the most recently ended Collection
Period minus (ii) the sum of the aggregate Unpaid Principal Balance of (A) all
Auto Loans against which insurance claims have been filed as of the end of the
most recently ended Collection Period and (B) Auto Loans for which the related
Financed Vehicles are subject to repossession as of the end of the most recently
ended Collection Period and which are not included in (A), and (B) the
denominator of which equals the aggregate
2
Unpaid Principal Balance of Auto Loans outstanding as of the end of the most
recently ended Collection Period minus the amount determined pursuant to clause
(ii) above.
"Event of Purchase Termination" shall have the meaning
assigned to such term in the Loan Acquisition Agreement.
"Excess Reserve Account Amount" shall mean, as of each Payment
Date, the amount, if any, held in the Reserve Account in excess of the Reserve
Account Required Balance after giving effect to any withdrawals from the Reserve
Account pursuant to Section 6.04(d)(i), (ii) and (iii) on such Payment Date.
"Financed Vehicle" shall mean a new or used automobile, van or
light-duty truck, the purchase of which the Obligor financed with an Auto Loan.
"Interest Payment Date" shall mean the first Business Day of
each calendar month.
"Loan Documents" means, with respect to a Specified Auto Loan,
(a) the fully executed original retail installment loan contract and security
agreement evidencing such Specified Auto Loan, including the assignment to
AutoBond, (b) the original confirmation of title, copy of the application for
title or letter of guaranty from the applicable Dealer, as the case may be, for
the related Financed Vehicle, (c) a copy of the credit application, (d) a copy
of an executed agreement to provide insurance signed by the Obligor, a binder in
respect thereof or the original confirmation of payment of premiums required
under the VSI Policy and (e) a copy of the funding check made to the order of
the Dealer or the Originator.
"Loan Files" 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.
"Loan Purchase Account" shall have the meaning assigned to
such term in Section 6.01 hereof.
"Lockbox" means the Lockbox established and maintained
pursuant to the Lockbox Agreement.
"Lockbox Account" means the account in the name of the
Servicer, as custodian for AutoBond, established in respect of the Auto Loans at
the Lockbox Bank and maintained pursuant to the Lockbox Agreement.
3
"Lockbox Agreement" means the Lockbox Operations Agreement,
dated as of September 30, 1996 between the Servicer, as custodian for AutoBond,
and the Lockbox Bank.
"Lockbox Bank" means Banc One, Texas, N.A.
"Monthly Repossession Ratio" shall mean on any Determination
Date, a fraction (a) the numerator of which is equal to the aggregate Unpaid
Principal Balance of all Designated Auto Loans which were put out for
repossession as of the end of the related Collection Period and (b) the
denominator of which is the aggregate Unpaid Principal Balance of all Designated
Auto Loans as of the end of the related Collection Period.
"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, and each other date on which Advances are paid or payable.
"Proceeds" shall have the meaning assigned such term under the
UCC of the State of New York, and of each other jurisdiction whose law governs
the grant or perfection of the Collateral Agent's interest in the particular
proceeds of the Collateral and shall also include (to the extent not already
included): (a) any and all proceeds of any insurance, indemnity, warranty,
guaranty or letter of credit payable to the Borrower from time to time with
respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or rights to amounts payable to the Borrower from time to time
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority), (c) any and all other amounts, products, offspring, rents or profits
from time to time paid or payable under or in connection with the Collateral and
(d) all additions to or substitutions or replacements for any of the Collateral.
"Program Manual" shall mean the AutoBond Program Manual in
effect as of the date hereof, as modified from time to time.
"Reimbursable Collection Agent Expenses" means, with respect
to any Payment Date, all reasonable and customary out-of-pocket fees and
expenses of third parties incurred by the Collection Agent (including expenses
related to financing statements and titles required to be paid or reimbursed by
the Collection Agent) in connection with their respective repossession
activities, including, without limitation, fees of attorneys, appraisers, third
party collateral managers and others (who shall have been retained by the
Collection Agent, in accordance with the Servicing Agreement) for the Collection
Period immediately preceding such Payment Date, but not including expenses paid
net of recoveries.
4
"Reserve Account" shall have the meaning assigned to such term
in Section 6.01 hereof.
"Reserve Account Balance" shall mean the amount of funds on
deposit in the Reserve Account.
"Reserve Account Deficiency Amount" shall mean as of any
Payment Date the amount by which the Reserve Account Required Balance exceeds
the Reserve Account Balance as of such Payment Date.
"Reserve Account Required Balance" shall mean, as of any
Determination Date, the greater of (a) $150,000 and (b) the product of (i) the
Target Reserve Percentage and (ii) the aggregate Unpaid Principal Balance of the
Specified Auto Loans as of the end of the preceding Collection Period.
"Responsible Officer" shall mean, when used with respect to
the Collateral Agent, any officer within the corporate trust department (or any
successor thereof) including any vice president, assistant vice president, or
any officer or assistant officer of the Collateral Agent customarily performing
functions similar to those performed by any of the above-designated officers.
"Repossession Ratio" shall mean, on any Determination Date on
or after May 10, 1997, the product of (a) the average of the Monthly
Repossession Ratios for the three immediately preceding calendar months and (b)
12.
"Secured Parties" shall mean the Lenders from time to time in
respect of the Advances.
"Servicer Fee" shall mean, as of any Payment Date, the sum of
(a) an initial booking fee equal to the product of (i) $10 and (ii) the number
of additional Specified Auto Loans purchased by the Borrower during the
immediately preceding Interest Period, (b) a servicing fee equal to the product
of (i) $8.00 and (ii) the total number of Specified Auto Loans which were
outstanding at any time during the preceding Interest Period and (c) any
expenses reimbursable in accordance with the Servicing Agreement.
"Specified Auto Loan" shall mean each Auto Loan pledged by the
Borrower to the Collateral Agent hereunder as security for its obligations
hereunder and under the Credit Agreement.
"Target Reserve Percentage" shall mean 6%; provided, that if,
as of a Determination Date,
5
(a) the Delinquency Ratio on such Determination Date
or any prior Determination Date is greater than or equal to
the 7%, then the Target Reserve Percentage shall thereafter
equal 9%;
(b) the Repossession Ratio on such Determination Date
or any prior Determination Date is greater than or equal to
20%, then the Target Reserve Percentage shall thereafter equal
9%; and
(c) the Repossession Ratio on such Determination Date
or any prior Determination Date is greater than or equal to
27%, then the Target Reserve Percentage shall thereafter equal
12%.
If more than one of the foregoing clauses is applicable as of
a particular Determination Date, then the applicable Target Reserve Percentage
shall be the highest amount so applicable.
"Uniform Commercial Code" or "UCC" shall mean, with respect to
any jurisdiction, the Uniform Commercial Code, or any successor statute, or any
comparable law, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"Unpaid Principal Balance" shall mean, with respect to any
Auto Loan as of any Determination Date, (a) for an Auto Loan bearing interest
calculable on a simple interest basis, the unpaid principal amount for such Auto
Loan or (b) for a Precomputed Receivable, the Net Principal Balance, in each
case as of the end of the most recent Collection Period, provided that, for any
Auto Loan where the Net Unrealized Amount equals the Unpaid Principal Balance,
such Unpaid Principal Balance shall thereafter equal zero (other than for
purposes of calculating the Net Unrealized Amounts.
"Unused Facility Fee" shall mean, with respect to any Payment
Date, the product of (i) a fraction (A) the numerator of which is the number of
days elapsed during the immediately preceding Interest Period and (B) the
denominator of which is 360, (ii) the average outstanding balance of the
Available Facility Amount during such Interest Period and (iii) the Unused
Facility Fee Rate.
"Unused Facility Fee Rate" shall mean the per annum rate
agreed to by the Borrower and the Initial Lender.
6
SECTION 2. SECURITY INTERESTS.
(a) As security for the prompt, complete and unconditional
payment and performance of all obligations of the Borrower in respect of the
Advances, the Borrower hereby pledges, assigns, transfers and delivers to the
Collateral Agent for the benefit of the Secured Parties, and grants to the
Collateral Agent for the benefit of the Secured Parties, a continuing first lien
on, and first and prior security interest in, all of the Borrower's right, title
and interest in, to and under the following (the "Collateral"):
(i) each Specified Auto Loan, including without limitation,
all rights to payments thereunder, purchased by or otherwise conveyed
to or established by the Borrower pursuant to the Loan Acquisition
Agreement;
(ii) each Financed Vehicle and all other Property, now or
hereafter acquired, securing or evidenced by, each Specified Auto Loan,
including, without limitation, the certificate of title relating to
each Financed Vehicle, any insurance proceeds with respect to any such
Financed Vehicle or Specified Auto Loan, the proceeds of any
repossession and liquidation of any such Financed Vehicle, rights under
judgments with respect to defaulted obligors, rights to deficiency
judgments with respect to defaulted obligors and rights under any
service contracts with respect to any such Financed Vehicle;
(iii) the Loan Purchase Account, the Collection Account and
the Reserve Account and all moneys, checks, instruments, documents,
securities, Investments, deposits and other credits (whether or not
permitted by the Program Documents) credited to the Collateral Account,
or otherwise held by the Collateral Agent;
(iv) all securities and other Investments held at any time
on behalf of the Borrower in the Collateral Account;
(v) the Loan Files; and
(vi) all Proceeds of any of the foregoing.
(b) All rights of the Collateral Agent and the Secured Parties
and all liens and security interests granted hereunder, shall be absolute,
unconditional and irrevocable unless and until released pursuant to the Program
Documents, irrespective of any condition or circumstance whatsoever.
(c) The grant of the security interest to the Collateral Agent
pursuant to this Section 2 shall not: (i) relieve the Borrower from the
performance of any term, covenant,
7
condition or agreement on the Borrower's part to be performed or observed under
or in connection with the Collateral, (ii) impose any obligation on the
Collateral Agent or the Secured Parties to perform or observe any such term,
covenant, condition or agreement on the Borrower's part to be so performed or
observed, or (iii) impose any liability on the Collateral Agent or the Secured
Parties for any act or omission on the part of the Borrower, or any Person
acting as agent for or on behalf of the Borrower, relative to or for any breach
of any representation or warranty on the part of the Borrower in connection with
the Collateral.
SECTION 3. CERTAIN RIGHTS OF SECURED PARTIES WITH RESPECT TO
COLLATERAL.
Upon the occurrence and during the continuance of an Event of
Default, the Borrower hereby irrevocably authorizes the Collateral Agent to
execute and deliver, as the attorney-in-fact of the Borrower, any consent,
waiver or amendment which, under the terms of any Program Document, is or may be
executed and delivered by the Borrower with respect to the Collateral, subject
to the provisions of the Program Documents; provided, however, that the
Collateral Agent shall have no duty or obligation to execute and deliver any
such consent, waiver or amendment unless directed in writing to take the actions
specified therein by the Lenders in respect of at least 66 2/3% in aggregate
principal amount of the Advances outstanding; and provided, further, that the
Collateral Agent shall not be required to take any action which the Collateral
Agent reasonably believes may be contrary to applicable law or which would
expose the Collateral Agent to financial liability if the Collateral Agent has
reasonable grounds to believe that repayment of such financial liability is not
reasonably assured. The Borrower hereby agrees to remit to the Collection
Account for deposit in accordance with this Agreement any and all Proceeds of
any Collateral received by the Borrower.
SECTION 4. REMEDIES UPON THE OCCURRENCE OF AN EVENT OF DEFAULT.
(a) (i) If at any time an Event of Default shall have occurred
and be continuing, the Collateral Agent may, without demand of performance or
other demand, advertisement or notice of any kind (except for any notice of the
time and place of public or private sale required by law) to or upon the
Borrower or any other Person (all of which demands, advertisements and/or
notices are hereby expressly waived), and in its own name or in the name of the
Borrower, forthwith demand, collect, receive, xxx for, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, assign,
grant an option or options to purchase, contract to sell or otherwise dispose of
and deliver said Collateral, or any part thereof, in one or more parcels at
public or private sale or sales, at any location or locations at the option of
the Collateral Agent acting upon any instructions received from the Lenders in
respect of a majority in aggregate principal amount of Advances outstanding, all
upon such terms and
8
conditions and at such prices as such Lenders may deem advisable, for cash or on
credit or for future delivery without assumption of any credit risk, with the
right of the Collateral Agent or any Secured Party upon any such public sale or
sales to purchase the whole or any part of said Collateral so sold, free of any
right of redemption in the Borrower, which right is hereby expressly waived and
released. At the instruction of the Lenders in respect of a majority in
aggregate principal amount of Advances outstanding, the Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned.
(ii) If at any time an Event of Default shall have occurred
and be continuing and the Lenders in respect of a majority in aggregate
principal amount of Advances outstanding give written direction to the
Collateral Agent as to the disposition of the Collateral or as to the
exercise of remedies against the Collateral, the Collateral Agent
hereby agrees to follow such direction; provided, however, no provision
of this Agreement shall require the Collateral Agent to take any action
which it or its counsel deems to be unlawful nor shall the Collateral
Agent be obligated to expend or risk its own funds or otherwise incur
any financial liability in the performance of any rights, powers or
duties hereunder, if the Collateral Agent shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured. Until all
Advances have been repaid and satisfied in full, the Collateral Agent
shall be obligated, subject to the foregoing proviso, to take direction
only from the Lenders in respect of a majority in aggregate principal
amount of Advances outstanding as to, upon the occurrence and during
the continuance of an Event of Default, the disposition of the
Collateral, or the exercise of remedies against or in connection with
the Collateral.
(iii) Notwithstanding the above provisions of this
Section 4(a), the Collateral Agent may not sell or otherwise liquidate
the Collateral following an Event of Default, other than an Event of
Default as described in paragraphs (a) and (b) of Section 13.1 of the
Credit Agreement, unless (A) the Collateral Agent shall have received
written evidence reasonably satisfactory to the Collateral Agent that
the Lenders in respect of 100% in aggregate principal amount of the
Advances outstanding consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Lenders, as determined by the Lenders,
are sufficient to discharge in full the principal of and the accrued
interest on and fees in respect of the Advances at the date of such
sale or liquidation; written evidence of such determination to be
provided by the Lenders to the Collateral Agent or (C) the Lenders
determine that the Collateral will not continue to provide sufficient
funds for the payment of principal of and interest on and fees in
respect of the Advances as and when they would have become due if the
Advances had not been declared due and payable and the Lenders provide
written notice to the Collateral Agent to such effect.
9
(b) If any notification of a proposed disposition of the
Collateral is required by law, such notification shall be deemed reasonably and
properly given if made in any manner provided in Section 10 hereof at least ten
days before such disposition.
(c) In addition to the rights, powers and remedies granted to
it in this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Advances, the Collateral Agent shall have all of
the rights, powers and remedies now or hereafter permitted in law or equity,
including, without limitation, those of a secured party under the UCC of the
State of New York and any other applicable jurisdiction.
(d) The Collateral Agent shall apply the net proceeds of any
collection, recovery, receipt, appropriation, realization or sale referred to
above in this Section 4 in accordance with the provisions of Section 6.04(e)
hereof. The Borrower shall remain absolutely liable for the amount, if any, by
which the amount due under the Advances exceeds the proceeds of any such
collection, recovery, receipt, appropriation, realization or sale.
(e) The Borrower shall provide written payment instructions
(including the account number of the bank account to which payments are to be
directed and the name, address and ABA number of the bank in which such account
is maintained, if payments are to be made to such party by the wire transfer of
immediately available funds) to the Collateral Agent. Failure to provide such
notice shall not affect the Borrower's right to receive any funds to which it is
otherwise entitled in accordance with the Program Documents, but failure to
deliver such notice may result in a delay in the receipt of such funds.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Borrower represents, warrants and agrees, as of the date
hereof, and as of each Closing Date, that:
(a) No security agreement, financing statement, equivalent
security or lien instrument or continuation statement listing the Borrower as
debtor covering all or any part of the Collateral is on file or of record in any
jurisdiction, except such as may have been filed, for the benefit of the Secured
Parties recorded or made by the Borrower in favor of the Collateral Agent
pursuant to this Security Agreement or the Credit Agreement.
(b) This Security Agreement is effective to create a valid and
continuing Lien on the Collateral in favor of the Collateral Agent for the
benefit of the Secured Parties, which Lien is prior to all other Liens except
Permitted Liens, and is enforceable as such as against creditors of and
purchasers from the Borrower. All action necessary or desirable to protect and
perfect such security interest has been duly taken.
10
(c) The Borrower's chief executive office is at 000 Xxxxx
Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000. The Borrower will not change
its name and will not change its principal place of business or chief executive
office unless the Borrower shall have given the Collateral Agent at least thirty
(30) days prior written notice thereof and the Borrower shall have taken all
action necessary to assure continuous perfection of the security interest held
by the Collateral Agent in the Collateral as evidenced by an opinion of counsel
addressed to the Collateral Agent and the Lenders to the effect that the lien
and security interest created by this Security Agreement with respect to such
Collateral will continue to be maintained, and that the priority thereof will
not be affected, after giving effect to such action or actions.
(d) At any time and from time to time, and at the sole expense
of the Borrower, the Borrower will promptly and duly execute and deliver any and
all such further instruments and documents and take such further action as the
Lenders in respect of a majority in aggregate principal amount of Advances
outstanding may reasonably deem desirable in obtaining the full benefits of this
Security Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code in effect in any jurisdiction with respect to the
liens and security interests granted hereby. The Borrower also hereby authorizes
the Collateral Agent to file any such financing or continuation statement
without the signature of the Borrower to the extent permitted by applicable law;
provided, however, that such authorization shall not be deemed to create a duty
in the Collateral Agent. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note or other
instrument, or any chattel paper, the Borrower shall immediately notify the
Collateral Agent and shall duly endorse such note, instrument or chattel paper
to the order of the Collateral Agent and deliver such note, instrument or
chattel paper to the Collateral Agent promptly, and shall take such other
actions and execute such other documents as may be required by law to perfect
the Collateral Agent's interest in such note, instrument or chattel paper.
(e) The Borrower will warrant and defend the Collateral
Agent's right, title and interest in and to the Collateral, for the benefit of
the Secured Parties against the claims and demands of all Persons whomsoever.
(f) All authorizations in this Security Agreement for the
Collateral Agent to endorse checks, instruments and securities and to execute,
deliver and file financing statements, continuation statements, security
agreements and other instruments with respect to the Collateral are powers
coupled with an interest and are irrevocable so long as any Advances are
outstanding; provided however, the foregoing authorizations shall not create any
duty or obligation on the part of the Collateral Agent other than those
obligations set forth in this Agreement.
11
SECTION 6. COLLATERAL ACCOUNT.
6.01. Establishment and Maintenance of Lockbox and Collateral
Account. AutoBond shall cause to be established and maintained at all times a
lockbox and related account (the "Lockbox" and the Lockbox Account) in the name
of the Servicer, as custodian for AutoBond and its designees. AutoBond agrees to
cause the Lockbox Bank to sweep funds from the Lockbox Account to the Collection
Account at least once each week. Autobond agrees to require, and to cause the
Servicer to require, that all payments by Obligors on Specified Auto Loans be
made to the Lockbox. Only payments on Specified Auto Loans will be received in
the Collection Account and no other funds other than funds in which the
Collateral Agent has an interest hereunder will be commingled therein. In
addition, concurrently with the execution and delivery hereof, the Collateral
Agent shall establish the following segregated accounts entitled (a) the
"AutoBond Funding Corporation II Loan Purchase Account, Norwest Bank Minnesota,
National Association, as Collateral Agent" (the "Loan Purchase Account"); (b)
the "AutoBond Funding Corporation II Collection Account, Norwest Bank Minnesota,
National Association, as Collateral Agent" (the "Collection Account"); and (c)
the "AutoBond Funding Corporation II Reserve Account, Norwest Bank Minnesota,
National Association, as Collateral Agent" (the "Reserve Account"). The Loan
Purchase Account, the Collection Account and the Reserve Account are sometimes
collectively referred to herein as the "Collateral Account". The Collateral
Account shall be maintained in the State of Minnesota in either (i) segregated
trust accounts with the corporate trust department of Norwest Bank Minnesota
(National Association) or any replacement collateral agent or (ii) segregated
deposit accounts with banks or trust companies (which may include the Collateral
Agent or a replacement collateral agent) the short-term debt obligations of
which are rated "A-1" by S&P and P-1 by Xxxxx'x. The Borrower shall have no
right of withdrawal from the Collateral Account.
6.02. Required Deposits to the Accounts. (a) The Borrower
shall cause the following amounts to be paid to the Collateral Agent for deposit
to the accounts established pursuant to Section 6.01:
(i) on the initial Closing Date, an amount equal to
$150,000 shall be deposited in the Reserve Account;
(ii) all amounts payable to the Borrower by or on behalf
of Lenders in respect of Advances shall be deposited directly in the
Loan Purchase Account;
(iii) all amounts representing payments in respect of
Specified Auto Loans (including, without limitation, all Recoveries on
Receivables, all late charges, all payments in respect of the
Repurchase Price of Specified Auto Loans repurchased by
12
AutoBond in accordance with the Loan Acquisition Agreement and all
proceeds of any Dispositions) shall be deposited in the Collection
Account;
(iv) all amounts in respect of principal of Permitted
Investments shall be allocated to the account to which the funds
applied for purchase of such Permitted Investments were deposited;
(v) all amounts representing insurance proceeds in
respect of Specified Auto Loans (including, without limitation, the
proceeds of any credit default) shall be deposited in the Collection
Account;
(vi) all amounts representing repossession proceeds in
respect of Specified Auto Loans shall be deposited in the Collection
Account; and
(vii) all other amounts paid to the Borrower under the
Program Documents, other than indemnity payments made to the Borrower,
and all investment earnings on Permitted Investments shall be deposited
in the Collection Account.
(b) The Collateral Agent is hereby irrevocably authorized and
empowered, as the Borrower's attorney-in-fact, to endorse any check or any other
instrument or security presented for deposit in the Collateral Account requiring
the endorsement of the Borrower; provided, however, the foregoing authorizations
shall not create any duty or obligation on the part of the Collateral Agent.
(c) Notwithstanding the foregoing provisions of this Section
6.02, if at any time the Borrower, AutoBond or any Person on behalf of the
Borrower or AutoBond (including the Servicer under the Servicing Agreement),
receives any proceeds or payments required to be deposited in the Collateral
Account, all such amounts shall be held by the Borrower, AutoBond or such other
person as the agent of, and in trust for, the Collateral Agent and shall,
forthwith upon receipt by the Borrower, AutoBond or such other Person, be turned
over to the Collateral Agent for deposit to the Collection Account or the Loan
Purchase Account, as the case may be, in the same form as received by the
Borrower, AutoBond or such other Person (and, if received in the form of a
check, instrument or security requiring endorsement, duly endorsed on behalf of
the Borrower, AutoBond or such other Person to the order of the Collateral
Agent).
(d) The Borrower shall cause all amounts remitted to the
Collateral Agent for deposit pursuant to Section 6.02(a) to be identified to
permit the deposit of the same into the appropriate account; any amounts
received by the Collateral Agent without sufficient identification shall be
deposited by the Collateral Agent into the Collection Account until such time as
sufficient identification is received, at which time the Collateral Agent is
authorized, if
13
necessary, to withdraw such amounts from the Collection Account and deposit same
in accordance with such identification.
6.03. Right of Withdrawal from the Collateral Account. In
furtherance of the security interest provided in Section 2, the Collateral
Agent, acting on behalf of the Secured Parties, and the Borrower, agree (a) that
the Collateral Account shall be maintained in the name of the Collateral Agent,
(b) that the Collateral Account shall be subject to the exclusive dominion of
the Collateral Agent, and (c) that the Collateral Agent shall have the sole
right of withdrawal from the Collateral Account. The Borrower, the Lender, the
Servicer and AutoBond shall timely provide written remittance information to the
Collateral Agent specifying payment instructions with respect to amounts payable
pursuant to each provision of Section 6.04. The Collateral Agent shall have no
liability to the Borrower, any Lender or any other Person for failure to pay
funds to any Person in accordance with Section 6.04 in the absence of timely
receipt of such written remittance instructions or in the event of any errors in
such written remittance instructions.
6.04. Application of Funds in the Collateral Account;
Application of Proceeds of Realization on Collateral. (a) Except as otherwise
provided in Section 6.05, if no Event of Default shall have occurred and be
continuing, the Collateral Agent, in the case of clause (iii), on each Payment
Date or, in the case of clause (ii), on each Business Day, shall apply collected
funds in the Loan Purchase Account in the following order of priority pursuant
to written instructions of the Borrower in the case of clauses (i) and (ii) or
pursuant to the Servicer Report (as defined in the Servicing Agreement) in the
case of clause (iii):
(i) on each Closing Date other than the Initial
Closing Date, deposit to the Reserve Account, 2% of each related
Advance;
(ii) to pay to AutoBond an amount equal to the Loan
Acquisition Price (less the amount deposited in (i) above), in respect
of all Specified Auto Loans, if any, to be purchased the Borrower on
such date on or before 10:00 a.m., New York City time; provided that,
with respect to each such Specified Auto Loan, such amounts shall be
payable only if the Collateral Agent has received each of the Loan
Documents with respect to such Specified Auto Loan from AutoBond; and
(iii) to pay to the Lenders, pro rata, all interest
on the Advances and any Unused Facility Fee then due to the extent
funds on deposit in the Collection Account and the Reserve Account on
such date are insufficient therefor;
and, if any such funds shall remain unused after being applied for the foregoing
purposes, so long as any Advances remain outstanding the remaining funds shall
be retained in the Loan Purchase Account and continue to be Collateral
hereunder, and if so instructed in writing by
14
AutoBond, may be invested or withdrawn by the Collateral Agent in accordance
with Section 6.05 hereof. The Collateral Agent may liquidate any investment when
required to make an application pursuant to clauses (i), (ii) and (iii) above.
No investment made pursuant to this section will have a maturity later than one
Business Day prior to the date on which such funds will be needed to make
payment on the Advances.
(c) If no Event of Default shall have occurred and be
continuing, the Collateral Agent on each Payment Date shall apply funds held in
the Collection Account in respect of the prior Collection Period in the
following order of priority (in accordance with the Servicer Report):
(i) to the Lenders, pro rata, an amount equal to accrued
and unpaid interest on the Advances and an amount equal to the Unused
Facility Fee payable on such Payment Date;
(ii) to the Collateral Agent and the Servicer, an amount
equal to the Collateral Agent Fee and the Servicer Fee, respectively,
payable on such Payment Date;
(iii) to the Loan Purchase Account as Advances to fund
Auto Loans, unless directed by the Initial Lender to pay to the
Lenders, pro rata, as payment of principal on the Advances, an amount
equal to any principal received in respect of Specified Auto Loans
during the immediately preceding Collection Period;
(iv) to the Reserve Account, an amount equal to the
Reserve Account Deficiency Amount, until the Reserve Account Balance
equals the Reserve Account Required Balance;
(v) to the Collection Agent, an amount equal to the sum
of (i) the Collection Agent Fee payable on such Payment Date and (ii)
any late charges received in respect of Specified Auto Loans during the
immediately preceding Collection Period;
(vi) to the discharge of all other obligations of the
Borrower which are then due under the Program Documents (or, to the
extent such obligations have not yet matured, to be set aside and held
in trust solely to satisfy such obligations, as and when they mature or
otherwise become due) in an amount equal to such obligations; and
(vii) to the Borrower, an amount equal to any funds
remaining in the Collection Account.
15
(d) If no Event of Default shall have occurred and be
continuing, the Collateral Agent on each Payment Date shall apply funds held in
the Reserve Account in the following order of priority (in accordance with the
Servicer Report):
(i) to the Lenders, pro rata, an amount equal to the
accrued and unpaid interest and fees on the Advances (including, any
accrued and unpaid Unused Facility Fees) to the extent that funds on
deposit in the Collection Account on such date are insufficient
therefor;
(ii) to the Lenders, pro rata, an amount equal to the
principal of the Advances due and payable on such date to the extent
that funds on deposit in the Collection Account on such date are
insufficient therefor; and
(iii) to the Collection Account, if 30 days have passed
since the cancellation of any optional credit life, accident and health
insurance policy or optional extended service contract in respect of
any Specified Auto Loan and the Borrower has not received a refund of
any unearned Dealer's commission or insurance premium, an amount equal
to such unearned Dealer's commission or insurance premium; and
(iv) to the Collection Account, an amount equal to the
Excess Reserve Account Amount.
(e) If an Event of Default shall have occurred and be
continuing, the Collateral Agent shall apply all amounts held in the Loan
Purchase Account, the Collection Account and the Reserve Account and the
proceeds of any collection, recovery, receipt, appropriation, realization or
sale of any Collateral in connection with any Event of Default (after deducting
all reasonable costs and expenses of every kind incurred in any way relating to
the exercise of rights of the Collateral Agent with respect to the Collateral
upon an Event of Default, including reasonable attorney's fees and expenses) in
the following order of priority:
(i) to the Collateral Agent, an amount equal to all fees,
costs and expenses owing to the Collateral Agent under this Agreement;
(ii) to the Servicer, an amount equal to all fees, costs
and expenses owing to the Servicer under the Servicing Agreement;
(iii) to the Lenders, pro rata, in the following order of
priority (A) an amount equal to all unpaid interest on, (B) other
amounts due or to become due with respect to including, without
limitation, any accrued and unpaid Unused Facility Fees, and (C)
principal of, the Advances (in the event any such principal is not due
and the Advances have not been accelerated, all such amounts shall be
retained in the Collateral
16
Account and applied solely to pay principal of and interest on, and
other amounts due or to become due with respect to, the Advances, as
and when due until all principal and interest on, and other amounts due
or to become due with respect to, the Advances shall have been paid and
satisfied in full);
(iv) to the discharge of all other obligations of the
Borrower which are then due (or, to the extent such obligations have
not yet matured, to be set aside and held in trust solely to satisfy
such obligations, as and when they mature or otherwise become due) in
an amount equal to such obligations; and
(v) to the Borrower, an amount equal to any funds
remaining in the Collateral Account.
6.05. Investment of Funds Deposited in Collateral Account. The
Collateral Agent shall, in accordance with the provisions of this Section 6.05,
invest and reinvest, at the written direction of AutoBond, in the Collateral
Agent's own name or in the name of the Collateral Agent's nominee, collected
funds in each of the Loan Purchase Account, the Collection Account and the
Reserve Account in Permitted Investments which shall mature, or be redeemed at
the option of the holder, prior to the respective dates when the money invested
in such Permitted Investments is required for application in accordance with
this Section 6. To the extent that the sum of amounts held in the Loan Purchase
Account exceeds $5,000,000, the Collateral Agent shall notify the Borrower and
the Lender. In the event that three (3) Business Days following the Business Day
on which the amount on deposit in the Loan Purchase Account exceeded $5,000,000,
the amount on deposit in the Loan Purchase Account (after giving effect to any
disbursements pursuant to Section 6.04(a) on such date) is still greater than
$5,000,000, the Collateral Agent, unless otherwise directed by the Initial
Lender, shall withdraw an amount equal to the amount by which the amount on
deposit in the Loan Purchase Account exceeds $4,000,000 and disburse such amount
to the Lenders, pro rata as a prepayment of Advances in accordance with Section
8 of the Credit Agreement.
SECTION 7. DISPOSITIONS OF AUTO LOANS.
The Collateral Agent, at the written direction of the Initial
Lender, shall release from the lien of this Agreement any of the Specified Auto
Loans held as Collateral upon a Disposition, a prepayment of Advances or a
repurchase by AutoBond in accordance with the terms of the Credit Agreement;
provided, that the proceeds of any such Disposition, voluntary prepayment or
repurchase (net of expenses and costs) have been deposited into the Collection
Account for application in accordance with Section 6.04(c); provided, however,
that, upon satisfaction of the conditions set forth in this Section 7, the
Collateral Agent will release to or at the direction of AutoBond the certificate
of title with respect to a Financed Vehicle subject
17
to a Disposition within one Business Day of such request by AutoBond. Any
Disposition shall in and of itself have no effect on the obligation of the
Lender under the Credit Agreement to make Advances.
SECTION 8. THE COLLATERAL AGENT.
8.01. Appointment. By accepting the benefits of the security
interest granted herein, each Secured Party hereby irrevocably designates and
appoints Norwest Bank Minnesota, National Association as the Collateral Agent of
such Secured Party under this Security Agreement, and each such Secured Party
irrevocably authorizes Norwest Bank Minnesota, National Association as the
Collateral Agent for such Secured Party, to take such action on its behalf under
the provisions of this Security Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Collateral Agent by the
terms of this Security Agreement together with such other powers as are
reasonably incidental thereto but in each instance solely at the written
instruction of the Lenders in respect of at least a majority in aggregate
principal amount of Advances outstanding. Notwithstanding any provision to the
contrary elsewhere in this Security Agreement, the Collateral Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Secured Party, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Security Agreement or otherwise exist against the Collateral Agent.
Norwest Bank Minnesota, National Association hereby accepts its appointment as
Collateral Agent, subject to, and in reliance upon, the provisions of this
Section 8.01.
8.02. Exculpatory Provisions. Neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (a) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Security Agreement
(except for its or such Person's own negligence or wilful misconduct), or (b)
responsible in any manner to any of the Secured Parties for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained herein or in the Loan Acquisition Agreement, the Servicing
Agreement, the Credit Agreement or in any certificate, report, statement or
other document referred to or provided for in, or received by the Collateral
Agent under or in connection with, this Agreement, the Loan Acquisition
Agreement, the Servicing Agreement or the Credit Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency (except with
respect to enforceability of this Agreement as it relates to the Collateral
Agent) of this Agreement, the Loan Acquisition Agreement, the Servicing
Agreement, the Lockbox Agreement, the Credit Agreement, the Advances or the
Collateral or for any failure of the Borrower to perform its obligations
hereunder or under the Loan Acquisition Agreement, the Servicing Agreement, the
Lockbox, the Credit Agreement or the Advances. The Collateral Agent shall not be
under any obligation to any Secured Party to ascertain or to inquire as to the
observance or performance of any of
18
the agreements contained in, or conditions of, any of the Program Documents, or
to inspect the properties, books or records of the Borrower or the Servicer.
Except for its duty to maintain possession of the Auto Loans and as set forth in
this Agreement, the Collateral Agent shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any security interest in any Automobile or any Auto Loan, or the perfection or
priority of such a security interest or the maintenance of any such perfection
or priority or for or with respect to the ability of the Auto Loans to generate
the payments to be distributed to the Lender under the Credit Agreement,
including, without limitation, the existence, condition, location and ownership
of any Financed Vehicle; the existence of any insurance thereon (including,
without limitation, any VSI Policy); the compliance by the Borrower, the
Servicer or the Collection Agent with any covenant or the breach by the
Borrower, the Servicer or the Collection Agent of any warranty or representation
made under this Agreement or the Servicing Agreement or in any related document;
the accuracy of any such warranty or representation; any investment of monies by
the Collateral Agent in accordance with the terms of this Agreement or the
Servicing Agreement or any loss resulting therefrom; the acts or omissions of
the Borrower, the Servicer, the Collection Agent or any Obligor; or any action
of the Servicer or the Collection Agent taken in the name of the Collateral
Agent.
8.03. Reliance by Collateral Agent. The Collateral Agent shall
be entitled to rely, and shall be fully protected in relying, upon any Advance,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent shall be fully justified in failing or refusing to
take any action under this Security Agreement unless it shall first receive such
written advice or concurrence as it deems appropriate or it shall first be
indemnified to its satisfaction (by one or more Secured Parties) against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent may from time to time
consult with legal counsel, independent accountants or other experts of its own
selection in the event of any disagreement, controversy, question or doubt as to
the construction of any provision of this Agreement or any of its duties
hereunder, and the Collateral Agent shall be fully protected in acting in good
faith in reliance upon the advice or opinion of any such counsel or other
expert.
8.04. Notice of Default. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Event of Default
under the Credit Agreement unless a Responsible Officer has received written
notice from the Lenders of a majority in aggregate principal amount of Advances
outstanding or the Borrower referring to this Security Agreement and describing
such Event of Default or unless a Responsible Officer otherwise has actual
knowledge of such Event of Default.
19
8.05. Non-Reliance on Collateral Agent. Neither the Collateral
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates has made any representations or warranties to the Secured Parties,
and no act by the Collateral Agent hereafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any representation or
warranty by the Collateral Agent to any Secured Party. Each Secured Party
represents (or will be deemed to have represented at such time as such party
becomes a Secured Party hereunder) to the Collateral Agent that it has,
independently and without reliance upon the Collateral Agent, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Borrower and made its own decision
to extend credit to the Borrower. Each Secured Party will, independently and
without reliance upon the Collateral Agent, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Security Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished by the Collateral Agent
hereunder, the Collateral Agent shall have no duty or responsibility to provide
any Secured Party with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Borrower which may come into the possession of the Collateral Agent or any of
its officers, directors, employees, agencies, attorneys-in-fact or affiliates.
8.06. Successor Collateral Agent. The Collateral Agent may
resign as collateral agent hereunder and under the Servicing Agreement upon 60
days' notice to the Borrower, AutoBond and the Lenders. The Collateral Agent may
be removed at any time by the Borrower acting at the direction of, or with the
consent of, the Lenders in respect of the majority in aggregate principal amount
of the Advances outstanding if at any time the Collateral Agent shall fail to
comply with its obligations under this Security Agreement. No such resignation
or removal shall be effective unless and until a successor collateral agent has
accepted appointment as such pursuant to this Agreement and in the case of a
removal, any and all amounts then due to the Collateral Agent hereunder have
been paid in full. If the Collateral Agent shall resign or be removed as
collateral agent, then the Borrower shall appoint a commercial bank having a
combined capital and surplus of at least $250,000,000, subject to supervision or
examination by federal or state authority and having an established place of
business in the United States as successor collateral agent for the Secured
Parties upon (a) acceptance of such appointment by such successor collateral
agent, (b) the approval of such appointment by the Lenders in respect of a
majority in aggregate principal amount of the Advances outstanding, and (c) the
filing of any necessary amendments to any UCC financing statements to reflect
such appointment. Such successor collateral agent shall succeed to the rights,
powers and duties of the Collateral Agent, and the term "Collateral Agent" shall
mean such successor collateral agent effective upon its appointment, and the
former Collateral Agent's rights, powers and duties as Collateral Agent
20
shall be terminated, without any other or further act or deed on the part of
such former Collateral Agent. Such successor collateral agent shall be entitled
to amend any UCC financing statements and any other filings, recordation and
declarations it deems advisable or necessary in connection with such termination
and cancellation. After any retiring Collateral Agent's resignation or removal
hereunder as Collateral Agent, the provisions of this Section 8 and Section 14
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Collateral Agent under this Security Agreement. Notwithstanding the
foregoing, if no successor collateral agent shall be appointed as aforesaid, or
if appointed, such successor shall not have accepted its appointment within
thirty (30) days after resignation of the Collateral Agent, the Collateral Agent
may petition a court of competent jurisdiction to make such appointment.
8.07. Delivery of Collateral and Permitted Investments. All
finance contracts representing or evidencing the Collateral and Permitted
Investments from time to time shall be delivered to and held by or on behalf of
the Collateral Agent pursuant hereto and shall, in the case of the Collateral,
be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank. Each Secured Party
hereby appoints the Collateral Agent as its agent for the purpose of holding any
Auto Loans and Permitted Investments. The Collateral Agent shall be the agent of
the Secured Parties and of the Borrower. The Collateral Agent shall not release
possession of any Auto Loans or any documents related thereto except (a) upon
receipt of a trust receipt substantially in the form attached hereto as Exhibit
B obligating the Servicer or AutoBond, acting as Collection Agent under the
Servicing Agreement, to hold same in trust for the benefit of the Secured
Parties and obligating the Servicer or AutoBond, as the case may be, to return
same when the need therefor no longer exists, (b) upon receipt of written
notification from the Servicer pursuant to Section 2.07 of the Servicing
Agreement that the Auto Loan has been paid in full, (c) in connection with a
Disposition or other prepayment in full of Advances or (d) in connection with
any repurchase by AutoBond in accordance with the terms of the Loan Acquisition
Agreement upon the receipt by the Collateral Agent of the Repurchase Price.
8.08. Duties and Covenants of Collateral Agent.
(a) The Collateral Agent undertakes to perform the duties as
are set forth in this Agreement, including, without limitation:
(i) upon the request of AutoBond and/or the Servicer,
providing information reasonably within its possession and within
reasonable time constraints regarding payments and receipt of funds
from and to AutoBond and the Servicer;
(ii) acting as custodian of all documents delivered to it
related to the Collateral;
21
(iii) depositing funds received by it, whether as
proceeds of Advances, as collections on Auto Loans, as proceeds of
repossession or otherwise in accordance with the terms of this
Agreement;
(iv) making payments from amounts held in the Collateral
Account, whether on the Advances, to the Servicer, to AutoBond or
otherwise based solely upon timely receipt of remittance information
from the Borrower, the Lenders, the Servicer and AutoBond in accordance
with the terms of this Agreement;
(v) upon the request of the Servicer, providing
information reasonably within its possession and within reasonable time
constraints regarding servicing, repossession and insurance with
respect to the Auto Loans to the Servicer;
(vi) providing the collateral agent report,
substantially in form of Exhibit C hereto, with respect to the Auto
Loans on or before the fifteenth (15th) day of each month (or if such
fifteenth day is not a Business Day, the next succeeding business day),
except in the case where the seventh (7th) Business Day of such month
falls on or after the eleventh (11th) day of the month, in which case,
the collateral agent report shall be provided on or before the
seventeenth (17th) day of such month (or if such seventeenth day is not
a Business Day, on the next succeeding Business Day); and
(vii) providing to the Borrower and the Servicer, a
monthly report summarizing each application for title with respect to
any Automobile securing a Specified Auto Loan for which the Collateral
Agent has not received a new title certificate from the appropriate
state agency;
(b) The Collateral Agent covenants and agrees that it will:
(i) not directly or indirectly create, incur, assume or
suffer to exist any Lien against the Collateral or any part thereof
other than as set forth herein;
(ii) upon receipt of written notice from the Servicer
that an Auto Loan has been paid in full (to the extent such amounts
have been deposited in the Collection Account), execute and return to
the Servicer documents prepared and furnished to the Collateral Agent
by the Servicer as shall be necessary to release the lien over the
related Automobile;
(iii) upon receipt pursuant to the Servicing Agreement of
the Servicer Report, annual financial statements or monthly compliance
statements, promptly forward a copy of such documents to the Lender;
22
(iv) upon the written direction of a Lender, request
from the Servicer certification evidencing the fidelity bond and
insurance coverage required by the Servicing Agreement and upon receipt
shall forward such certification to the Lender and the Borrower;
(v) upon receipt from the Servicer of a written notice
of cancellation or modification of the fidelity bond and insurance
coverage required by the Servicing Agreement, promptly forward a copy
of such notice to the Lender and the Borrower;
(vi) upon the written direction of the Lender (or, if
multiple Lenders, the Lenders in respect of a majority in aggregate
principal amount of the Advances outstanding), consent to a change in
business, merger, consolidation or disposition of assets of the
Servicer;
(vii) upon a Responsible Officer obtaining actual
knowledge of the occurrence of a change in business, merger,
consolidation or disposition of assets by the Servicer, promptly give
notice of such event to the Lender and the Borrower and, if directed to
do so by the Lender (or, if multiple Lenders, the Lenders in respect of
a majority in aggregate principal amount of the Advances outstanding),
terminate the responsibilities of the Servicer, in accordance with the
Servicing Agreement;
(viii) upon a Responsible Officer obtaining actual
knowledge of the occurrence of an Event of Servicing Termination or an
Event of Default, promptly give notice to the Lender and the Borrower
of such occurrence;
(ix) upon the written direction of the Lender (or, if
multiple Lenders, the Lenders in respect of a majority in aggregate
principal amount of the Advances outstanding), deliver notice to the
Servicer stating that an Event of Servicing Termination has occurred
and thereby terminate the responsibilities of the Servicer under the
Servicing Agreement; and
(x) upon a Responsible Officer obtaining actual
knowledge of the occurrence of an event the occurrence of which
together with notice to the appropriate party would constitute an Event
of Servicing Termination, Event of Purchase Termination or an Event of
Default, promptly give notice of the occurrence of such event to the
Lender and the Borrower.
8.09. Annual Report and Quarterly Certificate. The Collateral
Agent shall deliver to the Lender as soon as available, but in any event within
120 days after the end of each of its fiscal years, a consolidated and
consolidating balance sheet of it or its parent and its subsidiaries, if any, as
at such last day of the fiscal year, consolidated statements of income and
23
retained earnings and statements of cash flow, for each such fiscal year, each
prepared in accordance with generally accepted accounting principles, in
reasonable detail, and as to the consolidated statements, certified without
qualification by an independent public accountant, who may also render other
services to the Collateral Agent or any of its affiliates.
8.10. Delivery of Documents. On or before the Initial Closing
Date, the Collateral Agent shall have delivered to the Borrower and the Lender
the following, in form and substance satisfactory to the Borrower and the
Lender:
(a) a certificate of an assistant secretary of the Collateral
Agent certifying as to certain corporate matters in a format acceptable
to the Lender; and
(b) a certificate of an officer of the Collateral Agent as to
the establishment of the Loan Purchase Account, the Collection Account
and the Reserve Account.
8.11. Instructions of the Lender. Whenever the Collateral
Agent is required to consent to any action hereunder or under the Servicing
Agreement, the Collateral Agent shall so notify the Lenders and shall act in
accordance with the written instructions of Lenders holding 51% of Advances
outstanding.
SECTION 9. AMENDMENTS AND WAIVERS.
With the written consent of AutoBond (such consent not to be
unreasonably withheld) and the Lenders in respect of a majority in aggregate
principal amount of Advances outstanding, the Collateral Agent and the Borrower
may, from time to time, enter into written amendments, supplements or
modifications hereto for the purpose of adding any provision to this Security
Agreement or changing in any manner the rights of the Collateral Agent or the
Borrower hereunder, and, with the written consent of (a) on or prior to the
Initial Closing Date, the Lender and (b) after the Initial Closing Date, the
Lenders in respect of at least 66-2/3% in aggregate principal amount of Advances
outstanding, the Collateral Agent on behalf of the Secured Parties may execute
and deliver to the Borrower a written instrument waiving, on such terms and
conditions as may be specified in such instrument, any of the requirements of
this Security Agreement; provided, however, that no such waiver and no such
amendment, supplement or modification shall (a) amend the definition of Secured
Parties or amend, modify or waive any provision of Section 6 hereof or this
Section 9 without the written consent of each Secured Party whose rights under
this Security Agreement would be affected thereby, or (b) amend, modify or waive
any provision of Section 8 or otherwise alter the duties, rights or obligations
of the Collateral Agent without the written consent of all the Secured Parties.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each
24
of the Secured Parties and shall be binding upon the Borrower, the Secured
Parties and the Collateral Agent.
In executing any supplement, amendment or modification of this
Security Agreement, the Collateral Agent shall be entitled to receive and shall
be fully protected in relying upon an opinion of counsel stating that the
execution of such supplement, amendment or modification is authorized or
permitted by this Section 9. The Collateral Agent may, but shall not be
obligated to, enter into any such supplement, amendment or modification that
affects the Collateral Agent's own rights, duties or immunities under this
Security Agreement or otherwise.
The Borrower and the Secured Parties agree not to execute any
supplement, amendment or modification to any Program Document to which the
Collateral Agent is not a party, without the prior written consent of the
Collateral Agent, if the effect of such supplement, amendment or modification
would be to affect the Collateral Agent's rights, duties, or immunities under
this Security Agreement, and they agree to promptly forward to the Collateral
Agent any such supplement, amendment or modification.
SECTION 10. NOTICES.
Unless otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or when deposited
in the mail, postage prepaid, or in the case of telegraphic notice, when
delivered to the telegraph company, or, in the case of facsimile notice, when
sent, confirmation received, addressed as follows, or to such other addresses as
may be hereafter notified by the respective parties hereto:
The Borrower:
AutoBond Funding Corporation II
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
25
AutoBond:
AutoBond Acceptance Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxx
Telecopy: (000) 000-0000
The Collateral Agent:
Norwest Bank Minnesota, National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Services - Asset Backed
Administration
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
To the Lenders at the address as the Lenders shall have furnished to the
Borrower (with a copy to the Collateral Agent) in writing;
provided, that any notice to or upon the Borrower shall be deemed to have been
duly given or made as aforesaid when so given or made to the Borrower whether or
not any other party indicated above as the recipient of a copy thereof shall
have received a copy of each notice.
SECTION 11. LIMITATION ON COLLATERAL AGENT'S DUTY IN RESPECT OF
COLLATERAL.
Except as set forth herein and beyond the safe custody
thereof, the Collateral Agent shall not have any duty as to any Collateral in
its possession or control or the possession or control of any agent or nominee
of it or any income thereof or as to the preservation of rights against prior
parties or any other rights pertaining thereto.
26
SECTION 12. SEVERABILITY.
Any provision of this Security Agreement which is prohibited
or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidation of the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13. NO WAIVER; CUMULATIVE REMEDIES.
Neither the Collateral Agent nor the Secured Parties shall by
any act, delay, omission or otherwise be deemed to have waived any of its or
their rights or remedies hereunder and no waiver shall be valid unless in
writing, signed by the Collateral Agent on behalf of the Secured Parties, and
then only to the extent therein set forth. A waiver by the Collateral Agent of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Collateral Agent or the Secured Parties
would otherwise have had on any future occasion. No failure to exercise nor any
delay in exercising on the part of the Collateral Agent or the Secured Parties
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law.
SECTION 14. PAYMENT OF EXPENSES AND TAXES.
(a) The Borrower hereby agrees to pay to the Collateral Agent
a fee for its services hereunder equal to the Collateral Agent Fee. AutoBond
agrees to pay, indemnify, and to hold the Collateral Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp and other similar taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Security Agreement, and any such other
documents, and to pay, indemnify, and hold the Collateral Agent and its
officers, directors, shareholders, employees, agents and representatives
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Security Agreement and any
such other documents (including, but not limited to, those incurred by any
negligent act or negligent omission to act of the Collateral Agent) (all the
foregoing, collectively, the "indemnified liabilities"); provided, that AutoBond
shall not be liable to the
27
Collateral Agent for any (i) losses incurred by the Collateral Agent as a result
of the fraudulent actions, misrepresentations, negligence or willful misconduct
of the Collateral Agent or (ii) 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 Collateral Agent with respect to its receipt of the Collateral
Agent Fee hereunder (including any liabilities, costs or expenses with respect
thereto). The obligations of AutoBond under this Section 14 shall survive the
termination of this Security Agreement and the discharge of the other
obligations of AutoBond hereunder and also shall survive the resignation or
removal of the Collateral Agent hereunder.
(b) Promptly after receipt by the Collateral Agent of notice
of the commencement of any action, such Collateral Agent shall, if a claim in
respect thereof is to be made against AutoBond under this Section 14, notify
AutoBond in writing of the commencement thereof; but the omission so to notify
AutoBond will not relieve AutoBond from any liability which it may have to the
Collateral Agent except to the extent AutoBond is prejudiced thereby. In case
any action is brought against the Collateral Agent, and it notifies AutoBond of
the commencement thereof, AutoBond will be entitled to appoint counsel
satisfactory to AutoBond (who shall not, except with the consent of the
Collateral Agent, be counsel to the Borrower or AutoBond) to represent the
Collateral Agent in such action; provided, however, that, if the defendants in
any action include both the Collateral Agent and AutoBond and the Collateral
Agent shall have reasonably concluded that there may be legal defenses available
to it which are different from or additional to those available to AutoBond, the
Collateral Agent shall have the right to select separate counsel to defend such
action on behalf of it. Upon receipt of notice from AutoBond to the Collateral
Agent of its election so to appoint counsel to defend such action and approval
by the Collateral Agent of such counsel, AutoBond will not be liable to the
Collateral Agent under this Section 14 for any legal or other expenses
subsequently incurred by the Collateral Agent in connection with the defense
thereof unless (i) the Collateral Agent shall have employed separate counsel in
accordance with the proviso to the next preceding sentence, (ii) AutoBond shall
not have employed counsel satisfactory to the Collateral Agent to represent the
Collateral Agent within a reasonable time after notice of commencement of the
action or (iii) AutoBond has authorized the employment of counsel for the
Collateral Agent at the expense of AutoBond; 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 14 is
unavailable or insufficient to hold harmless the Collateral Agent under
subsection (a) or (b) above, then AutoBond shall contribute to the amount paid
or payable by the Collateral Agent as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by AutoBond on the one
hand
28
and the Collateral Agent 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 AutoBond on the one hand and the Collateral Agent 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 Collateral Agent and AutoBond 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 AutoBond 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 Collateral Agent in connection with investigating or defending
any action or claim which is the subject of this subsection (c). No person found
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 Borrower, AutoBond and the
Collateral Agent under this Section 14 shall be in addition to any liability
which each of them may otherwise have.
(e) The agreement, indemnities and other statements of the
parties hereto in or made pursuant to this Section 14 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 14. The
provisions of this Section 14 shall survive the termination or cancellation of
this Agreement.
SECTION 15. SUCCESSORS AND ASSIGNS; GOVERNING LAW.
This Security Agreement and all obligations of the Borrower
hereunder shall be binding upon the successors and assigns of the Borrower, and
shall, together with the rights and remedies of the Collateral Agent hereunder,
inure to the benefit of the Collateral Agent, the Secured Parties and their
respective successors and assigns.
THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
29
SECTION 16. ENFORCEMENT RIGHTS OF LENDERS.
Unless the Collateral Agent shall fail to take action required
to be taken by it under the terms of this Agreement, no Lender shall have any
right directly to enforce the security interests granted by this Security
Agreement. No Lender shall have any right to require the Collateral Agent to
take or fail to take any action under this Security Agreement, except as
otherwise provided in this Security Agreement.
SECTION 17. BANKRUPTCY PETITION AGAINST THE BORROWER.
The Collateral Agent hereby covenants and agrees that, until
the expiration of the later of (a) the date which is one year and one day after
the payment in full of all outstanding Advances, and (b) 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 a Disposition, it will not
institute against, or join any other Person in instituting against, the Borrower
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION 18. MISAPPLICATION OF FUNDS.
The Collateral Agent agrees that any funds incorrectly paid to
it by the Borrower shall be promptly returned to the Borrower upon receipt of
written notice from the Borrower that such funds were incorrectly paid to the
Collateral Agent prior to the Collateral Agent's transfer of such funds in
accordance with this Agreement. The Collateral Agent shall be completely
protected against any liability for returning such funds in reliance on such
written notice that funds were incorrectly paid.
SECTION 19. COUNTERPART SIGNATURES.
This Agreement may be executed and delivered to you
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 20. THIRD PARTY BENEFICIARY.
For all purposes of this Agreement, each of the Lenders shall
be a third party beneficiary of the agreements and covenants herein contained
and the Servicer shall be a third party beneficiary of the provisions of this
Agreement which specify the amount and priority of payment of the Servicer Fee.
30
SECTION 21. STATUS OF COLLATERAL AGENT.
The parties hereto acknowledge and agree that upon payment in
full of all amounts owing under the Credit Agreement and the release of the
Secured Parties' security interest in the Collateral, the rights of the
Collateral Agent to indemnification and payment of its fees and expenses under
this Agreement shall continue.
SECTION 22. ACTS OF LENDERS.
(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 Collateral Agent. 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 22.
(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 Collateral Agent
deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Lender shall bind the Lender in respect
of anything done, omitted or suffered to be done by the Collateral Agent in
reliance thereon, whether or not notation of such action is made upon the Note.
31
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be executed by their duly authorized officers as of the
date first set forth above.
AUTOBOND FUNDING CORPORATION II
By: /s/ Xxxxxx Xxxx
---------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
AUTOBOND ACCEPTANCE CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Secretary
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Collateral Agent
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Corporate Trust Officer
32
EXHIBIT A
[FORM OF COLLATERAL ASSIGNMENT]
COLLATERAL ASSIGNMENT, dated as of __________, 199_ among AutoBond
Funding Corporation II (the "Borrower"), AutoBond Acceptance Corporation
("AutoBond") and Norwest Bank Minnesota, National Association, as Collateral
Agent (the "Collateral Agent").
1. We refer to the Security Agreement (the "Security Agreement"), dated
as of February 1, 1997, by and among the Borrower, AutoBond Acceptance
Corporation and acknowledged by Daiwa Finance Corporation, as Initial Lender.
All provisions of such Security Agreement are incorporated by reference. All
capitalized terms shall have the meanings set forth in the Security Agreement.
2. As security for the prompt, complete and unconditional payment and
performance of all obligations of the Borrower in respect of the Advances, the
Borrower hereby pledges, assigns, transfers and delivers to the Collateral Agent
for the benefit of the Secured Parties, and grants to the Collateral Agent for
the benefit of the Secured Parties, a continuing first lien on, and first and
prior security interest in, all of the Borrower's title and interest in, to and
under following:
(i) each Specified Auto Loan listed on Schedule 1
hereto, including without limitation, all rights to payments
thereunder, purchased by or otherwise conveyed to or established by the
Borrower pursuant to the Loan Acquisition Agreement;
(ii) each Financed Vehicle and all other Property, now
or hereafter acquired, securing or evidenced by, each such Specified
Auto Loan, including, without limitation, the certificate of title
relating to each Automobile, any insurance proceeds with respect to any
such Financed Vehicle or such Specified Auto Loan, the proceeds of any
repossession and liquidation of any such Financed Vehicles, rights
under judgments with respect to defaulted obligors, rights to
deficiency judgments with respect to defaulted obligors and rights
under any service contracts with respect to any such Financed Vehicle;
(iii) any proceeds of any insurance policy purchased by
the Borrower in respect of each such Specified Auto Loan;
(iv) the Loan Files; and
A-1
(v) all Proceeds of any of the foregoing.
3. Each of AutoBond and the Borrower does hereby certify:
(i) the representations and warranties of the Borrower set
forth in Sections 2.1 and 2.3(a) of the Credit Agreement and
AutoBond in Sections 2.2 and 2.3(a) of the Credit Agreement,
are true and correct on and as of the date hereof, before and
after giving effect to the transfer evidenced hereby and to
the application of the proceeds therefrom, as though made on
and as of such date;
(ii) no event has occurred, or would result from such
assignment or from the application of the proceeds therefrom,
which constitutes an Event of Default or a Funding Termination
Event or would constitute an Event of Default or a Funding
Termination Event but for the requirement that notice be given
or time elapse or both;
(iii) each of AutoBond and the Borrower is in compliance
with each of its covenants set forth in the Credit Agreement
and the Security Agreement; and
(iv) the aggregate Unpaid Principal Balance of the
Specified Auto Loans listed on Schedule 1 hereto to be
transferred by the Borrower pursuant to this Collateral
Assignment is $__________.
IN WITNESS WHEREOF, the parties have caused this Collateral
Assignment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
AUTOBOND FUNDING CORPORATION II, as
Borrower
By:
----------------------------------------
Name:
Title:
AUTOBOND ACCEPTANCE CORPORATION
By:
----------------------------------------
Name:
Title:
A-2
Accepted:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Collateral Agent
By:
---------------------------------
A-3
Schedule 1
to
Collateral Assignment dated _____________, 1997
A-4
EXHIBIT B
TRUST RECEIPT
[DATE]
AutoBond Funding Corporation II Norwest Bank Minnesota, N.A.
000 Xxxxx Xxxxxx Xxxxxx Sixth and Xxxxxxxxx Xxxxxx
Xxxxx 000 Xxxxxxxxxxx, XX 00000-0000
Xxx Xxxxx, Xxxxxx 00000
Re: Servicing Agreement, dated as of
January 31, 1997 (the "Servicing Agreement")
among AutoBond Funding Corporation II,
AutoBond Acceptance Corporation, CSC Logic/
MSA L.L.P. and Norwest Bank Minnesota,
National Association
Ladies and Gentlemen:
In accordance with Section 2.07 of the Servicing Agreement,
the undersigned hereby certifies that it has taken possession of the items set
forth on Annex I hereto with respect to the Auto Loans identified below. The
undersigned (i) confirms that it holds such items in trust for the benefit of
the Lender and (ii) agrees to promptly return such items to the Collateral Agent
after its need for possession of them ceases, except for title and security
instruments which the undersigned is required under applicable law to otherwise
deal with in furtherance of its duties under the Servicing Agreement.
Auto Loans:
[CSC LOGIC/MSA L.L.P. or
AutoBond Acceptance Corporation]
By:
--------------------------------
Name:
Title:
B-1
EXHIBIT C
FORM OF COLLATERAL AGENT REPORT
The undersigned, a duly authorized representative of Norwest Bank
Minnesota, National Association, as collateral agent pursuant to the Security
Agreement, dated as of February 1, 1997 (the "Security Agreement"), between
AutoBond Funding Corporation II, AutoBond Acceptance Corporation and Norwest
Bank Minnesota, National Association, does hereby certify as follows:
1. Aggregate amount on deposit in the Loan Purchase Account
as of the end of the most recent Collection Period.................................$_______________.
2. Aggregate amount on deposit in the Collection Account
as of the end of the most recent Collection Period.................................$_______________.
3. Aggregate amount on deposit in the Reserve Account
as of the end of the most recent Collection Period.................................$_______________.
4. The Reserve Account Required Balance as reported in
the most recent Servicer's Report..................................................$_______________.
Capitalized terms used in this Certificate have their meanings set
forth in the Security Agreement. This Certificate is delivered pursuant to
Section 8.08 of the Security Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this ____ day of __________, ____.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Collateral Agent
By:
--------------------------
Name:
Title:
C-1
