EXHIBIT 4(f)60
EXECUTION COPY
AMENDED AND RESTATED TRUST AGREEMENT
between
CREDIT ACCEPTANCE FUNDING LLC 2004-1
Seller
and
WACHOVIA BANK OF DELAWARE, NATIONAL ASSOCIATION
Owner Trustee
Dated as of August 25, 2004
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions.......................................................................................... 1
SECTION 1.1. Capitalized Terms.............................................................................. 1
SECTION 1.2. Other Definitional Provisions.................................................................. 2
ARTICLE II Organization........................................................................................ 3
SECTION 2.1. Declaration of Trust; Name..................................................................... 3
SECTION 2.2. Office......................................................................................... 3
SECTION 2.3. Purposes and Powers............................................................................ 3
SECTION 2.4. Appointment of Owner Trustee................................................................... 4
SECTION 2.5. Capital Contribution of Trust Estate........................................................... 4
SECTION 2.6. Status of Trust Under Statutory Trust Act; Certain Income Tax Matters.......................... 5
SECTION 2.7. Liability of Seller............................................................................ 5
SECTION 2.8. Appointment of Trust Collateral Agent; Title to Trust Property................................. 5
SECTION 2.9. Situs of Trust................................................................................. 6
SECTION 2.10. Representations and Warranties of the Seller.................................................. 6
SECTION 2.11. Federal Income Tax Treatment of the Trust..................................................... 7
SECTION 2.12. Covenants of the Seller....................................................................... 8
SECTION 2.13. Covenants of the Certificateholders........................................................... 11
ARTICLE III Certificates and Transfer of Interests............................................................. 12
SECTION 3.1. Initial Ownership.............................................................................. 12
SECTION 3.2. The Certificates............................................................................... 12
SECTION 3.3. Authentication of Certificates................................................................. 12
SECTION 3.4. Registration of Transfer and Exchange of Certificates.......................................... 12
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.............................................. 14
SECTION 3.6. Persons Deemed Certificateholders.............................................................. 14
SECTION 3.7. Access to List of Certificateholders' Names and Addresses...................................... 14
SECTION 3.8. Distributions.................................................................................. 15
SECTION 3.9. ERISA Restrictions............................................................................. 15
ARTICLE IV Voting Rights and Other Actions..................................................................... 15
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters........................................ 15
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters................................... 18
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy........................................ 18
SECTION 4.4. Restrictions on Certificateholders' Power...................................................... 19
SECTION 4.5. Majority Control............................................................................... 19
SECTION 4.6. Rights of the Controlling Party................................................................ 20
ARTICLE V Certain Duties....................................................................................... 20
SECTION 5.1. Accounting and Records to the Certificateholders, the Internal Revenue Service and Others...... 20
SECTION 5.2. Signature on Returns; Tax Matters Partner...................................................... 20
i
ARTICLE VI Authority and Duties of Owner Trustee............................................................... 21
SECTION 6.1. General Authority.............................................................................. 21
SECTION 6.2. General Duties................................................................................. 21
SECTION 6.3. Action upon Instruction........................................................................ 21
SECTION 6.4. No Duties Except as Specified in this Agreement or in Instructions............................. 22
SECTION 6.5. No Action Except under Specified Documents or Instructions..................................... 23
SECTION 6.6. Restrictions................................................................................... 23
ARTICLE VII Concerning the Owner Trustee....................................................................... 23
SECTION 7.1. Acceptance of Trusts and Duties................................................................ 23
SECTION 7.2. Furnishing of Documents........................................................................ 25
SECTION 7.3. Representations and Warranties................................................................. 25
SECTION 7.4. Reliance; Advice of Counsel.................................................................... 25
SECTION 7.5. Not Acting in Individual Capacity.............................................................. 26
SECTION 7.6. Owner Trustee Not Liable for Certificates or Contracts......................................... 26
SECTION 7.7. Owner Trustee May Own Certificates and Notes................................................... 27
SECTION 7.8. Payments from Trust Property................................................................... 27
SECTION 7.9. Doing Business in Other Jurisdictions.......................................................... 27
ARTICLE VIII Compensation of Owner Trustee..................................................................... 27
SECTION 8.1. Owner Trustee's Fees and Expenses.............................................................. 27
SECTION 8.2. Indemnification................................................................................ 28
SECTION 8.3. Payments to the Owner Trustee.................................................................. 28
SECTION 8.4. Non-Recourse Obligations....................................................................... 29
ARTICLE IX Termination of Trust Agreement...................................................................... 29
SECTION 9.1. Termination of Trust Agreement................................................................. 29
ARTICLE X Successor Owner Trustees and Additional Owner Trustees............................................... 30
SECTION 10.1. Eligibility Requirements for Owner Trustee.................................................... 30
SECTION 10.2. Resignation or Removal of Owner Trustee....................................................... 31
SECTION 10.3. Successor Owner Trustee....................................................................... 32
SECTION 10.4. Merger or Consolidation of Owner Trustee...................................................... 32
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee................................................. 33
ARTICLE XI Miscellaneous....................................................................................... 34
SECTION 11.1. Supplements and Amendments.................................................................... 34
SECTION 11.2. Limitations on Rights of Others............................................................... 35
SECTION 11.3. Notices....................................................................................... 35
SECTION 11.4. Severability.................................................................................. 36
SECTION 11.5. Separate Counterparts......................................................................... 36
SECTION 11.6. Assignments; Class A Insurer, Backup Insurer.................................................. 36
SECTION 11.7. No Petition................................................................................... 36
SECTION 11.8. No Recourse................................................................................... 36
SECTION 11.9. Headings...................................................................................... 37
SECTION 11.10. GOVERNING LAW................................................................................ 37
SECTION 11.11. Servicer..................................................................................... 37
ii
SECTION 11.12. Controlling Party............................................................................ 37
EXHIBITS
EXHIBIT A FORM OF CERTIFICATE
EXHIBIT B FORM OF CERTIFICATE OF TRUST
iii
This AMENDED AND RESTATED TRUST AGREEMENT dated as of August 25,
2004 between CREDIT ACCEPTANCE FUNDING LLC 2004-1, a Delaware limited liability
company (the "Seller"), and WACHOVIA BANK OF DELAWARE, NATIONAL ASSOCIATION, a
national banking association, as Owner Trustee (solely in such capacity and not
in its individual capacity, the "Owner Trustee").
PRELIMINARY STATEMENT
The Owner Trustee has executed and caused to be filed with the
Delaware Secretary of State the Certificate of Trust relating to the Trust, on
August 11, 2004. The Owner Trustee and the Seller heretofore entered into an
Interim Trust Agreement dated August 11, 2004 relating to the Trust and desire
to enter into this Amended and Restated Trust Agreement in order to amend and
restate such Interim Trust Agreement.
ARTICLE I
Definitions
SECTION 1.1. Capitalized Terms.
For all purposes of this Agreement, the following terms shall have
the meanings set forth below:
"Agreement" shall mean this Amended and Restated Trust Agreement, as
the same may be amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.9.
"Certificate" means a Trust Certificate.
"Certificate of Trust" shall mean the certificate of trust for the
Trust filed on August 11, 2004, as amended and /or restated from time to time, a
copy of which is attached hereto as Exhibit B.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
One ▇▇▇▇▇▇ Square, 920 No. King Street, 1st Floor, Wilmington, Delaware 19801 or
at such other address as the Owner Trustee may designate by notice to the
Certificateholders, the Class A Insurer, the Backup Insurer and the Seller, or
the principal corporate trust office of any successor Owner Trustee (the address
of which the successor owner trustee will notify the Certificateholders, the
Class A Insurer, the Backup Insurer and the Seller).
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name
a Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.2.
"Majority Certificateholders" shall have the meaning specified in
Section 4.5 hereof.
"Owner Trustee" shall mean Wachovia Bank of Delaware, National
Association, a national banking association, not in its individual capacity but
solely as owner trustee under this Agreement, and any successor Owner Trustee
hereunder.
"Percentage Interest" means, with respect to any Certificates, the
undivided percentage ownership of the Certificates evidenced by such
Certificate, as set forth in such Certificate.
"Record Date" means, with respect to a Distribution Date, the last
day of the calendar month preceding such Distribution Date; provided that the
Record Date with respect to the First Distribution Date shall be the Closing
Date.
"Seller" shall mean Credit Acceptance Funding LLC 2004-1 in its
capacity as Seller hereunder.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, the Seller, the Servicer, the Trust Collateral Agent
and Backup Servicer, dated as of August 25, 2004, as the same may be amended and
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Securityholders" shall mean the Certificateholders and the Class A
Noteholders.
"Statutory Trust Act" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq. as the same may be amended from
time to time.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" means a Certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
2
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
ARTICLE II
Organization
SECTION 2.1. Declaration of Trust; Name.
There is hereby formed a trust to be known as "Credit Acceptance
Auto Dealer Loan Trust 2004-1", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust, and ▇▇▇ and be sued.
SECTION 2.2. Office.
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address as the Owner Trustee may
designate by written notice to the Certificateholders, the Class A Insurer, the
Backup Insurer and the Seller.
SECTION 2.3. Purposes and Powers.
(a) The purpose of the Trust is, and the Trust shall have the
power and authority, to engage in the following activities:
3
(i) to issue the Class A Notes pursuant to the Indenture
and the Certificates pursuant to this Agreement, and to sell the Class A
Notes and the Certificates;
(ii) with the proceeds of the sale of the Class A Notes
and the Certificates, to fund the Reserve Account and to pay the
organizational, start-up and transactional expenses of the Trust and to
pay the balance to the Seller pursuant to the Sale and Servicing
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Trust Property to the Trust Collateral Agent pursuant to the
Sale and Servicing Agreement for the benefit of the Securityholders, the
Class A Insurer, the Backup Insurer and the Seller pursuant to the terms
of the Sale and Servicing Agreement;
(iv) to enter into, execute and perform its obligations
under the Basic Documents to which it is a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith;
(vi) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Property and the making of distributions to the
Certificateholders, the Class A Insurer, the Backup Insurer and the Class
A Noteholders; and
(vii) at any time to enter into derivatives
transactions.
The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.4. Appointment of Owner Trustee.
Pursuant to the Interim Trust Agreement, the Seller appointed the
Owner Trustee as trustee of the Trust effective as of the date of the Interim
Trust Agreement, to have all the rights, powers and duties set forth therein.
The Owner Trustee by its execution hereof accepts and confirms such appointment
and shall have all of the rights, powers and duties set forth herein and
therein.
SECTION 2.5. Capital Contribution of Trust Estate.
Pursuant to the Interim Trust Agreement, the Seller sold, assigned,
transferred, conveyed and set over to the Owner Trustee the sum of $1.00. The
Owner Trustee hereby acknowledges receipt in trust from the Seller, as of the
date of the Interim Trust Agreement, of the foregoing contribution, which shall
constitute the initial Trust Property and shall be deposited with the Trust
Collateral Agent for deposit in the Certificate Distribution Account.
4
SECTION 2.6. Status of Trust Under Statutory Trust Act; Certain Income Tax
Matters.
The Owner Trustee hereby declares that it will hold the Trust
Property in trust upon and subject to the conditions set forth herein for the
use and benefit of the Securityholders, the Class A Insurer, the Backup Insurer
and the Seller, subject to the obligations of the Trust under Basic Documents.
It is the intention of the parties hereto that the Trust constitute a statutory
trust under the Statutory Trust Act and that this Agreement constitute the
governing instrument of such statutory trust. Should the Certificates be held by
more than one Holder, it is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership
with the owners of the Certificates being partners in such partnership for
federal income tax purposes. Effective as of the date hereof, the Owner Trustee
shall have all rights, powers and duties set forth herein and to the extent not
inconsistent herewith, in the Statutory Trust Act with respect to accomplishing
the purposes of the Trust. The Owner Trustee has filed the Certificate of Trust
with the Secretary of State.
SECTION 2.7. Liability of Seller.
The Seller shall pay organizational expenses of the Trust as they
may arise or shall, upon the request of the Owner Trustee and upon receipt of
documentation or invoices therefor, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
SECTION 2.8. Appointment of Trust Collateral Agent; Title to Trust
Property.
(a) [Reserved]
(b) The specific rights, duties and obligations of the Trust
Collateral Agent shall be as set forth in the Sale and Servicing Agreement. Upon
the issuance of the Class A Notes and the Certificates, the Seller shall have
only such rights with respect to the Trust Collateral Agent as shall be
specified in the Sale and Servicing Agreement.
(c) Subject to the lien of the Indenture, legal title to all
the Trust Property shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Trust Property to be vested in a trustee or trustees, a co-trustee
and/or a separate trustee, in which case title shall be deemed to be vested in
the Owner Trustee or a separate trustee, as the case may be. The Holders shall
not have legal title to any part of the Trust Property. The Holders shall be
entitled to receive distributions with respect to their beneficial ownership
interest therein only in accordance with Article V of the Sale and Servicing
Agreement and Article IX hereof. No transfer, by operation of law or otherwise,
of any right, title or interest by any Certificateholder of its ownership
interest in the Trust Property shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Trust Property.
(d) Pursuant to Section 3803 of the Statutory Trust Act, the
Holders shall be entitled to the same limitation of personal liability extended
to stockholders of private corporations organized under the General Corporation
Law of the State of Delaware.
5
SECTION 2.9. Situs of Trust.
The Trust will be located and administered in the State of Delaware.
The Trust shall not have any employees; provided, however, that nothing herein
shall restrict or prohibit the Owner Trustee, the Servicer, the Backup Servicer,
or any agent of the Trust from having employees within or without the State of
Delaware. The only office of the Trust will be at the Corporate Trust Office in
Delaware.
SECTION 2.10. Representations and Warranties of the Seller.
The Seller makes the following representations and warranties on
which the Owner Trustee relies in accepting the Trust Property in trust and
issuing the Certificates and on which the Class A Insurer relies in issuing the
Class A Note Insurance Policy and on which the Backup Insurer relies in issuing
the Backup Insurance Policy.
(a) Organization and Good Standing. The Seller is duly
organized and validly existing as a Delaware limited liability company with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted and is
proposed to be conducted pursuant to this Agreement and the Basic Documents.
(b) Due Qualification. The Seller is duly qualified to do
business as a limited liability company in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of its property, the conduct of its business and the performance of its
obligations under this Agreement and the Basic Documents requires such
qualification.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Seller has full
power and authority to sell and assign the property to be sold and assigned to
and deposited with the Trust and the Seller has duly authorized such sale and
assignment and deposit to the Trust by all necessary action; and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Seller by all necessary
action.
(d) Enforceability. The Seller has duly executed and delivered
this Agreement and the other Basic Documents to which it is a party and this
Agreement and the other Basic Documents to which it is a party constitute legal,
valid and binding obligations of the Seller, enforceable against Seller in
accordance with their terms, and subject to applicable bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws now or
hereafter in effect relating to creditors' rights generally or the rights of
creditors of banks the deposit accounts of which are insured by the Federal
Deposit Insurance Corporation and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Basic Documents,
except for such as have been obtained, effected or made.
6
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which it is a
party and the fulfillment of the terms hereof and thereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the certificate of
formation or the limited liability company agreement of the Seller, or any
material indenture, agreement or other instrument to which the Seller is a party
or by which it is bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic Documents); nor
violate any law or any order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties (A) asserting the
invalidity of this Agreement or any of the Basic Documents, (B) seeking to
prevent the issuance of the Certificates or the Class A Notes or the
consummation of any of the transactions contemplated by this Agreement or any of
the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect its performance of its obligations under, or the
validity or enforceability of, this Agreement or any of the Basic Documents, or
(D) seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificates or the Class A Notes.
SECTION 2.11. Federal Income Tax Treatment of the Trust.
(a) For so long as the Trust has a single owner for federal
income tax purposes, it will, pursuant to Treasury Regulations promulgated under
Section 7701 of the Code, be disregarded as an entity distinct from the
Certificateholder for all federal income tax purposes. Accordingly, for federal
income tax purposes, the Certificateholder will be treated as (i) owning all
assets owned by the Trust, (ii) having incurred all liabilities incurred by the
Trust, and (iii) all transactions between the Trust and the Certificateholder
will be disregarded.
(b) Neither the Owner Trustee nor any Certificateholder will,
under any circumstances, and at any time, make an election on IRS Form 8832 or
otherwise, to classify the Trust as an association taxable as a corporation for
federal, state or any other applicable tax purpose.
(c) In the event that the Trust has two or more equity owners
for federal income tax purposes, the Trust will be treated as a partnership. In
such event, unless otherwise required by appropriate tax authorities, the Trust
and the owners of the Certificates, will file or cause to be filed annual or
other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership. At any such time that the Trust
has two or more equity owners, this Agreement may need to be amended, in
accordance with Section 11.1 herein, and appropriate provisions may need to be
added so as to provide for treatment of the Trust as a partnership.
7
SECTION 2.12. Covenants of the Seller.
The Seller agrees and covenants for the benefit of each Holder, the
Class A Insurer, the Backup Insurer and the Owner Trustee, during the term of
this Agreement, and to the fullest extent permitted by applicable law, that:
(a) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as permitted by
its certificate of formation and limited liability company agreement and the
Basic Documents;
(b) it shall not, for any reason, institute proceedings for
the Trust to be adjudicated bankrupt or insolvent, or consent to or join in the
institution of bankruptcy or insolvency proceedings against the Trust, or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(c) it shall obtain from each counterparty to each Basic
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting against, it or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States;
(d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement or any other Basic Document to which it is a party,
dissolve, institute proceedings for it to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against it, or file a petition seeking or consenting to reorganization or relief
under any applicable federal or state law relating to bankruptcy, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of it or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due, or declare or effect a moratorium on
its debt or take any action in furtherance of any such action;
(e) the Seller is a limited purpose limited liability company
whose activities are restricted in its certificate of formation and limited
liability company agreement to activities related to purchasing or otherwise
acquiring Dealer Loans and related collateral, and related assets and rights and
conducting any related or incidental business or activities it deems necessary
or appropriate to carry out its primary purpose, including entering into
agreements such as the Basic Documents;
(f) the Seller has not engaged, and does not presently engage,
in any activity other than those activities expressly permitted hereunder and
under the other Basic
8
Documents, nor has the Seller entered into any agreement other than this Trust
Agreement, the other Basic Documents to which it is a party, and with the prior
written consent of the Class A Noteholders, any other agreement necessary to
carry out more effectively the provisions and purposes hereof or thereof;
(g) (A) the Seller maintains its own deposit account or
accounts, separate from those of any of its Affiliates, with commercial banking
institutions, (B) the funds of the Seller are not and have not been diverted to
any other Person or for other than the corporate use of the Seller, and (C)
except as may be expressly permitted by the Basic Documents, the funds of the
Seller are not and have not been commingled with those of any of its Affiliates;
(h) to the extent that the Seller contracts or does business
with vendors or service providers where the goods and services provided are
partially for the benefit of any other Person, the costs incurred in so doing
are fairly allocated to or among the Seller and such entities for whose benefit
the goods and services are provided, and each of the Seller and each such entity
bears its fair share of such costs; and, all material transactions between the
Seller and any of its Affiliates shall be only on an arms-length basis;
(i) the Seller maintains a principal executive and
administrative office through which its business is conducted and a telephone
number and stationery through which all business correspondence and
communication are conducted, in each case separate from those of the Originator
and its Affiliates, or, if it shares office space with the Originator or any of
its Affiliates, it shall allocate fairly and reasonably any overhead and expense
for such shared office space;
(j) the Seller conducts its affairs strictly in accordance
with its certificate of formation and limited liability company agreement and
observes all necessary, appropriate and customary limited liability company
formalities, including (A) holding all regular and special meetings appropriate
to authorize all limited liability company action (which, in the case of regular
meetings, are held at least annually), (B) keeping separate and accurate minutes
of such meetings, (C) passing all resolutions or consents necessary to authorize
actions taken or to be taken, and (D) maintaining accurate and separate books,
records and accounts, including intercompany transaction accounts;
(k) all decisions with respect to its business and daily
operations are independently made by the Seller (although the officer making any
particular decision may also be an employee, officer or director of an Affiliate
of the Seller) and are not dictated by any Affiliate of the Seller (it being
understood that the Servicer, which is an Affiliate of the Seller, will
undertake and perform all of the operations, functions and obligations of it set
forth herein and it may appoint sub-servicers, which may be Affiliates of the
Seller, to perform certain of such operations, functions and obligations);
(l) the Seller acts solely in its own limited liability
company name and through its own authorized officers and agents, which can also
be officers and agents of an Affiliate;
9
(m) no Affiliate of the Seller advances funds to the Seller,
other than as is otherwise provided herein or in the other Basic Documents, and
no Affiliate of the Seller otherwise supplies funds to, or guaranties debts of,
the Seller; provided, however, that an Affiliate of the Seller may provide funds
to the Seller in connection with the capitalization of the Seller;
(n) other than organizational expenses and as expressly
provided herein or in its certificate of formation and limited liability company
agreement, the Seller pays all expenses, indebtedness and other obligations
incurred by it;
(o) the Seller does not guarantee, and is not otherwise
liable, with respect to any obligation of any of its Affiliates;
(p) any financial reports required of the Seller comply with
GAAP and are issued separately from, but may be consolidated with, any reports
prepared for any of its Affiliates;
(q) at all times the Seller is adequately capitalized to
engage in the transactions contemplated in its certificate of formation;
(r) the financial statements and books and records of the
Seller reflect the separate corporate existence of the Seller;
(s) the Seller does not act as agent for any Affiliates of
itself, but instead presents itself to the public as a limited liability company
separate from each such entity and independently engaged in the business of
purchasing and financing Contracts;
(t) the Seller shall at all times have at least two
independent directors (each an "Independent Director). An Independent Directors
shall be any person who (a) is not and has not been (i) a stockholder, officer,
director (except in its capacity as Independent Directors of the Seller),
partner, member or employee of the Seller's ultimate parent or any Subsidiaries
or Affiliates thereof or of a significant customer, creditor, supplier or
independent contractor of the Seller, its ultimate parent or any Subsidiaries or
Affiliates thereof, and is not himself such a significant customer, creditor,
supplier or independent contractor, or (ii) a member of the immediate family of
any person described above, and (b) does not directly or indirectly own any
class of voting securities of the Seller or any of its Subsidiaries or
Affiliates. As used in this covenant of the Seller, the terms "Affiliate" and
"Subsidiary" shall have the meanings ascribed thereto in the limited liability
company agreement of the Seller as of the date of this Agreement;
(u) the certificate of formation or limited liability company
agreement of the Seller require the affirmative vote of the independent
directors before a voluntary petition under Section 301 of the Bankruptcy Code
may be filed by the Seller, and the Seller to maintain correct and complete
books and records of account and minutes of the meetings and other proceedings
of its board of directors; and
10
(v) the Seller acknowledges that the parties hereto are
entering into this Trust Agreement and the other Basic Documents in reliance
upon the Seller being, on the Closing Date and at all times during the term of
this Trust Agreement, a limited purpose entity.
SECTION 2.13. Covenants of the Certificateholders.
Each Certificateholder by becoming a beneficial owner of the
Certificate agrees:
(a) to be bound by the terms and conditions of the
Certificates of which such Certificateholder is the beneficial owner and of this
Agreement, including any supplements or amendments hereto and to perform the
obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee, the Class A Insurer, the Backup Insurer
and all other Certificateholders present and future;
(b) to the appointment of the Seller as such
Certificateholder's agent and attorney-in-fact to sign any federal income tax
information return filed on behalf of the Trust and, if requested by the Trust,
to sign such federal income tax information return in its capacity as holder of
an interest in the Trust;
(c) that all transactions and agreements between the Trust on
the one hand, and any of the Owner Trustee, the Indenture Trustee, the Trust
Collateral Agent, the Seller and any Certificateholder on the other hand, shall
reflect the separate legal existence of each entity and will be formally
documented in writing;
(d) not to take any position in such Certificateholder's tax
returns inconsistent with those taken in any tax returns filed by the Trust;
(e) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099-B, to notify the Owner Trustee in writing of any transfer by
it of a Certificate in a taxable sale or exchange, within 30 days of the date of
the transfer; and
(f) until one year and one day after the completion of the
events specified in Section 9.1(e), not, for any reason, to institute
proceedings for the Trust or the Seller to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against the Trust or the Seller, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust or the Seller or
a substantial part of its property, or cause or permit the Trust or the Seller
to make any assignment for the benefit of its creditors or to admit in writing
its inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any action in furtherance of any such
action.
11
ARTICLE III
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership.
Effective upon the formation of the Trust by the contribution by the
Seller pursuant to Section 2.5, the Seller shall be deemed to have acquired and
to have become the owner of a 100% interest in the Trust and at all times prior
to the issuance of any Certificates pursuant to Section 3.3 shall be the sole
beneficial owner and beneficiary of the Trust.
SECTION 3.2. The Certificates.
The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4 hereof provided,
that the number of Certificateholders at no time may exceed 95. Notwithstanding
the provisions of Section 3.4 hereof, if the Seller is the Holder of a
Certificate, it shall not pledge, sell, transfer, assign or convey such
Certificate without the consent of the Class A Insurer and the Backup Insurer,
or the Indenture Trustee, at the direction of the Majority Noteholders, if both
a Class A Insurer Default and a Backup Insurer Default have occurred and are
continuing, until the earlier of: (i) the Class A Termination Date; and (ii) the
date on which Credit Acceptance is no longer Servicer under the Sale and
Servicing Agreement.
SECTION 3.3. Authentication of Certificates.
Concurrently with the initial sale of the Contracts and other Trust
Property to the Trust pursuant to Section 2.01 of the Sale and Servicing
Agreement, the Owner Trustee shall cause one or more Certificates having the
respective Percentage Interests (in the aggregate not to exceed 100%) specified
in writing by the Seller to be authenticated, issued and delivered to or upon
the written order of the Seller, signed by its president or any vice president,
any assistant treasurer or any assistant secretary without further action by the
Seller. No Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee, by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 3.4. Registration of Transfer and Exchange of Certificates.
12
The Certificate Registrar shall keep or cause to be kept, at the
Corporate Trust Office, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Owner Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. Wachovia Bank of Delaware, National Association, shall be
the initial Certificate Registrar.
The Certificate Registrar shall provide the Indenture Trustee, the
Trust Collateral Agent, the Class A Insurer and the Backup Insurer with a list
of the names and addresses of the Certificateholders on the Closing Date, to the
extent such information has been provided to the Certificate Registrar and in
the form provided to the Certificate Registrar on such date. Upon any transfers
of Certificates, the Certificate Registrar shall notify the Indenture Trustee,
the Trust Collateral Agent, the Class A Insurer and the Backup Insurer of the
name and address of the transferee in writing, by facsimile, on the day of such
transfer.
Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Owner Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates in authorized denominations of a like class and aggregate face
amount dated the date of authentication by the Owner Trustee or any
authenticating agent. At the option of a Holder, Certificates may be exchanged
for other Certificates of the same class in authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by: (i) a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Certificateholder or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Certificate Registrar, which requirements
include membership or participation in the Securities Transfer Agent's Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP; and (ii) an Opinion of Counsel that the transfer or exchange of such
Certificate would not cause the Trust to be treated as a publicly traded
partnership or otherwise be taxable as a corporation. Each Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Certificates have not been registered under the Securities Act
or any state securities law. Subject to the provisions of Section 3.1 hereof,
the Certificate Registrar shall not register the transfer of any Certificate or
unless such resale or transfer is: (i) pursuant to an effective registration
statement under the Securities Act; (ii) to the Seller; or (iii) unless it shall
have received a representation letter or such other representations and an
Opinion of Counsel satisfactory to the Seller or the Owner Trustee and, prior to
the Class A Termination Date, the Controlling Party, to the effect that such
resale or transfer is made (A) in a transaction exempt
13
from the registration requirements of the Securities Act and applicable state
securities laws, or (B) to a person who the transferor of the Certificate
reasonably believes is a "qualified institutional buyer" (within the meaning of
Rule 144A under the Securities Act) that is aware that such resale or other
transfer is being made in reliance upon Rule 144A. Until the earlier of (i) such
time as the Certificates shall be registered pursuant to a registration
statement filed under the Securities Act and (ii) the date three years from the
later of the date of the original authentication and delivery of the
Certificates and the date any Certificate was acquired from the Seller or any
affiliate of the Seller, the Certificates shall bear a legend substantially to
the effect set forth in the preceding two sentences. Neither the Seller, the
Servicer, the Trust nor the Owner Trustee is obligated to register the
Certificates under the Securities Act or to take any other action not otherwise
required under this Agreement to permit the transfer of Certificates without
registration.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Certificate, and (b)
there shall be delivered to the Certificate Registrar, the Class A Insurer, the
Backup Insurer and the Owner Trustee, such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, the
Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like class, tenor and denomination. In
connection with the issuance of any new Certificate under this Section, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute conclusive evidence of an ownership interest in the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders.
Every Person by virtue of becoming a Certificateholder in accordance
with this Agreement shall be deemed to be bound by the terms of this Agreement.
Prior to due presentation of a Certificate for registration of transfer, the
Owner Trustee, the Certificate Registrar, the Trust Collateral Agent, the Class
A Insurer, the Backup Insurer and any agent of the Owner Trustee, the Trust
Collateral Agent, the Class A Insurer, the Backup Insurer and the Certificate
Registrar, may treat the Person in whose name any Certificate shall be
registered in the Certificate Register as the owner of such Certificate for the
purpose of receiving distributions pursuant to the Sale and Servicing Agreement
and for all other purposes whatsoever, and none of the Owner Trustee, the Trust
Collateral Agent, the Class A Insurer, the Backup Insurer nor the Certificate
Registrar nor any agent of the Owner Trustee, the Trust Collateral Agent, the
Class A Insurer, the Backup Insurer nor the Certificate Registrar shall be bound
by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
14
The Owner Trustee shall cause to be furnished to the Trust
Collateral Agent, the Servicer or the Seller and, prior to the Class A
Termination Date, the Class A Insurer and the Backup Insurer, within 15 days
after receipt by the Owner Trustee of a request therefor from such Person in
writing, a list, of the names and addresses of the Certificateholders as of the
most recent Record Date. If three or more Holders of Certificates or one or more
Holders of Certificates evidencing not less than 25% of the Certificate Interest
apply in writing to the Owner Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Seller, the Servicer, the Class A Insurer, the Backup Insurer, the
Trust Collateral Agent or the Owner Trustee or any agent thereof accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
SECTION 3.8. Distributions.
Distributions on the Certificates shall be made in accordance with
Section 5.08(a) and Section 5.10 of the Sale and Servicing Agreement.
SECTION 3.9. ERISA Restrictions.
The Certificates may not be acquired by or transferred to (i) an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). In
connection with any acquisition or transfer of a Certificate, the Holder thereof
shall be required to represent and warrant that it is not a Benefit Plan.
ARTICLE IV
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters.
(a) The Owner Trustee shall not take any of the actions set
forth below unless (i) the Owner Trustee shall have notified the
Certificateholders and, prior to the Class A Termination Date, the Class A
Insurer and the Backup Insurer, in writing of the proposed action at least 30
days before the taking of such action, and (ii) the Controlling Party prior to
the Class A Termination Date, and thereafter, the Majority Certificateholders,
have approved such action in writing, which approval has been received by the
Owner Trustee by the 30th day after such notice has been given:
(i) the election by the Trust to file an amendment to
the Certificate of Trust (unless such amendment is required to be filed
under the Statutory Trust Act);
15
(ii) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Class A Noteholder is
required;
(iii) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Class A Noteholder is
not required and such amendment materially adversely affects the interest
of the Certificateholders;
(iv) except pursuant to Section 11.01 of the Sale and
Servicing Agreement, the amendment, change or modification of the Sale and
Servicing Agreement.
(v) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
(vi) do any act which would make it impossible to carry
on the ordinary business of the Trust;
(vii) confess a judgment against the Trust;
(viii) possess Trust assets, or assign the Trust's right
to property, for other than a Trust purpose;
(ix) cause the Trust to lend any funds to any entity;
(x) change the Trust's purpose and powers from those set
forth in this Agreement;
(xi) cause the Trust to incur, assume or guaranty any
indebtedness except as set forth in this Agreement;
(xii) the initiation of any material claim or litigation
by the Trust (except for claims or lawsuits brought in connection with the
collection of Contracts or Dealer Loans;) or
(xiii) the appointment, pursuant to the Indenture of a
successor Indenture Trustee or the consent to the assignment by the
Indenture Trustee, Certificate Registrar or Owner Trustee of any of its
obligations under the Indenture or any other Basic Document.
(b) In addition, the Trust shall not commingle its assets with
those of any other entity. The Trust shall maintain its financial and accounting
books and records separate from those of any other entity. Except as expressly
set forth herein or in any other Basic Document, the Trust shall pay its
indebtedness and expenses from its own funds and shall not pay the indebtedness
or operating expenses of any other entity. The Trust shall maintain appropriate
minutes or other records of all appropriate actions and shall maintain its
office separate from the offices of the Seller and its affiliates
16
(c) The Trust and each Certificateholder shall comply with the
following covenants:
(i) Neither the Owner Trustee nor any Certificateholder
shall cause the funds and other assets of the Trust to be commingled with
those of any other individual, corporation, estate partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government or agency or political subdivision thereof or any
other entity.
(ii) Neither the Owner Trustee nor any Certificateholder
shall cause the Trust to be, become or hold itself out as being liable for
the debts of any other party, and neither the Trust nor any
Certificateholder shall act as agents for each other. The Trust shall not
guarantee the indebtedness of or make loans to any other party or any
Certificateholder. No Certificateholder may guarantee the indebtedness of
or make loans to the Trust or hold itself out as being liable for the
debts of the Trust.
(iii) Neither the Owner Trustee nor any
Certificateholder shall cause the Trust (A) to act other than solely in
its Trust name and through its duly authorized officers or agents in the
conduct of its business, (B) to prepare all Trust correspondence otherwise
than in the Trust name, (C) to conduct its business other than so as not
to mislead others as to the identity of the entity with which they are
conducting business; and no Certificateholder will be involved in the
day-to-day management of the Trust.
(iv) The Owner Trustee shall maintain on behalf of the
Trust all statutory trust records required by the Statutory Trust Act and
neither the Owner Trustee nor any Certificateholder shall cause the Trust
to commingle its statutory trust records and books of account with the
corporate records and books of account maintained by any Certificateholder
or the Owner Trustee on behalf of the Trust shall reflect the separate
existence of the Trust. The books of the Trust may be kept (subject to any
provision contained in any applicable statutes) inside or outside the
State of Delaware at such place or places as may be designated from time
to time by the Owner Trustee with notice to the Class A Insurer and the
Backup Insurer. The Trust's books and records relating to the Trust
Property shall be maintained by the Servicer or Credit Acceptance, if it
is no longer the Servicer, pursuant to Section 4.06 of the Sale and
Servicing Agreement.
(v) The Trust shall take such formalities as may be
necessary to authorize all of its actions as may be required by law.
(vi) The Owner Trustee shall cause the Trust to (1)
conduct its business in an office separate from that of each
Certificateholder, (2) maintain stationery, if any, separate from that of
each Certificateholder, (3) except as expressly set forth herein, to pay
its indebtedness, operating expenses, and liabilities from its own funds,
and not to pay the indebtedness, operating expenses and liabilities of any
other entity, (4) observe all statutory formalities under the Statutory
Trust Act, and (5) keep in full effect its existence, rights and
franchises as a statutory trust under the laws of the State of Delaware
until dissolved in accordance with the Basic Documents.
17
(d) For accounting purposes, the Trust shall be treated as an
entity separate and distinct from any Certificateholder. The pricing and other
material terms of all transactions and agreements to which the Trust is a party
shall be intrinsically fair to all parties thereto. This Agreement is and shall
be the only agreement among the parties thereto with respect to the creation,
operation and termination of the Trust.
(e) The Owner Trustee shall not have the power, except upon
the direction of the Controlling Party and the Certificateholders, and to the
extent otherwise consistent with the Basic Documents, to (i) remove or replace
the Servicer, the Backup Servicer or the Indenture Trustee, (ii) institute
proceedings to have the Trust declared or adjudicated a bankruptcy or insolvent,
(iii) consent to the institution of bankruptcy or insolvency proceedings against
the Trust, (iv) file a petition or consent to a petition seeking reorganization
or relief on behalf of the Trust under any applicable federal or state law
relating to bankruptcy, (v) consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or any similar official) of the
Trust or a substantial portion of the property of the Trust, (vi) make any
assignment for the benefit of the Trust's creditors, (vii) cause the Trust to
admit in writing its inability to pay its debts generally as they become due,
(viii) take any action, or cause the Trust to take any action, in furtherance of
any of the foregoing (any of the above, a "Bankruptcy Action"). So long as the
Indenture and Sale and Servicing Agreement remain in effect, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take
any Bankruptcy Action with respect to the Trust.
(f) The Owner Trustee shall notify the Seller, the Servicer,
the Class A Insurer, the Backup Insurer and the Certificateholders in writing of
any appointment of a successor Note Registrar, Trust Collateral Agent or
Certificate Registrar within five Business Days of its receipt thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the written
direction of the Certificateholders with the prior written consent of the
Controlling Party or, prior to the Class A Termination Date, the Controlling
Party in accordance with the Basic Documents, to (a) remove the Servicer under
the Sale and Servicing Agreement or (b) except as expressly provided in the
Basic Documents, sell the Dealer Loans after the termination of the Indenture.
The Owner Trustee shall take the actions referred to in the preceding sentence
only upon written instructions signed by the Certificateholders or the
Controlling Party, as applicable, and written consent of the Controlling Party
and the furnishing of indemnification satisfactory to the Owner Trustee by the
Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to, and shall not,
commence or join in any proceeding or other actions contemplated by Section
2.12(c) relating to the Trust without the unanimous prior approval of all
Certificateholders and, prior to the Class A Termination Date, the Controlling
Party or the Indenture Trustee, at the direction of the Majority Noteholders, if
both a Class A Insurer Default and a Backup Insurer Default have occurred and
are continuing, and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying
18
that such person reasonably believes that the Trust is insolvent and, prior to
the Class A Termination Date, written consent of the Controlling Party or the
Indenture Trustee, at the direction of the Majority Noteholders, if both a Class
A Insurer Default and a Backup Insurer Default have occurred and are continuing.
SECTION 4.4. Restrictions on Certificateholders' Power.
(a) The Certificateholders shall not direct the Owner Trustee
to take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Trust or the Owner Trustee under this
Agreement or any of the Basic Documents or would be contrary to Section 2.3 nor
shall the Owner Trustee follow any such direction, if given.
(b) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement or any Basic Document, unless the Certificateholders are the
Instructing Party pursuant to Section 6.3 and unless a Certificateholder
previously shall have given to the Owner Trustee a written notice of default and
of the continuance thereof, as provided in this Agreement, and also unless
Certificateholders evidencing not less than 25% of the Certificate Interest
shall have made written request upon the Owner Trustee to institute such action,
suit or proceeding in its own name as Owner Trustee under this Agreement and
shall have offered to the Owner Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Owner Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or refused to institute
any such action, suit, or proceeding, and during such 30-day period no request
or waiver inconsistent with such written request has been given to the Owner
Trustee pursuant to and in compliance with this Section or Section 6.3; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Owner Trustee shall be entitled to such relief as can be given either at
law or in equity.
SECTION 4.5. Majority Control.
No Certificateholder shall have any right to vote or in any manner
otherwise control the operation and management of the Trust except as expressly
provided in this Agreement. Except as expressly provided herein, any action that
may be taken by the Certificateholders under this Agreement shall be taken by
the Holders of Certificates evidencing not less than 51% of the Certificate
Interest (the "Majority Certificateholders"). Except as expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by the Majority Certificateholders at the
time of the delivery of such notice.
19
SECTION 4.6. Rights of the Controlling Party.
Notwithstanding anything to the contrary in the Basic Documents,
without the prior written consent of the Controlling Party, prior to the Class A
Termination Date, neither the Owner Trustee nor any Certificateholder shall (i)
remove the Servicer, (ii) initiate any claim, suit or proceeding by the Trust or
compromise any claim, suit or proceeding brought by or against the Trust, other
than with respect to the enforcement of any Dealer Loan or Contract or any
rights of the Trust thereunder, (iii) authorize the merger or consolidation of
the Trust with or into any other statutory trust or other entity or convey or
transfer all or substantially all of the Trust Property to any other entity,
(iv) amend the Certificate of Trust or (v) amend this Agreement.
ARTICLE V
Certain Duties
SECTION 5.1. Accounting and Records to the Certificateholders, the
Internal Revenue Service and Others.
Subject to the Code and Section 4.01 of the Sale and Servicing
Agreement, the Owner Trustee shall (a) maintain (or cause to be maintained) the
books of the Trust on a calendar year basis on the accrual method of accounting,
(b) deliver (or cause to be delivered) to each Certificateholder, as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1) to enable each Certificateholder to
prepare its federal and state income tax returns, and (c) file or cause to be
filed such tax returns relating to the Trust, and make such elections as may
from time to time be required or appropriate under any applicable state or
federal statute or rule or regulation thereunder. The Owner Trustee shall make
all elections pursuant to this Section as directed in writing by the Seller. The
Owner Trustee shall sign all tax information returns filed pursuant to this
Section and any other returns as may be required by law, and in doing so shall
rely entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Seller. The Owner Trustee shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Dealer Loans. The Owner Trustee shall not make the
election provided under Section 754 of the Code.
SECTION 5.2. Signature on Returns; Tax Matters Partner.
(a) Notwithstanding the provisions of Section 5.1, the Owner
Trustee shall sign on behalf of the Trust the tax returns of the Trust, if any,
unless applicable law requires a Certificateholder to sign such documents, in
which case such documents shall be signed by the Seller as "tax matters
partner".
(b) The Certificateholders hereby elect the Seller as the "tax
matters partner" of the Trust pursuant to Section 6231 of the Code and the
Treasury Regulations promulgated thereunder.
20
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority.
The Owner Trustee is authorized and directed to execute and deliver
on behalf of the Trust the Basic Documents to which the Trust is named as a
party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Seller shall approve as
evidenced conclusively by the Owner Trustee's execution thereof, and on behalf
of the Trust, to direct the Indenture Trustee to authenticate and deliver the
Class A Notes in the aggregate principal amount of $100,000,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Basic Documents. The
Owner Trustee is further authorized from time to time to take such action as the
Instructing Party (as defined below) shall direct in writing with respect to the
Basic Documents so long as such activities are consistent with the terms of the
Basic Documents. The Instructing Party hereby agrees not to instruct the Owner
Trustee to take any action which is inconsistent with or in violation of the
terms of the Basic Documents.
SECTION 6.2. General Duties.
It shall be the duty of the Owner Trustee to: (a) discharge (or
cause to be discharged) all of its responsibilities pursuant to the terms of
this Agreement and to administer the Trust in the interest of the Holders, the
Class A Insurer and the Backup Insurer, subject to the Basic Documents and in
accordance with the provisions of this Agreement; and (b) to obtain and preserve
the Trust's qualification to do business in each jurisdiction in which, based
upon the advice of the Seller or the Servicer, such qualification is or shall be
necessary to protect the validity and enforceability of the Basic Documents and
related instruments and agreements, the Class A Notes and the Trust Property.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents: (i) to the extent the Servicer, or Credit Acceptance if Credit
Acceptance is no longer the Servicer, has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Owner Trustee or
the Trust hereunder or under any Basic Document, and the Owner Trustee shall not
be liable for the default or failure of the Servicer to carry out its
obligations under the Sale and Servicing Agreement; and (ii) to the extent that
Owner Trustee has contracted with a third party acceptable to the Controlling
Party to discharge such duties and responsibilities. The Servicer, Credit
Acceptance, the Backup Servicer, the Trust Collateral Agent and the Seller shall
all be deemed acceptable to the Controlling Party.
SECTION 6.3. Action upon Instruction.
(a) Subject to Article IV, the Certificateholders holding not
less than 51% of the Certificate Interest, with, prior to the Class A
Termination Date, the consent of the Controlling Party (the "Instructing Party")
shall have the exclusive right to direct the actions of the Owner Trustee in the
management of the Trust, so long as such instructions are not inconsistent with
the express terms set forth herein or in any Basic Document or with
21
instructions of the Class A Noteholders acting pursuant to the Basic Documents.
The Instructing Party shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Basic Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten (10)
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders, the Class A Insurer and the
Backup Insurer, and shall have no liability to any Person for such action or
inaction absent gross negligence or willful misconduct.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party and, to the extent that the Owner Trustee acts or refrains from acting in
good faith in accordance with any such instruction received, the Owner Trustee
shall not be liable, on account of such action or inaction, to any Person. If
the Owner Trustee shall not have received appropriate instruction within ten
(10) days of such notice (or within such shorter period of time as reasonably
may be specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders, the Class A Insurer and the
Backup Insurer, and shall have no liability to any Person for such action or
inaction, absent gross negligence or willful misconduct.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions.
The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Trust Property, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly
22
provided by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.3; and no
implied duties or obligations shall be read into this Agreement or any Basic
Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
filing for the Trust with the Securities and Exchange Commission or to record
this Agreement or any Basic Document. The Owner Trustee nevertheless agrees that
it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any Liens on any part of the Trust Property that result
from actions by, or claims against, the Owner Trustee (solely in its individual
capacity) and that are not related to the ownership or the administration of the
Trust Property.
SECTION 6.5. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Property except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Basic Documents and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6. Restrictions.
The Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust set forth in Section 2.3 or (b) that, to the
actual knowledge of the Owner Trustee, would result in the Trust's becoming
taxable as a corporation for federal income tax purposes. The Certificateholders
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties.
The Owner Trustee accepts the trusts hereby created and agrees to
perform its duties hereunder with respect to such trusts but only upon the terms
of this Agreement and the Basic Documents. The Owner Trustee also agrees to
disburse all moneys actually received by it constituting part of the Trust
Property upon the terms of the Basic Documents and this Agreement. The Owner
Trustee shall not be answerable or accountable in its individual capacity
hereunder or under any Basic Document under any circumstances, except (i) for
its own willful misconduct, bad faith or gross negligence, (ii) in the case of
the inaccuracy of any representation or warranty contained in Section 7.3
expressly made by the Owner Trustee, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee, and every provision
of this Trust Agreement relating to the conduct or affecting the
23
liability of or affording protection to the Owner Trustee shall be subject to
this Section. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee or for any
information contained in the Private Placement Memorandum;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
instructions of the Instructing Party, the Servicer, the Backup Servicer or any
Certificateholder in accordance with the terms of this Agreement and the Basic
Documents;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
liability (financial or otherwise) in the performance of any of its rights or
powers hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness of the Trust evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Class A Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Seller or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Property or for or in respect
of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Certificates, and the Owner Trustee shall
in no event assume or incur any liability, duty or obligation to the Indenture
Trustee, the Trust Collateral Agent, the Class A Insurer, the Backup Insurer,
any Class A Noteholder or to any Certificateholder, other than as expressly
provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Seller, the Indenture Trustee, the Trust Collateral Agent, the
Class A Insurer, the Backup Insurer, the Servicer or the Backup Servicer under
any of the Basic Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations under this Agreement or the
Basic Documents that are required to be performed by the Seller under this
Agreement, by the Indenture Trustee under the Indenture or the Trust Collateral
Agent or the Servicer or the Backup Servicer under the Sale and Servicing
Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of the Instructing Party or any of the Certificateholders, unless such
Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity reasonably satisfactory to it against the costs, expenses
and
24
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its gross negligence, bad
faith or willful misconduct in the performance of any such act.
SECTION 7.2. Furnishing of Documents.
The Owner Trustee shall furnish to the Certificateholders, the Class
A Insurer, the Backup Insurer and the Rating Agencies promptly upon receipt of a
written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee under the Basic Documents.
SECTION 7.3. Representations and Warranties.
The Owner Trustee hereby represents and warrants to the Seller, the
Class A Insurer (which has relied on such representations and warranties in
issuing the Class A Note Policy), the Backup Insurer (which has relied on such
representations and warranties in issuing the Backup Insurance Policy) and the
Securityholders, that:
(a) It is a national banking association, duly organized and
validly existing in good standing under the laws of the United States of
America. It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel.
(a) In the absence of bad faith, willful misconduct or gross
negligence, the Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and to be signed by the proper party or parties;
however, the Owner Trustee shall examine the same to determine whether or not
they conform on their face to the Trust Agreement. The Owner Trustee may accept
a certified copy of a resolution of the board of directors of the Seller or
other governing body of any corporate party or other entity as conclusive
evidence that such resolution has been duly adopted by such body
25
and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care and are acceptable to the Controlling Party
(provided that any person to whom duties and obligations of the Owner Trustee
are delegated pursuant to and in accordance with the Basic Documents shall be
deemed to be acceptable to the Controlling Party), and (ii) may consult with
counsel, accountants and other skilled persons acceptable to the Controlling
Party that are selected with reasonable care and employed by it. The Owner
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the opinion or advice of any such counsel, accountants
or other such persons and according to such opinion not contrary to this
Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity.
Except as provided in this Article VII, in accepting the trusts
hereby created, Wachovia Bank of Delaware, National Association acts solely as
Owner Trustee hereunder and not in its individual capacity and all Persons
having any claim against the Owner Trustee by reason of the transactions
contemplated by this Agreement or any Basic Document shall look only to the
Trust Property for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or Contracts.
The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of the Seller and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Class A Notes,
or of any Dealer Loan, Contract or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Dealer Loan or Contract, or the
perfection and priority of any security interest created by any Dealer Loan or
Contract in any Financed Vehicle or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Trust Property or its
ability to generate the payments to be distributed to Certificateholders under
this Agreement or the Class A Noteholders under the Indenture, including,
without limitation: the existence, condition and ownership of any Financed
Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Dealer Loan or Contract on any computer or other
record thereof; the validity of the assignment of any Dealer Loan or Contract to
the Trust or of any intervening assignment; the completeness
26
of any Dealer Loan or Contract; the performance or enforcement of any Dealer
Loan or Contract; the compliance by the Seller, the Servicer or any other Person
with any warranty or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or representation or any
action of the Trust Collateral Agent or the Servicer, the Backup Servicer or any
sub-servicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates or Class A Notes and may deal with the
Seller, the Trust Collateral Agent and the Servicer in banking transactions with
the same rights as it would have if it were not Owner Trustee.
SECTION 7.8. Payments from Trust Property.
All payments to be made by the Owner Trustee on behalf of the Trust
under this Agreement or any of the Basic Documents to which the Trust or the
Owner Trustee is a party shall be made only from the corpus, income and proceeds
of the Trust Property and only to the extent that the Owner Trustee shall have
received corpus, income or proceeds from the Trust Property to make such
payments in accordance with the terms hereof. Wachovia Bank of Delaware,
National Association, or any successor thereto, in its individual capacity,
shall not be liable for any amounts payable under this Agreement or any of the
Basic Documents to which the Trust or the Owner Trustee is a party.
SECTION 7.9. Doing Business in Other Jurisdictions.
Notwithstanding anything contained herein to the contrary, neither
Wachovia Bank of Delaware, National Association nor any successor thereto, nor
the Owner Trustee shall be required to take any action in any jurisdiction other
than in the State of Delaware if the taking of such action will, even after the
appointment of a co-trustee or separate trustee in accordance with Section 10.5
hereof, (i) require the consent or approval or authorization or order of or the
giving of notice to, or the registration with or the taking of any other action
in respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of the State of Delaware becoming
payable by Wachovia Bank of Delaware, National Association (or any successor
thereto); or (iii) subject Wachovia Bank of Delaware, National Association (or
any successor thereto) to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wachovia Bank of Delaware, National
Association (or any successor thereto) or the Owner Trustee, as the case may be,
contemplated hereby.
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses.
27
The Owner Trustee shall receive as compensation for its services
hereunder such fees as have been separately agreed upon before the date hereof
between Credit Acceptance and the Owner Trustee, and the Owner Trustee shall be
entitled to be reimbursed therefor by the Issuer as set forth in Section 5.08(a)
of the Sale and Servicing Agreement.
SECTION 8.2. Indemnification.
Credit Acceptance shall be liable as primary obligor for, and shall
indemnify Wachovia Bank of Delaware, National Association, individually and as
Owner Trustee and its officers, directors, successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against any Indemnified Party in any way relating to or arising out of this
Agreement, the Basic Documents, the Trust Property, the administration of the
Trust Property or the action or inaction of the Owner Trustee hereunder, within
thirty (30) days of a demand by the Owner Trustee, upon receipt by the Owner
Trustee of an invoice or other demand for payment, except only that Credit
Acceptance shall not be liable for or required to indemnify the Owner Trustee
from and against: (i) Expenses arising or resulting from the gross negligence,
willful misconduct or bad faith of the Owner Trustee or (ii) any Expenses which
would constitute recourse for uncollectible Dealer Loans. Credit Acceptance
shall advance to each Indemnified Party expenses incurred in defending any
claim, demand, action, suit or proceeding, provided that such Indemnified Party
shall be obligated to repay such amount if a court of competent jurisdiction
determines that such Indemnified Party was not entitled to indemnification
hereunder. The indemnities contained in this Section and the rights of the Owner
Trustee under Section 8.1 shall be joint and several with the indemnification
obligations of the Trust pursuant to Section 6.05 of the Sale and Servicing
Agreement and shall survive the resignation or termination of the Owner Trustee
or the termination of this Agreement In any event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section, the
Owner Trustee's choice of legal counsel shall be subject to the approval of
Credit Acceptance which approval shall not be unreasonably withheld.
SECTION 8.3. Payments to the Owner Trustee.
Any amounts paid to the Owner Trustee pursuant to this Article VIII
shall be deemed not to be a part of the Trust Property immediately after such
payment.
28
SECTION 8.4. Non-Recourse Obligations.
Notwithstanding anything in this Agreement or any Basic Document,
the Owner Trustee agrees that all obligations of the Trust individually or as
Owner Trustee for the Trust shall be recourse to the Trust Property only, shall
be paid in accordance with the priorities set forth in Section 5.08 of the Sale
and Servicing Agreement and specifically shall not be recourse to the assets of
any Holder. Wachovia Bank of Delaware, National Association agrees not to seek
recourse against any Holder with respect to any obligations of the Trust owed to
it.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement.
(a) This Agreement shall terminate and the Trust shall
dissolve upon the latest of: (i) the maturity, payment in full or other
liquidation of the last Dealer Loan (including the purchase by the Servicer or
the Seller at its option of the corpus of the Trust as described in Section
10.01 of the Sale and Servicing Agreement) and the subsequent distribution of
amounts in respect of such Dealer Loans as provided in the Basic Documents and
the satisfaction and discharge of the Indenture and the termination of the Sale
and Servicing Agreement; or (ii) the payment to Certificateholders of all
amounts required to be paid to them pursuant to this Agreement and the payment
to each of the Class A Noteholders, the Class A Insurer and the Backup Insurer
of all amounts payable to it under the Basic Documents; provided, however, that
the rights to indemnification under Section 8.2 and the rights of the Owner
Trustee under Section 8.1, and the terms of Section 11.7 hereof shall survive
the termination of the Trust and that the winding up of the Trust shall be
conducted in accordance with Section 3808(e) of the Statutory Trust Act, and the
Owner Trustee shall be entitled to rely without investigation upon the
certificates of: (i) the Indenture Trustee pursuant to Section 4.1 of the
Indenture; (ii) the Servicer pursuant to Section 7.06 of the Sale and Servicing
Agreement; (iii) the Class A Insurer pursuant to Section 4.03 of the Insurance
Agreement as to the absence of liabilities; and (iv) the Backup Insurer pursuant
to Section 4.03 of the Insurance Agreement as to the absence of liabilities. The
Seller shall promptly notify the Owner Trustee, the Class A Insurer and the
Backup Insurer in writing of any prospective termination pursuant to this
Section 9.1. The bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, nor (y) entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Trust Property nor
(z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) Except as provided in clause (a), neither the Seller nor
any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Trust Collateral Agent, as paying agent who shall then
surrender such Certificates to the Owner Trustee for cancellation, shall be
given by the Owner Trustee by letter to Certificateholders mailed within
29
five Business Days of receipt of notice of such termination from the Seller or
Servicer, as the case may be, given pursuant to Section 10.01(b) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final distributions on the Certificates shall be made upon presentation
and surrender of the Certificates at the office of the Trust Collateral Agent
therein designated, (ii) the amount of any such final distribution, and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Owner Trustee therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee), the Class A Insurer, the Backup Insurer and the Trust Collateral
Agent at the time such notice is given to Certificateholders. Upon presentation
and surrender of the Certificates to the Owner Trustee, the Trust Collateral
Agent shall cause to be distributed to Certificateholders amounts distributable
on such Distribution Date pursuant to Section 5.08 of the Sale and Servicing
Agreement.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after two
years shall be distributed, subject to applicable escheat laws, by the Owner
Trustee or the Trust Collateral Agent upon the written direction of the Seller
to the Seller and Holders shall look solely to the Seller for payment.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution and reasonable
provision has been made for known claims and obligations of the Trust shall be
distributed by the Owner Trustee to the Seller.
(e) Upon dissolution and the winding up of the Trust pursuant
to Section 9.1(a), the Owner Trustee shall cause the Certificate of Trust to be
canceled by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810 of the Statutory Trust Act.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation or other
institution: (i) satisfying the provisions of Section 3807(a) of the Statutory
Trust Act; (ii) authorized to exercise corporate trust powers; (iii) having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authorities; provided
30
however, the net worth of the parent organization of such corporation shall be
included in the determination of the combined capital and surplus of such
corporation; and (iv) prior to the Class A Termination Date, acceptable to the
Controlling Party in its sole discretion. If such corporation or other
institution shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section, the combined capital and surplus of such
corporation or other institution shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Seller, the Class
A Insurer, the Backup Insurer and the Servicer. Upon receiving such notice of
resignation, the Seller shall promptly appoint a successor Owner Trustee
acceptable to the Controlling Party and satisfying the qualifications of Section
10.1 hereof by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee; provided that the Seller shall have received written confirmation
from the Rating Agencies that the proposed appointment will not result in an
increased capital charge to either Insurer by the Rating Agencies. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee or, prior to the Class A Termination Date, the
Controlling Party may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee acceptable to the Controlling Party and
satisfying the qualifications of Section 10.1 hereof.
If at any time, the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Seller with the prior written consent of the
Controlling Party or if at any time the Owner Trustee shall be legally unable to
act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Owner Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, prior to the Class
A Termination Date, the Controlling Party or the Seller with, prior to the Class
A Termination Date, the consent of the Controlling Party may remove the Owner
Trustee. If the Seller or the Controlling Party shall remove the Owner Trustee
under the authority of the immediately preceding sentence, the Seller shall, or
the Controlling Party may, promptly appoint a successor Owner Trustee acceptable
to the Controlling Party, and satisfying the qualifications set forth in Section
10.1 hereto by written instrument, in duplicate, one copy of which instrument
shall be delivered to the outgoing Owner Trustee so removed, one copy to the
Class A Insurer, one copy to the successor Owner Trustee and one copy to the
Backup Insurer and payment of all fees owed to the outgoing Owner Trustee;
provided, that the Seller shall have received written confirmation from the
Rating Agencies that the proposed appointment will not result in an increased
capital charge to either the Class A Insurer or the Backup Insurer by the Rating
Agencies.
31
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Seller shall provide notice of such resignation
or removal of the Owner Trustee to the Rating Agencies and the Trust Collateral
Agent.
SECTION 10.3. Successor Owner Trustee.
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge and deliver to the Seller, the Class A Insurer, the Backup
Insurer, the Servicer and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective and such
successor Owner Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Seller and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Class A Insurer,
the Backup Insurer, the Class A Noteholders and the Rating Agencies. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Servicer.
Any successor Owner Trustee appointed pursuant to this Section 10.3
shall promptly file an amendment to the Certificate of Trust with the Secretary
of State of Delaware, identifying the name and address of such successor Owner
Trustee in the State of Delaware.
SECTION 10.4. Merger or Consolidation of Owner Trustee.
Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall be
a party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Owner Trustee, shall be the successor of the
Owner Trustee hereunder, provided, however, such corporation shall be eligible
pursuant to Section 10.1, without the execution or filing of any instrument or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided further that
32
the Owner Trustee shall mail notice of such merger or consolidation to the Class
A Insurer, the Backup Insurer and the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Property or any Financed Vehicle may at the time be
located, the Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Controlling Party to act as co-trustee,
jointly with the Owner Trustee, or separate trustee or separate trustees, of all
or any part of the Trust Property, and to vest in such Person, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Servicer and the Owner Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee shall, with the consent
of the Controlling Party, have the power to make such appointment. No co-trustee
or separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to Section 10.1 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Seller and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate trustee
or co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be
33
provided therein, subject to all the provisions of this Agreement, specifically
including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, the Owner Trustee. Each
such instrument shall be filed with the Owner Trustee and a copy thereof given
to the Servicer and a copy to the Class A Insurer and the Backup Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
Miscellaneous
SECTION 11.1. Supplements and Amendments.
(a) This Agreement may be amended by the Seller and the Owner
Trustee, with (x) prior to the Class A Termination Date, the prior written
consent of the Controlling Party and (y) prior written notice to the Rating
Agencies, without the consent of any of the Class A Noteholders or the
Certificateholders: (i) to cure any ambiguity or defect; (ii) to correct,
supplement or modify any provisions in this Agreement; or (iii) to add any other
provisions with respect to matters or questions arising under this Agreement
that shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel which
may be based upon a certificate of the Seller, adversely affect in any material
respect the interests of any Class A Noteholder.
(b) This Agreement may also be amended from time to time by
the Seller and the Owner Trustee, with (x) prior written notice to the Rating
Agencies and (y) prior to the Class A Termination Date, the written consent of
the Controlling Party and thereafter, the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement other than
under (a) above; provided, however, that, subject to the express rights of the
Controlling Party under the Basic Documents no such amendment shall: (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Dealer Loans or distributions that shall
be required to be made for the benefit of the Class A Noteholders; or (b) reduce
the percentage of the Outstanding Amount of the Class A Notes required to
consent to any such amendment, without the consent of the Holders of all the
outstanding Class A Notes. Notwithstanding anything herein to the contrary, the
Backup Insurer must consent to any amendments to this Agreement which have an
adverse effect on the Backup Insurer.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Class A Insurer, the Backup
Insurer, the Indenture Trustee and the Rating Agencies.
34
It shall not be necessary for the consent of the Class A Noteholders
or the Indenture Trustee pursuant to this Section to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents shall
be subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of Trust, the
Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee, the Indenture Trustee, the Class A
Insurer and the Backup Insurer shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement, that all conditions precedent to the execution and
delivery of such amendment have been satisfied and that any such amendment would
not result in the Trust becoming taxable as a corporation for federal income tax
purposes. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 11.2. Limitations on Rights of Others.
Except for Section 2.7, the provisions of this Agreement are solely
for the benefit of the Owner Trustee, the Seller, the Certificateholders, the
Servicer, the Class A Insurer, the Backup Insurer, the Backup Servicer and, to
the extent expressly provided herein, the Indenture Trustee, the Trust
Collateral Agent and the Class A Noteholders, and nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Trust Property or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 11.3. Notices.
(a) Unless otherwise expressly specified or permitted by the
terms hereof, all notices shall be in writing and shall be deemed given upon
receipt personally delivered, delivered by overnight courier or mailed first
class mail or certified mail, in each case return receipt requested, and shall
be deemed to have been duly given upon receipt, if to the Owner Trustee,
addressed to the Corporate Trust Office; if to the Seller, addressed to Credit
Acceptance Funding LLC 2004-1, Silver Triangle Building, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇; phone number:
(▇▇▇) ▇▇▇-▇▇▇▇ (ext. 217); fax number: (▇▇▇) ▇▇▇-▇▇▇▇; if to the Class A
Insurer, addressed to Radian Asset Assurance Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Chief Risk Officer, Chief Legal Officer, "Urgent
Material Enclosed"; if to the Backup Insurer, addressed to XL Capital Assurance
Inc., 1221 Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇,
Attention: Surveillance, or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party; if to the
Indenture Trustee, the Trust Collateral Agent, the Servicer, the Backup Servicer
or the Rating Agency, addressed to each respective entity as set forth in the
notice provisions of the Basic Documents.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the
35
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
SECTION 11.4. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.5. Separate Counterparts.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 11.6. Assignments; Class A Insurer, Backup Insurer.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, the Class A Insurer, the Backup Insurer (in each case, to the
extent set forth herein) and their respective successors and permitted assigns.
Without limiting the generality of the foregoing, all covenants and agreements
in this Agreement which confer rights upon the Class A Insurer or the Backup
Insurer, as the case may be, shall be for the benefit of and run directly to the
Class A Insurer or the Backup Insurer, as the case may be, and the Class A
Insurer or the Backup Insurer, as the case may be, shall be entitled to rely on
and enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Basic Documents. The Class A Insurer and the
Backup Insurer may each disclaim any of its respective rights and powers under
this Agreement (but not its duties and obligations under the Class A Note
Insurance Policy or the Backup Insurance Policy, as the case may be), upon
delivery of a written notice to the Owner Trustee.
SECTION 11.7. No Petition.
The Owner Trustee (in its individual capacity and as Owner Trustee),
by entering into this Agreement, each Certificateholder, by accepting a
Certificate, and the Indenture Trustee and each Class A Noteholder by accepting
the benefits of this Agreement, hereby covenants and agrees that they will not
at any time institute against the Seller or the Trust, or join in any
institution against the Seller or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Class A Notes, this Agreement or
any of the Basic Documents.
SECTION 11.8. No Recourse.
Each Certificateholder, by accepting a Certificate acknowledges that
such Certificateholder's Certificates represent beneficial interests in the
Trust only and do not
36
represent interests in or obligations of the Seller, the Servicer, the Backup
Servicer, the Owner Trustee, the Indenture Trustee, the Class A Insurer, the
Backup Insurer or the Trust Collateral Agent or any Affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Certificates or the
Basic Documents.
SECTION 11.9. Headings.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 11.10. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.11. Servicer.
The Servicer is authorized to prepare, or cause to be prepared,
execute and deliver on behalf of the Trust all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust or
Owner Trustee to prepare, file or deliver pursuant to the Basic Documents. Upon
written request, the Owner Trustee shall execute and deliver to the Servicer a
limited power of attorney appointing the Servicer the Trust's agent and
attorney-in-fact to prepare, or cause to be prepared, execute and deliver all
such documents, reports, filings, instruments, certificates and opinions.
SECTION 11.12. Controlling Party.
So long as any Class A Note is outstanding, the Controlling Party
shall have the power to exercise the voting rights granted to the Class A
Noteholders, except as set forth in Section 11.1 hereof; provided, however, that
during the continuance of a Class A Insurer Default, all voting, consent or
control rights of the Class A Insurer shall be suspended and the Backup Insurer
shall be the Controlling Party. Upon the cure of a Class A Insurer Default, such
voting, consent and control rights shall be reinstated. If the Backup Insurer is
the Controlling Party, during the continuance of a Backup Insurer Default, any
voting, consent or control rights granted to the Backup Insurer shall be
suspended. Upon the cure of any such Backup Insurer Default, the Backup
Insurer's voting, consent and control rights shall be reinstated.
37
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WACHOVIA BANK OF DELAWARE,
NATIONAL ASSOCIATION, not in
its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
CREDIT ACCEPTANCE FUNDING LLC
2004-1, as Seller
By: _______________________________
Name:
Title:
[Trust Agreement Signature Page ]
EXHIBIT A
FORM OF CERTIFICATE
SEE ATTACHED PAGES FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENTS TO THE CLASS A
NOTES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE SKY"
LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS
CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE OWNER TRUSTEE OF A
CERTIFICATION OF THE TRANSFEREE AND AN OPINION OF COUNSEL (SATISFACTORY TO THE
ISSUER OR THE OWNER TRUSTEE AND, PRIOR TO THE CLASS A TERMINATION DATE, THE
CONTROLLING PARTY) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS
THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED A REPRESENTATION LETTER IN
SUBSTANTIALLY THE FORM REQUIRED BY THE AGREEMENT REFERRED TO BELOW FROM THE
TRANSFEREE OF THIS CERTIFICATE OR SUCH OTHER REPRESENTATIONS (OR AN OPINION OF
COUNSEL) AS MAY BE APPROVED BY THE SELLER AND THE CLASS A INSURER, TO THE EFFECT
THAT SUCH A TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION FROM THE SECURITIES
ACT, INCLUDING RULE 144A THEREUNDER, AND APPLICABLE STATE SECURITIES LAWS AND
SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE WITH THE ASSETS OF ANY
"EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") (WHICH IS SUBJECT TO TITLE I
OF ERISA) OR ANY "PLAN" AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE").
NUMBER Percentage Interest 100%
R-1
SEE REVERSE FOR CERTAIN DEFINITIONS
AMOUNTS IN RESPECT OF THIS CERTIFICATE ARE DISTRIBUTABLE AS SET
FORTH IN THE TRUST AGREEMENT.
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in the property of the Trust, as
defined below, the property of which includes a pool of dealer loans secured by
retail installment sales contracts secured by new or used automobiles, light
duty trucks, minivans or sport utility vehicles and sold to the Trust by Credit
Acceptance Funding LLC 2004-1.
(THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CREDIT
ACCEPTANCE FUNDING LLC 2004-1 OR ANY OF ITS AFFILIATES, EXCEPT TO THE EXTENT
DESCRIBED BELOW.)
THIS CERTIFIES THAT Credit Acceptance Funding LLC 2004-1 is the
registered owner of the Percentage Interest set forth above of the beneficial
ownership interest in certain distributions of Credit Acceptance Auto Dealer
Loan Trust 2004-1 (the "Trust") formed by Credit Acceptance Funding LLC 2004-1,
a Delaware special purpose limited liability company (the "Seller"). The
Certificates do not accrue interest.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WACHOVIA BANK OF DELAWARE,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
by: _______________________________
Authenticating Agent
The Trust was created pursuant to a Certificate of Trust and an
Interim Trust Agreement dated August 11, 2004 (the "Trust Agreement"), between
the Seller and Wachovia Bank of Delaware, National Association, as owner
trustee, in its capacity as trustee, and not in its individual capacity (the
"Owner Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Asset Backed Certificates" (herein called the "Certificates"). In
addition to the Certificates, there were also issued, under the Indenture dated
as of August 25, 2004, between the Trust and JPMorgan Chase Bank, as Indenture
Trustee, one class of Notes designated as "2.53% Class A Asset Backed Notes"
(the "Class A Notes" or the "Notes"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to which
Trust Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes a pool of dealer loans secured by retail installment sale contracts
(which are secured by new and used automobiles, light duty trucks, minivans or
sport utility vehicles) (the "Dealer Loans"), all monies due thereunder after
the applicable Cut-off Date, security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, proceeds from claims on
certain insurance policies and certain other rights under the Trust Agreement
and the Sale and Servicing Agreement, all right, title and interest of the
Seller in and to the Contribution Agreement dated as of August 25, 2004 between
the Originator and the Seller and all proceeds of the foregoing.
Under the Sale and Servicing Agreement, there will be distributed on
the 15th day of each month or, if such 15th day is not a Business Day, the next
Business Day (the "Distribution Date"), commencing on September 15, 2004, to the
Person in whose name this Certificate is registered at the close of business on
the last day of the month preceding such Distribution Date (the "Record Date")
such Certificateholder's fractional undivided interest in the amount to be
distributed, if any, to Certificateholders on such Distribution Date.
The holder of this Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Certificate are subordinated
to the rights of the Class A Noteholders as described in the Sale and Servicing
Agreement, the Indenture and the Trust Agreement, as applicable.
It is the intent of the Seller, the Servicer, and the
Certificateholders that, for purposes of federal income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Seller and the other Certificateholders by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust or the Seller, or join in any institution against the Trust or the
Seller of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Class A Notes, the Trust Agreement or any of the Basic
Documents.
Distributions on this Certificate will be made as provided in the
Sale and Servicing Agreement by the Trust Collateral Agent by wire transfer or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and the
Sale and Servicing Agreement and, notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Owner
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the Corporate Trust Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.
CREDIT ACCEPTANCE AUTO DEALER LOAN
TRUST 2004-1
By: WACHOVIA BANK OF DELAWARE,
NATIONAL ASSOCIATION, not
in its individual capacity
but solely as Owner Trustee
By: _______________________________
Dated:
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest
in, the Seller, the Servicer, the Backup Servicer, the Owner Trustee or any
Affiliates of any of them and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated herein or in
the Trust Agreement, the Indenture or the Basic Documents. In addition, this
Certificate is not guaranteed by any governmental agency or instrumentality and
is limited in right of payment to certain collections with respect to the Dealer
Loans, all as more specifically set forth herein and in the Sale and Servicing
Agreement. A copy of each of the Sale and Servicing Agreement and the Trust
Agreement may be examined during normal business hours at the principal office
of the Seller, and at such other places, if any, designated by the Seller, by
any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Seller and the Owner Trustee with, prior to
the Class A Termination Date, the prior written consent of the Controlling
Party, and, in certain circumstances, the consent of the Backup Insurer, and in
certain circumstances the consent of the holders of the Class A Notes evidencing
not less than 51% of the then-outstanding Class A Note Balance. Any such consent
shall be conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates.
As provided in the Trust Agreement and subject to certain
limitations set forth therein and set forth on the front of this Certificate,
the transfer of this Certificate is registerable in the Certificate Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies of the Certificate Registrar maintained by the Owner Trustee in the
Borough of Manhattan, The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee; provided, however, that if the Seller is the
Holder of this Certificate, this Certificate is non-transferable without the
prior written consent of the Controlling Party or the Indenture Trustee, at the
direction of the Majority Noteholders, if both a Class A Insurer Default and a
Backup Insurer Default have occurred and are continuing: (i) prior to the Class
A Termination Date or (ii) if Credit Acceptance is the Servicer. The initial
Certificate Registrar appointed under the Trust Agreement is Wachovia Bank of
Delaware, National Association.
The Certificates are issuable only as registered Certificates. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates in authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Class A Insurer, the Backup Insurer, the
Certificate Registrar and any agent of the Owner Trustee, the Class A Insurer,
the Backup Insurer or the Certificate Registrar may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar, the Class A Insurer, the
Backup Insurer nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement, upon the payment to the
Class A Insurer and the Backup Insurer of all amounts required to be paid to it
under the Basic Documents, and the disposition of all property held as part of
the Trust. The Servicer or the Seller, as the case may be may at its option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Dealer Loans and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Collection Period as of which the Class A Note Balance is 15% or less
of the initial Class A Note Balance, including any such purchase on such
Purchase Date.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e) (1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). In connection with any
acquisition or transfer of a Certificate, the Holder thereof shall be required
to represent and warrant that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of
the Seller or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Contracts or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________ Attorney to transfer said Certificate on the
books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
______________________________*
---------------
* NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Certificate
in every particular, without alteration, enlargement or any change whatsoever.
EXHIBIT B
FORM OF
CERTIFICATE OF TRUST OF
CREDIT ACCEPTANCE AUTO DEALER LOAN TRUST 2004-1
This Certificate of Trust of Credit Acceptance Auto Dealer Loan
Trust 2004-1 (the "Trust"), dated as of August 11, 2004, is being duly executed
and filed by Wachovia Bank of Delaware, National Association, a national banking
association, as trustee (the "Owner Trustee"), to form a statutory trust under
the Delaware Statutory Trust Act (12 Del. Code, Section 3801 et seq.).
1. Name. The name of the statutory trust formed hereby is Credit
Acceptance Auto Dealer Loan Trust 2004-1.
2. Delaware Trustee. The name and business address of the Owner
Trustee is:
Wachovia Bank of Delaware, National Association
One ▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WACHOVIA BANK OF DELAWARE,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as owner trustee of
the Trust.
By: _______________________________
Name:
Title: