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AMENDED AND RESTATED SECURITY AGREEMENT
among
ENTERPRISE FUNDING CORPORATION,
as Company,
UNION ACCEPTANCE FUNDING CORPORATION,
as Seller
UAFC CORPORATION,
as Debtor
UNION ACCEPTANCE CORPORATION,
Individually and as Collection Agent
MBIA INSURANCE CORPORATION
as Insurer
and
BANK OF AMERICA, N.A.,
as Collateral Agent and Bank Investor
Dated as of May 12, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms.............................................2
SECTION 1.2 Other Terms......................................................28
SECTION 1.3 Computation of Time Periods......................................28
ARTICLE II
GRANT OF SECURITY INTEREST AND SETTLEMENTS
SECTION 2.1 Grant of Security Interest.......................................28
SECTION 2.2 Carrying Costs, Fees and Other Costs and Expenses................29
SECTION 2.3 Allocations of Collections; Reserve Account Advances;
Servicer Advances................................................30
SECTION 2.4 Liquidation Settlement Procedures................................33
SECTION 2.5 Fees.............................................................34
SECTION 2.6 Protection of Interest of the Collateral Agent...................34
SECTION 2.7 Payments on Receivables; Application of Payments.................35
SECTION 2.8 Payments and Computations, Etc...................................36
SECTION 2.9 Reports..........................................................36
SECTION 2.10 Collection Account...............................................37
SECTION 2.11 Prefunding Account; Prefunding Interest Reserve Account;
Interest Reserve Deposits; Interest Reserve Advances;
Reimbursements...................................................38
SECTION 2.12 Prefunding Account and Prefunding Interest Reserve Account
Withdrawals......................................................41
SECTION 2.13 Yield Supplement Account, Deposits; Withdrawals..................42
SECTION 2.14 Reserve Account; Withdrawals; Releases; Draws
on Policy........................................................44
SECTION 2.15 Optional Release.................................................46
SECTION 2.16 Hedging Amounts..................................................50
i
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Debtor.............52
SECTION 3.2 Representations and Warranties of the Collection Agent...55
SECTION 3.3 Reaffirmation of Representations and Warranties..........57
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Effectiveness..............................58
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Debtor, the Seller and UAC..60
SECTION 5.2 Negative Covenants of Debtor, the Seller and UAC.........65
SECTION 5.3 Acceptable Hedging Arrangements..........................67
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent..........................68
SECTION 6.2 Duties of Collection Agent...............................68
SECTION 6.3 Collection Agent Defaults................................70
SECTION 6.4 Rights After Designation of New Collection Agent.........71
SECTION 6.5 Responsibilities of the Debtor...........................72
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events.......................................72
SECTION 7.2 Termination..............................................74
SECTION 7.3 Proceeds.................................................76
ii
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Duties of the Collateral Agent...........................76
SECTION 8.2 Compensation and Indemnification of Collateral Agent.....78
SECTION 8.3 Representations, Warranties and Covenants of the
Collateral Agent.........................................78
SECTION 8.4 Liability of the Collateral Agent........................79
SECTION 8.5 Merger or Consolidation of, or Assumption of the
Obligations of, the Collateral Agent.....................82
SECTION 8.6 Limitation on Liability of the Collateral Agent
and Others............................................83
SECTION 8.7 Indemnification of the Secured Parties...................83
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Term of Agreement........................................84
SECTION 9.2 Waivers; Amendments......................................84
SECTION 9.3 Notices..................................................85
SECTION 9.4 Governing Law; Submission to Jurisdiction; Integration...88
SECTION 9.5 Severability; Counterparts...............................89
SECTION 9.6 Successors and Assigns...................................89
SECTION 9.7 Waiver of Confidentiality................................90
SECTION 9.8 Confidentiality Agreement................................90
SECTION 9.9 No Bankruptcy Petition Against the Company...............90
SECTION 9.10 No Recourse Against Stockholders, Officers or Directors..91
SECTION 9.11 Further Assurances.......................................91
SECTION 9.12 Exercise of Rights by Insurer............................91
SECTION 9.13 Characterization of the Transactions Contemplated by
the Agreement; Tax Treatment.............................92
iii
EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B List of Lock-Box Banks and Lock-Box Accounts
EXHIBIT C Form of Policy
EXHIBIT D Form of Settlement Statement
EXHIBIT E Form of UAFC Withdrawal Notice
EXHIBIT F List of Actions and Suits
EXHIBIT G Schedule of Locations of Records
EXHIBIT H List of Subsidiaries, Divisions and
Tradenames
EXHIBIT I Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
EXHIBIT J Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
iv
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this
"Agreement"), dated as of May 12, 2000, by and among UNION ACCEP TANCE FUNDING
CORPORATION, an Indiana corporation, as Seller (in such capacity, the "Seller"),
UAFC CORPORATION, a Delaware corporation, as debtor (in such capacity, the
"Debtor"), UNION ACCEPTANCE CORPORATION, an Indiana corporation ("UAC"),
individually and in its capacity as collection agent (in such capacity, the
"Collection Agent"), ENTERPRISE FUNDING CORPORATION, a Delaware corporation (the
"Company"), MBIA INSURANCE CORPORATION, a New York stock insurance company, as
financial guaranty insurer (the "Insurer") and BANK OF AMERICA, N.A., a national
banking association ("Bank of America"), individually and as collateral agent
for the Company, the Bank Investors, and the Insurer (in such capacity, the
"Collateral Agent").
PRELIMINARY STATEMENTS
WHEREAS, the parties identified in the preceding paragraph
desire to amend and restate the Existing Security Agreement (defined below).
WHEREAS, subject to the terms and conditions of this
Agreement, the Debtor desires to grant a security interest in and to the
Receivables and related property including the Debtor's interest in certain
retail automotive installment sales contracts;
WHEREAS, Union Acceptance Funding Corporation, a Delaware
corporation, referred to in the Existing Security Agreement has changed its name
to UAFC Corporation and Union Acceptance Funding Corporation, an Indiana corpora
tion referred to herein is a new entity;
WHEREAS, pursuant to the Insurance Agreement, the Insurer has
issued its Policy to provide for the full and timely payment of all amounts of
interest due on and principal of the Note;
WHEREAS, pursuant to the Note Purchase Agreement, the Debtor
has issued the Note to the Company and will be obligated to the holder of the
Note to pay the principal of and interest on the Note in accordance with the
terms thereof;
1
WHEREAS, the Debtor is granting a security interest in the
Collateral to the Collateral Agent, for the benefit of the Secured Parties, to
secure the payment and performance of the Debtor of its obligations under this
Agreement, the Note, the Note Purchase Agreement and the Insurance Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Acceptable Hedging Arrangement" shall have the meaning
specified in the Insurance Agreement.
"Accrued Interest Component" shall mean, for any Settlement
Period, the Interest Component of all Related Commercial Paper outstanding at
any time during such Settlement Period which has accrued from the first day
through the last day of such Settlement Period, whether or not such Related
Commercial Paper matures during such Settlement Period. For purposes of the
immediately preceding sentence, the portion of the Interest Component of Related
Commercial Paper accrued in a Settlement Period in which Related Commercial
Paper has a stated maturity date that succeeds the last day of such Settlement
Period shall be computed based on the actual number of days that such Related
Commercial Paper was outstanding during such Settlement Period.
"Acquisition Subsidiary" shall mean PAC, or any wholly-owned
subsidiary of UAC which has entered into (i) agreements with dealers in certain
states for the origination or purchase of Receivables, and (ii) an agreement
with UAC pursuant to which UAC acquires all Receivables originated or purchased
by such Acquisition Subsidiary.
"Adjusted LIBOR Rate" means, with respect to any Settlement
Period, a rate per annum equal to the sum (rounded upwards, if necessary, to the
next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve percentage used
for determining the maximum reserve requirement as specified in Regulation D
(includ ing, without limitation, any marginal, emergency, supplemental, special
or other reserves) that is applicable to the Agent during such Settlement Period
in respect of eurocurrency or eurodollar funding, lending or liabilities (or, if
more than one percentage shall be so applicable, the daily average of such
percentage for those days in such Settlement Period during which any such
percentage shall be applicable) plus (B) the then daily net annual assessment
rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as estimated by
the Agent for determining the current annual assessment payable by the Agent to
the Federal Deposit Insurance Corporation in respect of eurocurrency or
eurodollar funding, lending or liabilities.
"Administrative Agent" shall mean Bank of America, as
administra tive agent.
"Adverse Claim" shall mean a lien, security interest, charge
or encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of voting stock, by contract or
otherwise.
"Agent" shall mean Bank of America, as agent for the Company
and the Bank Investors, and its successors and assigns.
"Aggregate Unpaids" shall mean, at any time, an amount equal
to the sum of (i) the aggregate accrued and unpaid Carrying Costs at such time,
(ii) an amount equal to the Company's existing obligations which comprise
Carrying Costs thereafter, (iii) the Net Investment at such time, and (iv) all
other amounts owed (whether due or accrued) hereunder and under the other
Transaction Documents by the Debtor at such time.
"Arrangement Fee" shall mean the fee payable by the Debtor to
the Administrative Agent pursuant to Section 2.5 hereof, the terms of which are
set forth in the Fee Letter.
2
"Available Funds" shall have the meaning specified in Section
2.3 hereof.
"Bank Investors" shall have the meaning specified in the Note
Purchase Agreement.
"Bank of America" shall have the meaning specified in the
preamble hereto.
"Base Rate" shall mean, a rate per annum equal to the greater
of (i) the prime rate of interest announced by the Liquidity Provider from time
to time, changing when and as said prime rate changes (such rate not necessarily
being the lowest or best rate charged by the Liquidity Provider) and (ii) the
rate equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by the
Liquidity Provider from three Federal funds brokers of recognized standing
selected by it plus 2.0%.
"Business Day" shall mean any day excluding Saturday, Sunday
and any day on which banks in New York, New York, Charlotte, North Carolina,
Little Rock, Arkansas, Indianapolis, Indiana, or Bonita Springs, Florida are
authorized or required by law to close.
"Carrying Costs" shall mean for any Settlement Period the sum
of:
(i) the sum of the dollar amount of the Company's
obligations for such Settlement Period determined on an accrual basis in
accordance with generally accepted accounting principles consistently applied
(a) to pay interest with respect to the Transferred
Interest pursuant to the provisions of the Liquidity Provider Agreement (such
interest to be calculated based on the Adjusted LIBOR Rate, if available,
otherwise to be calcu lated at the Base Rate), outstanding at any time during
such Settlement Period accrued from the day of the acquisition of the related
Transferred Interest through the last day of such Settlement Period whether or
not such interest is payable during such Settlement Period;
3
(b) without duplication of the amounts described in
clause (a) above, to pay interest, calculated at the Base Rate, with respect to
amounts disbursed by the Credit Support Provider in respect of Defaulted
Receivables or in respect of shortfalls between the Assignment Amount obtained
by the Company upon the assignment of the Transferred Interest to the Bank
Investors and the Net Investment, outstanding at any time during such Settlement
Period accrued from the first day through the last day of such Settlement Period
whether or not such interest is payable during such Settlement Period;
(c) to pay the Accrued Interest Component of Related
Commercial Paper with respect to any Settlement Period (it being understood that
to the extent the Company has obtained funding under the Liquidity Provider
Agree ment or a Credit Support Agreement, the Company will not obtain
duplicative funding in the commercial paper markets);
(d) to pay the Dealer Fee;
(e) to pay any servicing compensation payable to a
successor Collection Agent appointed pursuant to Section 6.1 of this Agreement;
(f) to reimburse any successor Collection Agent for
any Interest Reserve Advances made by such successor Collection Agent and not
previously reimbursed;
(g) to pay any past due amounts not paid in clause
(a), (b) and (c) with respect to prior Settlement Periods;
(h) to pay the costs of the Company with respect to
the Yield Protection Provision, which amounts paid pursuant to this clause (h)
shall not exceed 1.00% per annum of the Net Investment; and
(ii) the Program Fee, the Administrative Fee, and
Liquidity Fee accrued from the first day through the last day of such Settle
ment Period whether or not such amount is payable during such Settlement Period
the sum of which amounts shall not exceed 0.17% per annum of the Net Investment
plus 0.11% per annum of the Facility Limit.
4
During any Settlement Period during which the Bank Investors
have (x) advanced funds with respect to a Funding or (y) acquired an interest in
the Note, in lieu of the amounts described in clauses (i)(c) and (i)(d) above,
Carrying Costs shall include interest on the daily average Net Investment for
the related Settlement Period at the Adjusted LIBOR Rate, or if such rate is
unavailable, at the Base Rate, or if an Insurer Default and a Termination Event
shall have occurred and be continu ing, at the Base Rate plus 2.00%.
"Closing Date" shall mean September 18, 1998.
"Collateral" shall have the meaning specified in Section 2.1
hereof; provided, that the term "Collateral" specifically excludes Modified
Receivables.
"Collateral Agent" shall mean Bank of America, as collateral
agent for the Secured Parties, and its successors and assigns.
"Collections" shall mean, with respect to any Receivable, all
cash collections and other cash proceeds of such Receivable, including, without
limita tion, all Finance Charges, if any, and any refunded portion of extended
warranty protection plan costs or of insurance costs (for example, physical
damage, credit life or disability) included in the original amount financed
under such Receivable, and cash proceeds of Related Security with respect to
such Receivable, provided that amounts received in respect of a Receivable which
constitute, in accordance with the Credit and Collection Policy, a payment of a
late payment charge, insufficient funds charge or a prepayment charge will not
be considered a Collection and shall be retained by the Collection Agent and not
deposited into the Collection Account.
"Collection Account" shall mean the account established by the
Collateral Agent, for the benefit of the Secured Parties, pursuant to Section
2.10.
"Collection Agent" shall mean at any time the Person then
authorized pursuant to Section 6.1 to service, administer and collect
Receivables.
"Collection Agent Default" shall have the meaning specified in
Section 6.3.
"Commercial Paper" shall mean the promissory notes of the
Company issued by the Company in the commercial paper market.
5
"Commitment" shall have the meaning specified in the Note
Purchase Agreement.
"Commitment Termination Date" shall mean September 7, 2000, or
such later date to which the Commitment Termination Date may be extended by the
Debtor, the Agent and the Bank Investors not later than 30 days prior to the
then current Commitment Termination Date.
"Company" shall have the meaning specified in the preamble
hereto.
"Conduit Assignee" shall have the meaning specified in the
Note Purchase Agreement.
"Contract" shall mean any and all retail installment sales
contracts or installment notes and security agreements relating to the sale of a
new or used automobile, light duty truck or van and other writings related
thereto now existing and hereafter created or acquired by UAC (or in the case of
certain Receivables existing on the Cut-Off Date, created or acquired by PAC or
UAC d/b/a PAC) and assigned from time to time to (i) the Debtor pursuant to the
Sale and Purchase Agreement or the PFC Sale and Purchase Agreement, as
applicable, (ii) the Seller pursuant to the UAFC Sale and Purchase Agreement
which shall subsequently be assigned from the Seller to the Debtor pursuant to
the UAFCC Sale and Purchase Agreement or (iii) the Debtor from a Warehouse
pursuant to a Warehouse Transfer Agreement.
"Credit and Collection Policy" shall mean the Collection
Agent's credit and collection policy or policies and practices relating to
"prime" and "non- prime" automobile installment sales contracts, existing on the
date hereof and referred to in Exhibit A attached hereto, as amended,
supplemented or otherwise modified and in effect from time to time in compliance
with Section 5.2(d).
"Credit Support Agreement" shall mean the agreement between
the Company and the Credit Support Provider evidencing the obligation of the
Credit Support Provider to provide credit support to the Company in connection
with the issuance by the Company of Commercial Paper.
"Credit Support Provider" shall mean the Person or Persons who
will provide credit support to the Company in connection with the issuance by
the Company of Commercial Paper.
6
"Cut-Off Date" shall mean September 17, 1998.
"Dealer Fee" shall mean the fee payable by the Debtor to the
Collat eral Agent, pursuant to Section 2.5 hereof, the terms of which are set
forth in the Fee Letter.
"Debtor" shall mean UAFC Corporation, a Delaware corporation
(known under the Existing Security Agreement as Union Acceptance Funding
Corporation, a Delaware corporation).
"Defaulted Receivable" shall mean, for any Settlement Period,
a Receivable: (i) as to which any payment (in excess of $10.00), or part thereof
(in excess of $10.00), remains unpaid for 120 days or more as of the last day of
such Settlement Period; (ii) which has been or should have been identified by
the Collec tion Agent as uncollectible in accordance with the Collection Agent's
customary practices on or before the last day of such Settlement Period; or
(iii) as to which the related Financed Vehicle has been repossessed from the
Obligor.
"Delinquent Receivable" shall mean a Receivable: (i) as to
which any payment, or part thereof (provided that such part is in excess of
$10.00), remains unpaid for more than thirty (30) days from the due date for
such payment and (ii) which is not a Defaulted Receivable.
"Determination Date" shall mean, with respect to each
Remittance Date, the second Business Day preceding such Remittance Date.
"Duff & ▇▇▇▇▇▇" shall mean Duff & ▇▇▇▇▇▇ Credit Rating
Company.
"Eligible Institution" shall mean the Collateral Agent or any
other depository institution organized under the laws of the United States or
any one of the States thereof including the District of Columbia, the deposits
in which are insured by the FDIC and which at all times has a short-term
unsecured debt rating of at least "A-1+" and "P-1" from Standard & Poor's and
Moody's, respectively, and of at least "D-1+" from Duff & ▇▇▇▇▇▇, if such
institution is rated by Duff & ▇▇▇▇▇▇, and of at least "F-1+" from Fitch, if
such institution is rated by Fitch.
"Eligible Investments" shall mean (a) negotiable instruments
or securities represented by instruments in bearer or registered or in
book-entry form which evidence (i) obligations fully guaranteed by the United
States of America; (ii)
7
time deposits in, or bankers acceptances issued by, any depository institution
or trust company incorporated under the laws of the United States of America or
any state thereof (or any domestic branch or agency of any foreign bank) and
subject to supervision and examination by Federal or state banking or depository
institution authorities; provided, however, that at the time of the investment
or contractual commitment to invest therein, the certificates of deposit or
short-term deposits, if any, or long-term unsecured debt obligations (other than
any such obligation whose rating is based on collateral or on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from Moody's and
Standard & Poor's of at least "P-1" and "A-1+", respec tively, and from Duff &
▇▇▇▇▇▇ of at least "D-1+", if such investment is rated by Duff & ▇▇▇▇▇▇, and
from Fitch of at least "F-1+", if such investment is rated by Fitch, in the case
of the certificates of deposit or short-term deposits, or a rating not lower
than one of the two highest investment categories granted by Moody's and
Standard & Poor's and Duff & ▇▇▇▇▇▇, if such investment is rated by Duff &
▇▇▇▇▇▇, and Fitch, if such investment is rated by Fitch; (iii) certificates of
deposit having, at the time of the investment or contractual commitment to
invest therein, a rating from Moody's and Standard & Poor's of at least "P-1"
and "A-1+", respectively, and from Duff & ▇▇▇▇▇▇ of at least "D-1+", if such
certificates of deposit are rated by Duff & ▇▇▇▇▇▇, and from Fitch of at least
"F-1", if such certificates of deposit are rated by Fitch; or (iv) investments
in money market funds rated in the highest investment category, (b) demand
deposits in the name of the Secured Parties or the Collateral Agent on behalf of
the Secured Parties in any depository institution or trust company referred to
in (a)(ii) above, (c) commercial paper (having original or remaining maturities
of no more than 30 days) having, at the time of the investment or contractual
commitment to invest therein, a credit rating from Moody's and Standard & Poor's
of at least "P-1" and "A-1+", respectively, and from Duff & ▇▇▇▇▇▇ of at least
"D-1+", if such commercial paper is rated by Duff & ▇▇▇▇▇▇, and from Fitch of at
least "F-1", if such commercial paper is rated by Fitch, (d) Eurodollar time
deposits having a credit rating from Moody's and Standard & Poor's of at least
"P-1" and "A-1+", respec tively, and from Duff & ▇▇▇▇▇▇ of at least "D-1+", if
such deposits are rated by Duff & ▇▇▇▇▇▇, and from Fitch of at least "F-1", if
such deposits are rated by Fitch, and (e) repurchase agreements involving any of
the Eligible Investments described in clauses (a)(i), (a)(iii) and (d) hereof so
long as the other party to the repurchase agreement has at the time of the
investment therein, a rating from Moody's and Standard & Poor's of at least
"P-1" and "A-1+", respectively, and from Duff & ▇▇▇▇▇▇ of at least "D-1+", if
such party is rated by Duff & ▇▇▇▇▇▇, and from Fitch of at least "F-1", if such
party is rated by Fitch.
8
"Eligible Receivable" shall mean, at any time, any Receivable:
(i) (A) which shall have been either (x)
originated by or through a factory authorized dealer, a nationally
recognized rental car outlet, or a nationally recognized used car
superstore, in each case located in the United States and which,
together with the Contract related thereto, shall have been validly
assigned by such dealer to an Acquisition Subsidiary or UAC or pursuant
to the terms of such Contract, for the retail sale of the related
Financed Vehicle in the ordinary course of its business, shall have
been validly assigned to UAC if such Receivable had been assigned by
such a dealer to an Acquisition Subsidiary (other than PAC) or to PFC
if such Receivable had been assigned by such a dealer to PAC or UAC
d/b/a PAC, shall have been fully and properly executed by the parties
thereto, and shall have been advanced directly to or for the benefit of
the Obligor for the purchase of the related Financed Vehi cle, or (y)
originated by an Acquisition Subsidiary or UAC for the retail sale of
the related Financed Vehicle in the ordinary course of its business,
shall have been validly assigned to UAC if such Receivable had been
originated by an Acquisition Subsidiary (other than PAC) or to PFC if
such Receivable had been originated by PAC or UAC d/b/a PAC, shall have
been fully and properly executed by the parties thereto, and shall have
been advanced directly to or for the benefit of the Obligor for the
purchase of the related Financed Vehicle, (B) shall have been sold by
UAC or PFC to the Debtor pursuant to the Sale and Purchase Agreement or
the PFC Sale and Purchase Agreement, as applicable or shall have been
sold by UAC to the Seller pursuant to the UAFC Sale and Purchase
Agreement and subsequently sold by the Seller to the Debtor pursuant to
the UAFCC Sale and Purchase Agree ment, or to the Debtor by another
Warehouse pursuant to a ▇▇▇▇ house Transfer Agreement and to which
Debtor has good title thereto, free and clear of all Adverse Claims and
(C) the Contract related to which shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for the realization against the collateral of
the benefits of the security pro vided thereby;
(ii) the Obligor of which is recorded in the
Collection Agent's records as having a United States billing address,
9
is a natural person, and is not a government or a governmental subdi
vision or agency;
(iii) which is not a Defaulted Receivable at the time
of the initial creation of an interest of the Company therein;
(iv) which is not a Delinquent Receivable at the time
of the initial creation of an interest of the Company therein provided,
however, that if a Receivable is a Delinquent Receivable at the time of
initial creation of an interest of the Company and at any time
subsequently is not a Delinquent Receivable, such Receivable may become
an Eligible Receivable from such time going forward;
(v) which, according to the Contract related thereto,
shall provide for level monthly payments (provided that the payment in
the first or last month in the life of the Receivable may be minimally
different from such level payment) that fully amortize the amount
financed over the original term;
(vi) the Contract related thereto shall pro vide for
the calculation of interest payable thereunder under either the "simple
interest" or "Rule of 78's" or the "sum of the periodic time balances"
method;
(vii) the Contract related to which provides for no
more than 84 monthly payments;
(viii) which is an "eligible asset" as defined in
Rule 3a-7 under the Investment Company Act of 1940, as amended;
(ix) which is "chattel paper" within the meaning of
Article 9 of the Relevant UCC, and which is secured by a first priority
perfected lien on the related Financed Vehicle, free and clear of any
Adverse Claim or for which all necessary steps to result in such a
first priority perfected lien shall have been taken;
(x) which is denominated and payable only in United
States dollars in the United States;
10
(xi) which arises under a Contract that, together
with the Receivable related thereto, is in full force and effect and
constitutes the legal, valid and binding obligation of the related
Obligor enforceable against such Obligor in accordance with its terms
and is not subject to any offset, counterclaim or other defense at such
time;
(xii) which, together with the Contract related
thereto, does not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation, laws,
rules and regulations relating to usury laws, the Federal Truth-
in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, Regula tions B
and Z of the Federal Reserve Board, various state adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws) and with respect to which no part of the Contract related thereto
is in violation of any such law, rule or regulation in any material
respect;
(xiii) which (A) satisfies all applicable re
quirements of the Credit and Collection Policy and is a Prime Receiv
able or a Non-Prime Receivable, (B) arises under a Contract which does
not require the Obligor under such Contract to consent to the transfer
of the rights and duties of the Debtor or the Seller under such
Contract, and which does not contain a confidentiality provision that
purports to restrict the ability of the Company to exercise its rights
under this Agreement, including, without limitation, its right to
review the Contract, (C) arises under a Contract with respect to which
UAC, any Acquisition Subsidiary, the Seller and the Debtor have each
performed all obligations required to be performed by them thereun der,
and delivery of the Financed Vehicle to the related Obligor has
occurred, and (D) complies with such other criteria and requirements as
the Company may from time to time reasonably specify to the Debtor
following sixty (60) days' notice; and
(xiv) the Obligor of which has been directed to make
all payments to a specified account of the Collection Agent.
11
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
thereunder.
"ERISA Affiliate" means, with respect to any Person, (i) any
corpora tion which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code of 1986 (as
in effect from time to time, the "Code")) as such Person; (ii) a trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person; or (iii) a member of the same
affiliated service group (within the meaning of Section 414(n) of the Code) as
such Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above.
"Event of Bankruptcy", with respect to any Person, shall mean
(i) that such Person shall generally not pay its debts as such debts become due
or shall admit in writing its inability to pay its debts generally or shall make
a general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Person seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composi tion of it or its debts under any law
relating to bankruptcy, insolvency or reorganiza tion or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or (ii) if such Person is a corporation, such Person or any Subsidiary shall
take any corporate action to authorize any of the actions set forth in the
preceding clause (i).
"Excess Delinquent Receivables Balance" shall mean an amount,
calculated on the day a Take-Out occurs and for each day until the next Take-Out
occurs, equal to the excess, if any, of (i) the Outstanding Balance of all
Delinquent Receivables which are also Eligible Receivables at any time of
determination over (ii) the product of 2.5% and the Net Receivables Balance
(calculated without giving effect to clause (iv) of the definition thereof) at
any time of determination; provided, that if the Excess Delinquent Receivables
Balance shall, at any time since the most recent Take-Out, be less than or equal
to zero, the Excess Delinquent Receivables Balance shall be deemed to be zero
from such time until the next Take-Out shall occur.
12
"Existing Security Agreement" shall mean the Security
Agreement, dated as of September 18, 1998 among UAC, the Debtor, the Collateral
Agent, the Insurer and the Company.
"Face Amount" shall mean (i) with respect to Commercial Paper
issued on a discount basis, the face amount stated therein, and (ii) with
respect to Commercial Paper which is interest-bearing, the principal amount of
and interest accrued and to accrue on such Commercial Paper to its stated
maturity.
"Facility Limit" shall mean $500,000,000.
"Fee Letter" shall mean the letter agreement dated the date
hereof between the Debtor, the Collateral Agent and the Company, as amended,
modified or supplemented from time to time.
"Finance Charges" shall mean, with respect to a Contract, any
finance, interest or similar charges owing by an Obligor or another Person
pursuant to such Contract.
"Financed Vehicle" shall mean, with respect to a Receivable,
any new or used automobile, van or light-duty truck, together with all
accessories thereto, securing the related Obligor's indebtedness thereunder.
"Fitch" shall mean Fitch IBCA, Inc.
"Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Funding Date" shall have the meaning specified in the Note
Purchase Agreement.
"Hedge Proceeds Account" shall have the meaning specified in
Section 2.16(a).
"Initial Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Insurance Agreement" shall mean that certain Amended and
Restated Insurance and Reimbursement Agreement, dated as of May 12, 2000, among
the
13
Collection Agent, the Debtor, the Seller, the Collateral Agent and the Insurer
as amended, redefined or supplemented from time to time.
"Insurer" shall mean MBIA Insurance Corporation, a New York
stock insurance company.
"Insurer Default" shall mean, at any time, any failure by the
Insurer to make any payment when due under the Insurance Agreement or under the
Policy.
"Interest Component" shall mean, with respect to Commercial
Paper issued (i) on a discount basis, the portion of the Face Amount of such
Commercial Paper representing the discount incurred in respect thereof and (ii)
on an interest- bearing basis, the interest payable on such Commercial Paper at
its maturity pro vided, however, that if any component of such rate is a
discount rate in calculating the Interest Component, the rate used to calculate
such component of such rate shall be a rate resulting from converting such
discount rate to an interest bearing equiva lent rate per annum.
"Interest Reserve Advance" shall mean, with respect to any
Remit tance Date, the amount, if any (which shall not be less than zero), equal
to (i) the product of (x) the daily weighted average amount on deposit in the
Prefunding Account during the preceding Settlement Period, (y) the Targeted
Interest Rate for such Settlement Period (on a per annum basis) and (z) a
fraction the numerator of which is the number of days in such Settlement Period
and the denominator of which is 360 minus (ii) the amount earned during the
preceding Settlement Period on amounts on deposit in the Prefunding Account.
"Interest Reserve Deposit" shall have the meaning specified in
Section 2.11.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"LIBOR Rate" means, with respect to any Settlement Period, the
rate determined by Bank of America to be (i) the per annum rate for deposits in
U.S. Dollars for a term of one month which appears on the Telerate Page 3750
Screen on the day that is two London Business Days prior to the first day of
such Settlement Period except, that if such first day of the Settlement Period
is not a Business Day,
14
then the first preceding day that is a Business Day (rounded upwards, if
necessary, to the nearest 1/100,000 of 1%), (ii) if such rate does not appear on
the Telerate Page 3750 Screen, the term "LIBOR Rate" with respect to that
Settlement Period shall be the arithmetic mean (rounded upwards, if necessary,
to the nearest 1/100,000 of 1%) of the offered quotations obtained by Bank of
America from four major banks in the London interbank market selected by Bank of
America (the "Reference Banks") for deposits in U.S. Dollars to leading banks in
the London interbank market as of approximately 11:00 a.m. (London time) on the
day that is two London Business Days prior to the first day of such Settlement
Period, unless such first day of the Settlement Period is not a Business Day, in
which case, the first preceding day that is a Business Day or (iii) if fewer
than two Reference Banks provide Bank of America with such quotations, the LIBOR
Rate shall be the rate per annum which Bank of America determines to be the
arithmetic mean (rounded upwards, if necessary, to the nearest 1/100,000 of 1%)
of the offered quotations which leading banks in New York City selected by Bank
of America are quoting in the New York interbank market on such date for
deposits in U.S. dollars to the Reference Banks or; if fewer than two such
quotations are available, to leading European and Canadian banks.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing.
"Liquidity Provider Agreement" shall mean the agreement
between the Company and the Liquidity Provider evidencing the obligation of the
Liquidity Provider to provide liquidity support to the Company in connection
with the issuance by the Company of Commercial Paper.
"Liquidity Provider" shall mean the Person or Persons who
provide liquidity support to the Company in connection with the issuance by the
Company of Commercial Paper.
"Lock-Box Account" shall mean an account or accounts
maintained by the Collection Agent at a Lock-Box Bank for the purpose of
receiving Collections from Receivables.
15
"Lock-Box Bank" shall mean each of the banks set forth in
Exhibit B hereto and such banks as may be added thereto or deleted therefrom
pursuant to Section 2.6.
"London Business Day" shall mean any day which is a Business
Day and also is a day on which commercial banks are open for international
business (including dealings in U.S. Dollar deposits) in London.
"Majority Investors" shall have the meaning specified in the
Note Purchase Agreement.
"Minimum Required APR" shall mean, as of any date of determina
tion, the greater of (i) the money market yield of the rate quoted on a discount
basis for commercial paper having a thirty (30) day maturity, as made available
and subsequently published by the Board of Governors of the Federal Reserve
System in H.15(519) under the heading "Commercial Paper" plus 1.40% per annum
and (ii) the current yield to maturity of the United States Treasury Security
having a maturity of two years (or if there is more than one such security, the
average of the yields to maturity thereof) plus 1.63% per annum.
"Modified Receivable" means indebtedness owed to the Debtor by
an Obligor (without giving effect to any transfer under this Agreement) under a
Con tract which has been modified and is classified as a type 44, 45, 74 or 75
receivable in the Debtor's records, whether constituting an account, chattel
paper, instrument or general intangible, arising out of or in connection with
the sale of new or used automobiles, vans or light-duty trucks or the rendering
of services by the originating dealer in connection therewith, and includes the
right of payment of any finance charges and other obligations of the Obligor
with respect thereto.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Negative Carry" shall mean, with respect to any Prefunding
Date, a percentage equal to (i) for the amount on deposit in the Prefunding
Account by the Company, (a) the money market yield of the rate quoted on a
discount basis for commercial paper having a thirty (30) day maturity, as made
available and subse quently published by the Board of Governors of the Federal
Reserve System in H.15(519) under the heading "Commercial Paper", plus (b)
1.40%, minus (c) the Targeted Interest Rate; (ii) for the amount on deposit in
the Prefunding Account
16
funded by the Bank Investors, (a) the LIBOR Rate, (b) plus 1.40%, minus (c) the
Targeted Interest Rate.
"Net Asset Test" shall have the meaning specified in the Note
Purchase Agreement.
"Net Investment" shall mean the sum of (i) all amounts paid to
the Debtor for the Initial Funding plus (ii) the cumulative amount of Prefunding
Deposits minus (iii) the aggregate amount released from the Prefunding Account
and applied to reduce the Net Investment pursuant to Section 2.12, minus (iv)
the aggregate amount released from the Prefunding Interest Reserve Account and
applied to reduce the Net Investment pursuant to Section 2.12, minus (v) the sum
of (a) the aggregate amount of Receipts of Principal on deposit in the
Collection Account, plus (b) the aggregate amount of Receipts of Principal which
have been received by the Collec tion Agent on or prior to any date of
determination but have not yet been deposited in the Collection Account (if such
Receipts of Principal are not so deposited therein within 2 Business Days of the
receipt thereof by the Collection Agent the "Net Investment" shall thereupon be
recalculated, effective as of the original date of determination, without giving
effect to such Receipts of Principal) plus (c) the aggregate amount of
Collections received and applied by the Company to reduce such Net Investment
pursuant to Section 2.3, minus (vi) draws on the Policy distrib uted and applied
in reduction of Net Investment, and minus (vii) the aggregate amount of funds
received and applied to reduce such Net Investment pursuant to Sections 2.7,
2.15 and 2.16; provided that the Net Investment shall be restored in the amount
of any Collections so received and applied if at any time the distribution of
such Collections is rescinded or must otherwise be returned for any reason;
provided further, that as to the Insurer, draws made under the Policy will not
reduce the principal amount due under the Note.
"Net Negative Hedging Amounts" shall mean, as of any
Remittance Date, an amount equal to the amount by which (i) the aggregate amount
of losses incurred by the Debtor on any Acceptable Hedging Arrangements during
the related Settlement Period and any prior Settlement Periods exceeds (ii) the
sum of (x) the aggregate amount of gains retained by the Collection Agent on any
Acceptable Hedging Arrangements during the related Settlement Period and any
prior Settlement Periods and (y) amounts distributed to the Collection Agent
pursuant to Section 2.3(a)(xiii) on any prior Remittance Date.
17
"Net Receivables Balance" means at any time the Outstanding
Balance of the Eligible Receivables at such time reduced by the sum of (i) the
amount by which the aggregate Outstanding Balance of Undocumented Receivables
exceeds $15,000,000, plus (ii) the aggregate Outstanding Balance of all Eligible
Receivables which are Defaulted Receivables, plus (iii) the amount, if any, by
which the aggregate outstanding Balance of all Eligible Receivables which are
Non-Prime Receivables exceeds the product of (x) 5% and (y) the Outstanding
Balance of all Eligible Receivables, plus (iv) the Excess Delinquent Receivables
Balance.
"Net Yield" shall mean, as calculated on each Determination
Date, the product of (i) 12 and (ii) a fraction, the numerator of which is (x)
the Available Funds less the aggregate amount of Carrying Costs accrued during
the related Settlement Period less the aggregate Outstanding Balance of all
Receivables which became Defaulted Receivables during the related Settlement
Period net of the aggregate amount of recoveries received during such Settlement
Period, and the denominator of which is (y) the average daily Net Investment for
such Settlement Period. The Net Yield shall be expressed as a percentage.
"Non-Prime Percentage" shall mean the Net Receivables Balance
of all Non-Prime Receivables divided by the Net Receivables Balance.
"Note" shall have the meaning specified in the Note Purchase
Agree ment.
"Non-Prime Receivable" shall mean an account which is
identified on the Collection Agent's master servicing record as a "type 14"
account.
"Noteholder's Percentage" shall mean an amount equal to 100%
less the product of (i) 2, and (ii) the amount, if any, by which the Target Net
Yield exceeds the Net Yield as of the most recent Determination Date. The
Noteholder's Percentage shall initially equal 100%
"Note Purchase Agreement" shall mean that certain Amended and
Restated Note Purchase Agreement, dated as of May 12, 2000, among the Debtor,
the Company, the Bank Investors and the Agent as amended, restated and supple
mented from time to time.
"Obligor" shall mean a Person obligated to make payments
pursuant to a Contract.
18
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumen tality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Other Transferor" shall have the meaning specified in the
Note Purchase Agreement.
"Outstanding Balance" of a Receivable at any time shall mean
the amount advanced under the related Contract toward the purchase price of the
related Financed Vehicle and related costs minus all Receipts of Principal
received with respect to such Receivable.
"PAC" shall mean Performance Acceptance Corporation, an
Indiana corporation, and its successors and assigns, including UAC and UAC d/b/a
PAC.
"Person" shall mean any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization, enterprise,
government or any department or agency of any government.
"PFC" shall mean Performance Funding Corporation, a Delaware
corporation, and its successors and assigns.
"PFC Sale and Purchase Agreement" shall mean the Purchase and
Assignment Agreement, dated as of February 28, 1998, among the Debtor, as
purchaser, and PFC, as seller, as amended to the date hereof and as amended,
modified or supplemented from time to time hereafter.
"Policy" shall mean that certain financial guaranty insurance
policy, substantially in the form attached hereto as Exhibit C.
"Potential Termination Event" shall mean an event which but
for the lapse of time or the giving of notice, or both, would constitute a
Termination Event.
"Prefunding Account" shall mean the account established by the
Collateral Agent, for the benefit of the Secured Parties, pursuant to Section
2.11.
"Prefunding Date" shall mean the 1st calendar day of each
month (or if such day is not a Business Day, the next succeeding Business Day)
and such other
19
dates which are agreed upon by the Debtor and the Agent at least one Business
Day in advance; provided, that there shall in no event be more than two
additional Prefunding Dates in any period between any two Remittance Dates
(without Agent approval) and provided, further, that no Prefunding Date shall
occur on and after the Termination Date.
"Prefunding Deposit" shall have the meaning specified in the
Note Purchase Agreement.
"Prefunding Interest Reserve Account" shall mean the account
established by the Collateral Agent, for the benefit of the Secured Parties,
pursuant to Section 2.11.
"Prefunding Period" shall mean, with respect to any Prefunding
Date, the period from such date to the succeeding Prefunding Date.
"Premium" shall have the meaning specified in the Insurance
Agree ment.
"Prime Receivable" shall mean an account which is identified
on the Collection Agent's master servicing record as a "type 24" account.
"Proceeds" shall mean "proceeds" as defined in Section
9-306(1) of the Relevant UCC.
"Receipts of Interest" shall mean that portion of the
Collections with respect to the Receivables which are properly designated as
Finance Charges in accordance with the Credit and Collection Policy, together
with (i) any recoveries in respect of Defaulted Receivables and Related Security
with respect thereto, and (ii) amounts considered to be "Receipts of Interest"
pursuant to Sections 2.7, 2.10 and 2.15.
"Receipts of Principal" shall mean all Collections, other than
those designated as Receipts of Interest, together with all amounts considered
to be "Receipts of Principal" pursuant to Sections 2.7 and 2.15, provided, that
Collections constituting a refund of all or any portion of extended warranty
protection plan costs or of insurance costs (for example, physical damage,
credit life or disability) in cluded in the original amount financed under a
Receivable (other than a Defaulted Receivable) shall be considered a Receipt of
Principal.
20
"Receivable" shall mean indebtedness owed to the Debtor by an
Obligor (without giving effect to any transfer hereunder) under a Contract,
whether constituting an account, chattel paper, instrument or general
intangible, arising out of or in connection with the sale of new or used
automobiles, vans or light-duty trucks or the rendering of services by the
originating dealer in connection therewith, and includes the right of payment of
any Finance Charges and other obligations of the Obligor with respect thereto.
Notwithstanding the foregoing, once the Collateral Agent has released its
security interest in a Receivable and the related Contract pursuant to Section
2.7 or Section 2.15 hereof, it shall no longer constitute a Receiv able
hereunder. The term "Receivable" specifically excludes Modified Receivables.
"Records" shall mean all Contracts and other documents, books,
records and other information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be amended,
supplemented or otherwise modified and is effect from time to time.
"Related Commercial Paper" shall mean Commercial Paper issued
by the Company the proceeds of which were used to acquire, or refinance the
acquisi tion of, an interest in the Net Investment with respect to the Debtor.
"Related Security" shall mean with respect to any Receivable:
(i) all of the Debtor's interest in the Fi nanced
Vehicles (including repossessed vehicles) or in any document or writing
evidencing any security interest in any Financed Vehicle and all of the
Debtor's interest in all rights to payment under all insurance
contracts with respect to a Financed Vehicle, including, without
limitation, any monies collected from whatever source in connection
with any default of an Obligor with respect to a Financed Vehicle and
any proceeds from claims or refunds of premiums on any physical damage,
lender's single interest, credit life, disability and hospitalization
insurance policies covering Financed Vehicles or Obligors;
21
(ii) all of the Debtor's interest in all other
security interests or liens and property subject thereto from time to
time, if any, purporting to secure payment of the Contract related
thereto, whether pursuant to such Contract or otherwise, together with
all financing statements signed by an Obligor and security agreements
describing any collateral securing such Contract;
(iii) all of the Debtor's interest in all guaran
ties, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable, whether pursuant to the Contract related to such Receiv
able or otherwise;
(iv) all of the Debtor's interest in all rights to
payment under all service contracts and other contracts and agree ments
associated with such Receivables and all of the Debtor's interest in
all recourse rights against the dealers (excluding any rights in any
dealer reserve);
(v) all of the Debtor's interest in all Re cords,
documents and writings evidencing or related to such Receiv ▇▇▇▇▇ or
the Contracts; and
(vi) all Proceeds of the foregoing.
"Relevant UCC" shall mean the Uniform Commercial Code as from
time to time in effect in all applicable jurisdictions.
"Remittance Date" shall mean, for each Settlement Period, the
tenth (10th) day of the next succeeding calendar month; provided that if such
day is not a Business Day, then the Remittance Date shall be the next succeeding
Business Day.
"Required Reserve Account Amount" shall mean, at any time of
determination, an amount equal to the product of (a) the Required Reserve
Account Percentage and (b) the Net Investment divided by the Noteholder's
Percentage.
"Required Reserve Account Percentage" shall mean the
percentage specified in the following table corresponding to the percentage of
Non-Prime Receivables in relation to the Net Receivables Balance:
22
Percentage of Non-Prime Receivables Required Reserve Account Percentage
2.51% or greater 3.00%
0.0 to 2.50% 2.75%
"Required Yield Deposit Amounts" shall have the meaning
specified in Section 2.13(a).
"Reserve Account" shall have the meaning specified in Section
2.14 hereof.
"Reserve Account Advance" shall mean any advance made pursuant
to Section 2.3(c) from amounts on deposit in the Reserve Account.
"Reserve Account Guaranty" shall mean the amount available
pursuant to any guaranty of the amount required to be kept in the Reserve
Account pursuant to this Agreement and the other Transaction Documents. Any
Reserve Account Guaranty shall be rated at least investment grade by S&P and
▇▇▇▇▇'▇.
"S&P" shall mean Standard & Poor's Ratings Services, a
Division of the McGraw Hill Companies.
"Sale and Purchase Agreement" shall mean, as applicable,
either or both of (i) the Amended and Restated Sale and Purchase Agreement dated
as of December 23, 1996, between the Debtor, as purchaser, and UAC, as seller,
and (ii) the Amended and Restated Sale and Purchase Agreement dated as of
December 23, 1996, between PFC, as purchaser, and UAC, as seller, each as
amended to the date hereof and as amended, modified or supplemented from time to
time hereafter.
"Secured Parties" shall mean the Company, the Bank Investors
and the Insurer.
"Securities Intermediary" shall mean Bank of America, and any
other entity acting in the capacity of a "securities intermediary" as defined in
Section 8- 102(14) of the UCC.
23
"Securitization" shall mean a structured finance transaction
estab lished by or on behalf of the Debtor or an affiliate, to which the
released Contracts and related Receivables will be subject.
"Seller" shall have the meaning specified in the preamble
hereto.
"Servicer Advance" shall have the meaning specified in Section
2.3(c).
"Servicing Fee" shall mean, for any Settlement Period, the fee
payable pursuant to Section 2.3 on the related Remittance Date by the Company to
the Collection Agent, in an amount equal to 1.0% per annum on the amount of the
aggregate Outstanding Balance of the Receivables as of the first day of such
Settle ment Period.
"Settlement Period" shall mean any calendar month, provided
that the initial Settlement Period shall commence on the Cut-Off Date and end on
October 31, 1998.
"Settlement Statement" shall mean a report, in substantially
the form of Exhibit D or in such other form as is mutually agreed to by the
Debtor and the Company, furnished by the Collection Agent to the Collateral
Agent, the Agent, ▇▇▇▇▇'▇, S&P and the Insurer on each Determination Date
pursuant to Section 2.9.
"Subsidiary" of a Person shall mean any corporation more than
50% of the outstanding voting securities of which, and any partnership more than
50% of the partnership interests of which, shall at any time be owned or
controlled, directly or indirectly, by such Person or by one or more
Subsidiaries of such Person or any similar business organization which is so
owned or controlled.
"Take-Out" shall mean the release, pursuant to Section 2.15(a)
or 2.15(d), excluding releases due to Warehouse Transfers, by the Collateral
Agent of Receivables and the Contracts related thereto. In order to qualify as a
"Take-Out", the Take-Out Percentage shall be no greater than 10%.
"Take-Out Percentage" shall mean, with respect to any
Securitization, the percentage equal to (A) 100% minus (B) a fraction (expressed
as a percentage) equal to (i) the aggregate Outstanding Balance of the
Receivables being released
24
pursuant to such Securitization divided by (ii) the Net Receivables Balance as
of the cut-off date applicable to such Securitization.
"Targeted Interest Rate" for any Settlement Period shall mean
2.5% or such lower rate set forth in a written notice by the Agent to the Debtor
and the Collection Agent, such other rate to be effective three (3) Business
Days after the date of such notice.
"Target Net Yield" shall mean 5.0%
"Termination Date" shall mean the earliest of (i) that
Business Day designated by the Debtor to the Agent as the Termination Date at
any time following 60 days' written notice to the Agent, (ii) the date of
termination of the liquidity commitment of the Liquidity Provider under the
Liquidity Provider Agreement, (iii) the date of termination of the commitment of
the Credit Support Provider under the Credit Support Agreement, (iv) the day on
which a Termination Event occurs pursuant to Section 7.1, (v) two business days
prior to the Commitment Termination Date, or (vi) September 7, 2000, unless
extended prior to such date pursuant to a Revolving Period Extension (as defined
in the Insurance Agreement).
"Termination Event" shall mean an event described in Section
7.1.
"Transaction Documents" shall mean this Agreement, the Note
Purchase Agreement, the Note, the Sale and Purchase Agreement, the UAFC Sale and
Purchase Agreement, the UAFCC Sale and Purchase Agreement, the Insurance
Agreement, the Policy, the Fee Letter and all other agreements, documents and
instruments delivered pursuant thereto or in connection therewith.
"Transferred Interest" shall mean, at any time of
determination, an undivided interest in the Note.
"UAC" shall mean Union Acceptance Corporation, an Indiana
corporation, and its successors.
"UAFC" shall mean Union Acceptance Funding Corporation, an
Indiana corporation, and its successors and assigns.
25
"UAFC Sale and Purchase Agreement" shall mean the sale and
purchase agreement dated as of May 12, 2000, between the Seller, as purchaser
and UAC, as seller.
"UAFCC" shall mean UAFC Corporation, a Delaware corporation,
and its successors and assigns, previously known as Union Acceptance Funding
Corporation a Delaware corporation.
"UAFCC Sale and Purchase Agreement" shall mean the sale and
purchase agreement dated as of May 12, 2000, between the Debtor, as purchaser,
and UAFC, as seller.
"UARC" shall mean Union Acceptance Receivables Corporation, a
Delaware corporation, and its successors and assigns and assigns or any other
special purpose company agreed to by UAC and the Agent.
"Undocumented Receivable" shall mean any Receivable as to
which, at the time of the assignment of such Receivable and the Contract related
thereto to UAC or an Acquisition Subsidiary by the dealer which originated such
Receivable or at the time of the origination of such Receivable by UAC or such
Acquisition Subsidiary, the Collection Agent shall not have received from the
dealer and the related Obligor all documentation required to be received by the
Collection Agent pursuant to the Credit and Collection Policy.
"Warehouse" shall mean UAFC Corporation, UAFC-1 Corporation or
UAFC-2 Corporation.
"Warehouse Transfer" shall mean the transfer of Receivables
pursuant to a Warehouse Transfer Agreement.
"Warehouse Transfer Agreement" shall mean any agreement
pursuant to which the Debtor purchases Receivables from or sells Receivables to
a ▇▇▇▇ house, which agreement shall be acceptable to the Agent and the Insurer.
"Withdrawal Notice" shall have the meaning specified in
Section 2.12(a).
26
"Year-end Receivable Transfer" shall mean the transfer of
Receiv ▇▇▇▇▇ from the Debtor to UARC or to the Debtor from UARC solely for the
purpose of minimizing Florida intangible tax.
"Yield Protection Provision" shall mean the compensation of
the Company and the Bank Investors by the Debtor of the Company's and the Bank
Investors' costs due to increased taxes, reserve and funding costs as described
in Section 4.2 of the Note Purchase Agreement.
"Yield Supplement Account" shall mean the account established
by the Collateral Agent, for the benefit of the Company, pursuant to Section
2.13.
SECTION 1.2 Other Terms. Unless the context otherwise
requires, all capitalized terms used herein and not otherwise defined herein
shall have the meanings specified in the Note Purchase Agreement, and shall
include in the singular number the plural and in the plural number the singular.
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles. All terms used in
Article 9 of the Relevant UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9.
SECTION 1.3 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" shall mean "from and
including" and the words "to" and "until" each shall mean "to but excluding."
ARTICLE II
GRANT OF SECURITY INTEREST AND SETTLEMENTS
SECTION 2.1 Grant of Security Interest. As security for the
prompt and complete payment of the Note and the performance of all of the
Debtor's obligations under the Note, the Note Purchase Agreement, the Insurance
Agreement, this Agreement and the other Transaction Documents, the Debtor hereby
grants to the Collateral Agent, for the benefit of the Secured Parties, without
recourse except as provided herein, a security interest in and continuing Lien
on all of the Debtor's property, in existence on the Cut-Off Date or thereafter
acquired and wherever located, including, without limitation, all of its right,
title and interest in, to and
27
under all accounts, contract rights, general intangibles, chattel paper,
instruments, documents, money, cash, deposit accounts, certificates of deposit,
goods, letters of credit, securities, investment property, financial assets or
security entitlements (all of the foregoing, collectively, the "Collateral");
provided, that once the Company has released its interest in a Receivable and
the related Contract pursuant to Section 2.7 or 2.15 hereof, such Receivable and
related Contract shall no longer be part of the Collateral.
In connection with such grant, the Debtor agrees to record and
file, at its own expense, financing statements with respect to the Collateral
now existing and hereafter created meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
first priority security interest of the Collateral Agent in the Collateral, and
to deliver a file-stamped copy of such financing statements or other evidence of
such filing (which may, for purposes of this Section 2.1, consist of telephone
confirmation of such filing) to the Collateral Agent on or prior to the Closing
Date. In addition, the Debtor and the Collection Agent agree to clearly and
unambiguously ▇▇▇▇ their respective general ledgers and all accounting records
and documents and all computer tapes and records to show that the Collateral,
including that portion of the Collateral consisting of the Receiv ▇▇▇▇▇ and the
related Contracts, have been pledged to the Collateral Agent hereunder.
SECTION 2.2 Carrying Costs, Fees and Other Costs and Expenses.
Notwithstanding the limitation on recourse under Section 2.1, the Debtor shall
pay, as and when due in accordance with this Agreement, all fees hereunder,
Carrying Costs, all amounts payable pursuant to Article VIII hereof, if any, all
fees specified in the Fee Letter, and the Servicing Fee. On each Remittance
Date, the Debtor shall pay to the Company and the Bank Investors, as applicable,
an amount equal to the accrued and unpaid Carrying Costs for the related
Settlement Period together with, in respect of the Company, an amount equal to
the discount accrued on the Company's Commercial Paper notes to the extent such
notes were issued in order to fund the Net Investment in an amount in excess of
the amount of the Initial Funding or in excess of any deposit made by the
Company to the Prefunding Account. The Debtor shall pay to the Agent, for the
account of the Company, on each day on which Commercial Paper is issued by the
Company, the Dealer Fee. Nothing in this Agreement shall limit in any way the
obligations of the Debtor to pay the amounts set forth in this Section 2.2.
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SECTION 2.3 Allocations of Collections; Reserve Account Ad
vances; Servicer Advances.
(a) On each Determination Date, the Collection Agent shall
allocate all Collections received during the preceding Settlement Period as Re
ceipts of Interest or Receipts of Principal. On each Remittance Date, Receipts
of Interest plus all earnings during the related Settlement Period on amounts on
deposit in the Prefunding Account to the extent not required pursuant to Section
2.11 to be distributed to the Collection Agent in reimbursement for previously
advanced Interest Reserve Advances plus all amounts deposited in the Prefunding
Interest Reserve Account with respect to the related Settlement Period (together
with any earnings thereon during such Settlement Period) plus any Interest
Reserve Advance made by the Collection Agent on such Remittance Date pursuant to
Section 2.11 plus any payments to the Debtor under an Acceptable Hedging
Arrangement (it being understood that prior to a Termination Event and provided
that Acceptable Hedging Arrangements are in place, proceeds from the termination
of any Acceptable Hedg ing Arrangements in connection with a Securitization will
be released to the Debtor and not constitute "Available Funds") plus all amounts
to be applied pursuant to Section 2.14(c)(ii)(y) (the aggregate of such amounts
in respect of any remittance date, the "Available Funds") shall be applied,
without duplication, by the Collection Agent as follows:
(i) first, (A) to pay any amounts due under an
Acceptable Hedging Arrangement, pro rata, in accordance with the
amounts due thereunder, and (B) to the Reserve Account, in the amount
of Reserve Account Advances related to such Settlement Period;
(ii) second, to the extent of any remaining Available
Funds, to the retention by the Collection Agent of any Servicer
Advances related to such Settlement Period;
(iii) third, to the extent of any remaining Available
Funds, to pay to the Collateral Agent all fees and expenses due
pursuant to Section 8.2 hereof;
(iv) fourth, to the extent of any remaining Available
Funds, to the Agent, for the account of the Company and the Bank
Investors, as applicable, an amount equal to all accrued and
29
unpaid Carrying Costs (exclusive of all amounts payable pursuant to the
Yield Protection Provision) in respect of such Settlement Period and
with respect to any previous Settlement Period to the extent not
previously paid;
(v) fifth, to the extent of any remaining Available
Funds, to the payment of the Agent, for the account of the Company and
the Bank Investors, as applicable, to be applied in reduction of the
Net Investment, of the amount by which the Net Investment less the
quotient of (A) the amount on deposit in the Prefunding Account and (B)
100% less the quotient of (x) the percent age used to determine the
Required Reserve Account Amount and (y) the Noteholder's Percentage
exceeds the product of the Noteholder's Percentage and the Net
Receivables Balance;
(vi) sixth, to the extent of any remaining Available
Funds, to the Insurer, the aggregate amount of any previ ously
unreimbursed draws on the Policy, plus accrued interest thereon at the
rate provided in the Insurance Agreement;
(vii) seventh, to the extent of any remaining
Available Funds, to the Insurer, the Premium, including any overdue
Premium, accrued interest thereon plus any amounts owed under the
Policy or the Insurance Agreement;
(viii) eighth, to the extent of any remaining
Available Funds, to the Reserve Account, to the extent necessary to
cause the amount on deposit therein to equal the Required Reserve
Account Amount;
(ix) ninth, to the extent of any remaining Available
Funds, to the Yield Supplement Account to the extent of any amounts
previously withdrawn therefrom pursuant to Section 2.3(c) and not
previously reimbursed to the credit of the Yield Supple ment Account;
provided that there shall be no requirement to ▇▇▇▇ ▇▇▇▇▇ such account
for amounts withdrawn therefrom related to any Receivables and the
related Contracts with respect to which the Collateral Agent shall have
released its interest therein pursuant to Section 2.7 or Section 2.15;
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(x) tenth, to the extent of any remaining Available
Funds, to the payment of the Collection Agent (if the Collection Agent
is UAC) of the Servicing Fee for such Settlement Period and any
unreimbursed Interest Reserve Advances made by the Collection Agent and
not previously reimbursed;
(xi) eleventh, to the extent of any remaining
Available Funds, on or after the Termination Date, such remaining
Available Funds shall be paid to the Agent, for the account of the
Company and the Bank Investors, as applicable, in reduction of the Net
Investment;
(xii) twelfth, to the extent of any remaining
Available Funds, to pay all amounts due under the Yield Protection
Provision;
(xiii) thirteenth, to the extent of any remain
ing Available Funds, to the Collection Agent, in reimbursement for any
Net Negative Hedging Amounts incurred by the Collection Agent and not
previously reimbursed;
(xiv) fourteenth, to the extent of any remain ing
Available Funds, to the Agent, for the account of the Persons entitled
thereto, an amount equal to all other amounts owed under the Note
Purchase Agreement; and
(xv) fifteenth, any remaining Available Funds shall
be paid to the Debtor.
(b) On any Business Day on which Commercial Paper issued in
connection herewith matures, the Collection Agent may apply and remit to the
Agent, in reduction of the Net Investment, any Receipts of Principal received on
or prior to such day and not previously remitted to the Agent in any such case
in an amount not to exceed the principal component of such maturing Commercial
Paper. On each Remittance Date, the Collection Agent shall apply and remit to
the Agent, in reduction of the Net Investment, all Receipts of Principal
received with respect to the prior Settlement Period and not previously remitted
to the Agent pursuant to the preceding sentence.
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(c) In the event that, at any time, the Company does not have
sufficient funds at such time to pay Carrying Costs when due, then, in such
event, there shall be made a Reserve Account Advance equal to the amount of such
deficiency, which amount shall be applied to pay such costs and expenses of the
Company; provided, that such Reserve Account Advance shall be made only to the
extent of funds then on deposit in the Reserve Account and shall not include any
amount pursuant to a Reserve Account Guaranty. In the event that any such
Reserve Account Advance is not made by 11:00 a.m. (New York City time) on the
day requested the Collection Agent shall, at the request of the Agent, advance
to the Company an amount equal to such deficiency (each, a "Servicer Advance");
pro vided, that the Collection Agent shall not be required to make any such
Servicer Advance to the extent that the Collection Agent reasonably believes
that it will not be reimbursed for such Servicer Advance pursuant to Section
2.3(a)(ii) on any subsequent Remittance Date. In the event that any such
Servicer Advance is not made by 11:00 a.m. (New York City time) on the day
requested, there shall be withdrawn from the Yield Supplement Account an amount
equal to the amount of such deficiency, which amount shall be applied to pay
such costs and expenses of the Company. In the event that any such payment from
the Yield Supplement Account is not made by 11:00 a.m. (New York City time)
there shall be made a Reserve Account Advance and/or an advance pursuant to any
Reserve Account Guaranty equal to the amount of such deficiency, which amount
shall be applied to pay such costs and expenses of the Company. In the event
that any such Reserve Account Advance and/or advance pursuant to any Reserve
Account Guaranty is not made by 11:00 a.m. (New York City time) on the day
requested by the Collection Agent, there shall be made a draw under the Policy
equal to the amount of such deficiency, which amount shall be paid directly to
the Agent and shall be applied to pay such costs and expenses of the Company.
SECTION 2.4 Liquidation Settlement Procedures. Following any
date after the Termination Date on which all Aggregate Unpaids have been paid in
full, (i) the Collateral Agent shall be considered to have released its security
interest in and continuing Lien on the Collateral, including all of the
Receivables and Related Security, (ii) the Collection Agent shall pay to the
Debtor any remaining Collections set aside and held by the Collection Agent, and
(iii) the Collateral Agent shall execute and deliver to the Debtor, at the
Debtor's expense, such documents or instruments as are necessary to terminate
the Collateral Agent's security interest in the Collateral, including all of the
Receivables and Related Security and Collections
32
with respect thereto. Any such documents shall be prepared by or on behalf of
the Debtor at the expense of the Debtor.
SECTION 2.5 Fees. Notwithstanding any limitation on recourse
contained in this Agreement, the Debtor shall pay, in the manner and at the time
specified in the Fee Letter, the fees specified in the Fee Letter.
SECTION 2.6 Protection of Interest of the Collateral Agent.
(a) The Debtor agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents and take all actions as may be
necessary or as the Collateral Agent may reasonably request in order to perfect
or protect the Collateral or to enable the Collateral Agent to exercise or
enforce any of its rights hereunder. Without limiting the foregoing, the Debtor
will, upon the request of the Collateral Agent, in order to accurately reflect
the security interest of the Collateral Agent in the Collateral, execute and
file such financing or continuation statements or amendments thereto or
assignments thereof (as permitted pursuant to Section 9.6 hereof) as may be
requested by the Collateral Agent and ▇▇▇▇ its master data processing records
(or to cause such records to be marked) so as to indicate the Collateral Agent's
security interest in the portion of the Collateral consisting of Receivables,
the related Contracts, the Collections and the Related Security with respect
thereto. The Debtor agrees that it shall take all actions necessary to cause UAC
and the Seller to similarly ▇▇▇▇ its records to reflect the sale of the
Receivables and the Contracts to the Seller and Debtor, as applicable, and the
Collateral Agent's security interest in the Receivables, the related Contracts,
the Collections and the Related Security with respect thereto. The Debtor shall,
at its own expense, upon request of the Collateral Agent, obtain such additional
search reports as the Collateral Agent shall request. To the fullest extent
permitted by applicable law, the Collateral Agent shall be permitted to sign and
file continuation statements and amendments thereto and assignments thereof
without the Debtor's signature. Carbon, photo graphic or other reproduction of
this Agreement or any financing statement shall be sufficient as a financing
statement. The Debtor shall neither change its name, identity or corporate
structure (within the meaning of Section 9-402(7) of the Relevant UCC as in
effect in the State of Florida) nor relocate its chief executive office or any
office where Records are kept unless it shall have: (i) given the Collateral
Agent and the Insurer at least thirty (30) days prior notice thereof and (ii)
prepared at the Debtor's expense and delivered to the Collateral Agent all
financing statements, instruments and other documents necessary to preserve and
protect the Collateral or requested by the Collateral Agent or the Insurer in
connection with such change or relocation. Any filings under the Relevant UCC or
otherwise that are
33
occasioned by such change in name or location shall be made at the expense of
the Debtor. On the Closing Date, the Debtor shall deliver to the Collateral
Agent and the Insurer a listing by account number of the Contracts as of the
Cut-Off Date, which listing shall constitute Schedule A hereto and is hereby
incorporated herein by reference. On the second Business Day after the end of
each Settlement Period, the Debtor shall deliver to the Collateral Agent an
updated listing by account number of the Contracts as of the last day of such
Settlement Period (giving effect to any releases by the Company pursuant to
Section 2.7 or Section 2.15) and such updated list shall thereupon constitute
Schedule A hereto and is hereby incorporated by reference herein.
(b) The Collection Agent shall instruct all Obligors to cause
all Collections to be deposited directly with a Lock-Box Bank. The Collection
Agent shall not add any bank as a Lock-Box Bank to those listed on Exhibit B
without the consent of the Collateral Agent pursuant to Section 5.2(f) and the
Insurer. The Collection Agent shall not terminate any bank as a Lock-Box Bank
unless the Collateral Agent and the Insurer shall have received fifteen (15)
days' prior notice of such termination. If the Debtor or the Collection Agent
receives any Collections, the Debtor or the Collection Agent, as applicable,
shall immediately, but in any event within two (2) Business Days of receipt,
remit such Collections to a Lock-Box Account.
SECTION 2.7 Payments on Receivables; Application of Payments.
If, on any day,
(a) the Outstanding Balance of a Receivable is either (x)
reduced as a result of any defective, rejected or returned goods or services,
any cash discount, credit, rebate, allowance or other dilution factor, any
billing adjustment or other adjustment, or (y) reduced or canceled as a result
of a setoff or offset in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction); or
(b) as to any Undocumented Receivable, all documentation
required to be received after the origination of such Receivable pursuant to the
Credit and Collection Policy has not been received and accepted by the
Collection Agent within twenty (20) days following the date of the initial draft
drawn by the originating dealer on UAC in connection with the origination of
such Receivable; or
34
(c) any of the representations or warranties in Article III is
no longer true with respect to a Receivable;
then, in any such event, the Collateral Agent shall release its security
interest in and Lien on such Receivable and the related Contract; provided that
if such release would result in the Net Asset Test not being satisfied, then as
a condition precedent to such release the Debtor shall deposit into the
Collection Account an amount equal to the amount which, if applied to the
reduction of the Net Investment, would cause the Net Asset Test to be satisfied.
Such amount shall be applied as a Receipt of Principal pursuant to Section 2.3.
All collections of Finance Charges received with respect to any such released
Receivable through the last day of the Settlement Period in which such
Receivable is released shall continue to constitute Receipts of Interest hereun
der.
SECTION 2.8 Payments and Computations, Etc. All amounts to be
paid or deposited by the Debtor or the Collection Agent hereunder shall be paid
or deposited in accordance with the terms hereof no later than 12:00 noon. (New
York City time) on the day when due in immediately available funds; if such
amounts are payable to the Company or the Bank Investors, they shall be paid or
deposited in the Agent's account indicated in Section 9.3, until otherwise
notified by the Agent, the Company or any Bank Investor; if such amounts are
payable to the Insurer, they shall be paid or deposited in the Insurer's account
indicated in Section 9.3, until otherwise notified by the Insurer. The Debtor
shall, to the extent permitted by law, pay to the applicable Secured Parties
upon demand, interest on all amounts not paid or depos ited when due to the
Secured Parties hereunder at a rate equal to 2% per annum plus the Base Rate.
All computations of Carrying Costs, interest and all per annum fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
elapsed. Any computations of amounts payable by the Debtor hereunder to any of
the Secured Parties, the Liquidity Provider or the Credit Support Provider shall
be binding absent manifest error.
SECTION 2.9 Reports. On or before each Determination Date, the
Collection Agent shall prepare and forward to the Collateral Agent, the
Administra tive Agent, ▇▇▇▇▇'▇, S&P and the Insurer, (i) a Settlement Statement
as of the end of the preceding Settlement Period, (ii) if requested by the
Collateral Agent, the Administrative Agent or the Insurer, a computer tape
listing by Obligor all Receiv ▇▇▇▇▇, together with an aging of such Receivables,
and (iii) such other information as the Collateral Agent, the Administrative
Agent or the Insurer may reasonably request. The Agent shall provide to the
Debtor, on the day prior to each Determina tion Date, a monthly settlement
statement containing information relating to the amount of each obligation of
the Company which comprises Carrying Costs for the most recent Collection Period
and the amount of interest earnings on all related accounts for such Collection
Period.
SECTION 2.10 Collection Account. (a) There shall be
established on the Closing Date and maintained, for the benefit of the Secured
Parties, with the Collateral Agent, a segregated account (the "Collection
Account"), bearing a desig nation clearly indicating that the funds deposited
therein are held for the benefit of the Secured Parties. Subject to the terms
hereof, the Collateral Agent shall possess all right, title and interest in and
to all funds deposited from time to time in the Collection Account. The
Collateral Agent will maintain the Collection Account at an Eligible
Institution. If the Eligible Institution holding the Collection Account shall
cease to be an Eligible Institution, the Collateral Agent shall have the right
to direct the transfer of the Collection Account to an Eligible Institution. The
Collec tion Agent shall remit daily from the Lock-Box Account, within two (2)
Business Days of receipt, to the Collection Account all Collections received
with respect to any Receivables. On each Remittance Date, all interest and
earnings (net of losses and investment expenses) on funds on deposit in the
Collection Account shall be considered to be Receipts of Interest and shall be
distributed hereunder as such. On the date on which the Net Investment is zero
and all amounts payable hereunder by the Debtor have been paid in full, any
funds remaining on deposit in the Collection Account shall be paid to the
Debtor.
(b) Funds on deposit in the Collection Account shall be
invested in Eligible Investments by or at the written direction of the Debtor,
provided that if a Termination Event shall have occurred, such investments shall
be made as directed by the Collateral Agent. Any such written directions shall
specify the particular investment to be made and shall certify that such
investment is an Eligible Investment and is permitted to be made under this
Agreement.
(c) The Collateral Agent agrees that it shall not accept for
credit to the Collection Account any investment as to which it has knowledge of
any adverse claim thereto. Bank of America hereby agrees (and any other
Securities Intermediary holding the Collection Account shall so agree) to comply
with all Entitlement Orders (as defined in Section 8-102 of the 1994 Official
Text of the Uniform Commercial Code) received by it with respect to the
Collection Account from the Collateral Agent.
35
(d) Funds on deposit in the Collection Account (other than
investment earnings) shall be invested by the Collateral Agent in Eligible
Invest ments that will mature so that such funds will be available on the
Remittance Date with respect to the Settlement Period during which such funds
were received. No Eligible Investment may be liquidated or disposed of prior to
its maturity. All proceeds of any such Eligible Investment shall be deposited in
the Collection Account. Investments may be made in the Collection Account on any
date (provided such investments mature in accordance herewith), only after
giving effect to deposits to and withdrawals from the Collection Account on such
date. Realized losses, if any, on amounts invested in such Eligible Investments
shall be charged against investment earnings on amounts on deposit in the
Collection Account
(e) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Collection Ac count.
(f) Eligible Investments shall be maintained by the Collateral
Agent in the Collection Account in such manner as may be necessary to maintain
the first priority perfected security interest in favor of the Collateral Agent
on behalf of the Secured Parties. Bank of America, agrees (and any other
Securities Intermediary holding the Collection Account shall so agree) that it
shall not agree to comply with Entitlement Orders (as defined in Section 8-102
of the 1994 version of the Official Text of Article 8 of the Uniform Commercial
Code) with respect to the Collection Account given to it by any Person other
than the Collateral Agent.
SECTION 2.11 Prefunding Account; Prefunding Interest Reserve
Account; Interest Reserve Deposits; Interest Reserve Advances; Reimbursements.
(a) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent,
two segregated accounts (the "Prefunding Account" and the "Prefunding Interest
Reserve Account"), each bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Secured Parties. Subject to
the terms hereof, the Collateral Agent shall possess all right, title and
interest in and to all funds deposited from time to time in the Prefunding
Account and the Prefunding Interest Reserve Account. The Collateral Agent will
maintain the Prefunding Account and the Prefunding Interest Reserve Account at
an Eligible Institution. If the Eligible
36
Institution holding the Prefunding Account or the Prefunding Interest Reserve
Account shall cease to be an Eligible Institution, the Collateral Agent shall
have the right to direct the transfer of the Prefunding Account or the
Prefunding Interest Reserve Account to an Eligible Institution.
(2) Funds on deposit in the Prefunding Account and the
Prefunding Interest Reserve Account shall be invested by the Collateral Agent in
overnight Eligible Investments by or at the written direction of the Debtor,
provided that if a Termination Event shall have occurred, such investments shall
be made as directed by the Collateral Agent. Any such written directions shall
specify the particular investment to be made and shall certify that such
investment is an Eligible Investment and is permitted to be made under this
Agreement.
(3) The Collateral Agent agrees that it shall not accept for
credit to the Prefunding Account and the Prefunding Interest Reserve Account any
investment as to which it has knowledge of any adverse claim thereto. Bank of
America, hereby agrees (and any other Securities Intermediary holding the
Prefunding Account or the Prefunding Interest Reserve Account shall so agree) to
comply with all Entitlement Orders (as defined in Section 8-102 of the 1994
Official Text of the Uniform Commercial Code) received by it with respect to the
Prefunding Account or the Prefunding Interest Reserve Account from the
Collateral Agent.
(4) Funds on deposit in the Prefunding Account and the
Prefunding Interest Reserve Account shall be invested in Eligible Invest ments
that will mature overnight. No such Eligible Investment may be liquidated or
disposed of prior to its maturity. All proceeds of any such Eligible Investment
shall be deposited in the Prefunding Account or the Prefunding Interest Reserve
Account, as applicable. Investments may be made in either account on any date
(provided such investments mature in accordance herewith), only after giving
effect to deposits to and withdrawals from such account on such date. Realized
losses, if any, on amounts invested in Eligible Investments in the Prefunding
Account or the Prefunding Interest Reserve Account shall be charged against
investment earnings on amounts on deposit in the Prefunding Account or the
Prefunding Interest Reserve Account, as applicable.
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide
37
instructions relating to investments in Eligible Investments in the Prefunding
Account and the Prefunding Interest Reserve Account.
(6) Eligible Investments shall be maintained in the Prefunding
Account and the Prefunding Interest Reserve Account by the Collateral Agent in
such manner as may be necessary to maintain the first priority perfected
security interest in favor of the Collateral Agent on behalf of the Secured
Parties. Bank of America, agrees (and any other Securities Intermediary holding
the Prefunding Account or the Prefunding Interest Reserve Account shall so
agree) that it shall not agree to comply with Entitlement Orders (as defined in
Section 8-102 of the 1994 version of the Official Text of Article 8 of the
Uniform Commercial Code) with respect to the Prefunding Account or the
Prefunding Interest Reserve Account given to it by any Person other than the
Collateral Agent.
(b) On the Business Day preceding each Prefunding Date, the
Debtor shall deposit in the Prefunding Interest Reserve Account an amount equal
to the product of (i) the Negative Carry for such Prefunding Date, (ii) the
principal component of the amount of Commercial Paper which would be required on
such date to fund the Prefunding Deposit, or if such deposit is to be made by
the Bank Investors, the amount to be advanced by the Bank Investors, and (iii) a
fraction, the numerator of which is the number of days from the Prefunding Date
through the end of the Settlement Period during which such Prefunding Date
occurs and the denomi nator of which is 360 (such amount with respect to a
Prefunding Date, the "Interest Reserve Deposit").
(c) On each Remittance Date, the Collection Agent shall
deposit to the Collection Account an amount equal to the Interest Reserve
Advance, if any, for such Remittance Date. In the event that, on any Remittance
Date, the amount earned over the preceding Settlement Period on amounts on
deposit in the Prefunding Account shall exceed an amount equal to the product of
(i) the daily weighted average amount on deposit in the Prefunding Account
during the preceding Settlement Period, (y) the Targeted Interest Rate (on a per
annum basis) and (z) a fraction, the numerator of which is the number of days in
the related Settlement Period and the denominator of which is 360, the
Collateral Agent shall release such excess amount from the Prefunding Interest
Reserve Account to the Collection Agent in reimbursement for previously advanced
Interest Reserve Advances or, to the extent no such unreimbursed advances exist,
the Collection Agent shall apply such excess amount as part of Available Funds
under Section 2.3(a).
38
SECTION 2.12 Prefunding Account and Prefunding Interest
Reserve Account Withdrawals.
(a) On any Business Day, upon receipt by the Agent and the
Collateral Agent not later than 11:00 a.m. New York City time of written
certification in substantially the form of Exhibit E (a "Withdrawal Notice")
from the Debtor setting forth, among other things, the amount requested to be
released from the Prefunding Account and certifying that (i) after giving effect
to the amount to be funded with respect to such additional Receivables, the Net
Asset Test shall be satisfied, (ii) the amount on deposit in the Reserve Account
shall not be less than the Required Reserve Account Amount (calculated (x)
immediately prior to the related Prefunding Date and (y) as if such Prefunding
Deposit shall have occurred), (iii) the Debtor shall have made any deposit into
the Yield Supplement Account required pursuant to Section 2.13 in connection
with such Receivables, if any, and (iv) the Collection Agent shall be in
compliance with the requirements of Section 5.3 in respect of such Prefunding
Date, the Collateral Agent shall release to the Debtor the amount requested by
the Collection Agent.
(b) On the last day of each Prefunding Period, all amounts on
deposit in the Prefunding Account (exclusive of earnings thereon) shall be, at
the Debtor's option, either (i) released to the Agent to be applied in reduction
of the Net Investment, or (ii) retained in the Prefunding Account and applied to
reduce the amount of the Prefunding Deposit otherwise required to be made by the
Company or the Bank Investors, as applicable, on the succeeding Prefunding Date.
Notwithstand ing the foregoing however, on the first Remittance Date to occur on
or after the Termination Date, all amounts on deposit, exclusive of earnings
thereon, in the Prefunding Account shall be released to the Agent, for the
account of the Company and the Bank Investors, as applicable, and applied in
reduction of the Net Investment and earnings thereon shall be deposited in the
Collection Account for application as Available Funds.
(c) On each Remittance Date all amounts deposited in the
Prefunding Interest Reserve Account with respect to the related Settlement
Period (together with any earnings on the Prefunding Interest Reserve Account
during such Settlement Period) shall be deposited in the Collection Account.
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SECTION 2.13 Yield Supplement Account, Deposits; Withdrawals.
(a) On the day of the Initial Funding with respect to all
Receivables recorded on the Collection Agent's master servicing records as of
such day and on any Business Day thereafter on which a Receivable is recorded on
the Collection Agent's master servicing records, the Debtor shall deposit into
the Yield Supplement Account for each such Receivable with respect to which the
related Contract provides for interest to accrue thereunder at a rate less than
the Minimum Required APR (determined as of the date of such recordation on the
Collection Agent's master servicing records) an amount (each such amount, a
"Required Yield Deposit Amount") equal to the product of (i) the number of
monthly payments originally required under such Contract and (ii) an amount
equal to (x) the scheduled monthly payment on such Contract which would be
required to be made by the Obligor thereunder if such Contract had a rate per
annum equal to the Minimum Required APR minus (y) the scheduled monthly payment
on such Contract which would be required to be made by the Obligor thereunder if
such Contract had a rate per annum equal to the rate set forth in such Contract.
Notwithstanding the forego ing, no Required Yield Deposit Amount need be
deposited to the Yield Supplement Account until the total amount of all
undeposited Required Yield Deposit Amounts equals or exceeds $1,000.
(b) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Company and the Bank Investors, with the
Collat eral Agent, a segregated account (the "Yield Supplement Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Secured Parties. Subject to the terms hereof, the
Collateral Agent shall possess all right, title and interest in and to all funds
deposited from time to time in the Yield Supplement Account. The Collateral
Agent will maintain the Yield Supplement Account at an Eligible Institution. If
the Eligible Institution holding the Yield Supplement Account shall cease to be
an Eligible Institution, the Collateral Agent shall have the right to direct the
transfer of the Yield Supplement Account to an Eligible Institution.
(2) Funds on deposit in the Yield Supplement Account shall be
invested in overnight Eligible Investments by or at the written direction of the
Debtor, provided that if a Termination Event shall have occurred, such
investments shall be made as directed by the Collateral Agent. Any such written
directions shall specify the particular investment to be made and shall certify
40
that such investment is an Eligible Investment and is permitted to be made under
this Agreement.
(3) The Collateral Agent agrees that it shall not accept for
credit to the Yield Supplement Account any investment as to which it has
knowledge of any adverse claim thereto. Bank of America hereby agrees (and any
other Securities Intermediary holding the Yield Supplement Account shall so
agree) to comply with all Entitlement Orders (as defined in Section 8-102 of the
1994 Official Text of the Uniform Commercial Code) received by it with respect
to the Yield Supplement Account from the Collateral Agent.
(4) No Eligible Investment in the Yield Supple
ment Account may be liquidated or disposed of prior to its maturity. All
proceeds of any such Eligible Investment shall be deposited in the Yield
Supplement Account. Investments may be made in the Yield Supplement Account on
any date (provided such investments mature in accordance herewith), only after
giving effect to deposits to and withdrawals from such account on such date.
Realized losses, if any, on amounts invested in such Eligible Investments shall
be charged against investment earnings on amounts on deposit in the Yield
Supplement Account.
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Yield Supplement Account.
(6) Eligible Investments in the Yield Supplement Account shall
be maintained by the Collateral Agent in such manner as may be necessary to
maintain the first priority perfected security interest in the Yield Supplement
Account in favor of the Collateral Agent on behalf of the Secured Parties. Bank
of America agrees (and any other Securities Intermediary holding the Yield
Supplement Account shall so agree) that it shall not agree to comply with
Entitlement Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform Commercial Code) with respect to the
Yield Supplement Account given to it by any Person other than the Collateral
Agent.
(c) In the event that Available Funds with respect to any
Remittance Date are insufficient to provide for the payment of the amounts
described in Sections 2.3(a)(ii), (iv) and (v), the Collateral Agent shall make
a withdrawal from
41
the Yield Supplement Account in the amount of such deficiency and the proceeds
from such withdrawal shall be applied by the Collateral Agent to the required
distributions and payments. Funds may also be released from the Yield Supplement
Account each month in accordance with Section 2.3(c). On any day on which the
Collateral Agent, pursuant to Section 2.7 or Section 2.15, releases to the
Debtor its security interest in a Contract and related Receivable with respect
to which the Debtor deposited funds in the Yield Supplement Account pursuant to
Section 2.13(a), the amount of such deposit (together with any earnings thereon)
less any amounts released from the Yield Supplement Account in accordance with
Section 2.3(c) shall be released to the Debtor. Upon the occurrence of a
Termination Event, all amounts on deposit in the Yield Supplement Account shall
be released to the Agent, for the account of the Company and the Bank Investors,
as applicable, and applied in reduction of the Net Investment.
SECTION 2.14 Reserve Account; Withdrawals; Releases; Draws on
Policy.
(a) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segregated account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess
all right, title and interest in and to all funds deposited from time to time in
the Reserve Account. The Collateral Agent will maintain the Reserve Account at
an Eligible Institution. If the Eligible Institution holding the Reserve Account
shall cease to be an Eligible Institution, the Collateral Agent shall have the
right to direct the transfer of the Reserve Account to an Eligible Institution.
On each Funding Date and each Prefunding Date, the Debtor shall deposit (or
cause to be withheld from proceeds from the issuance of Related Commercial
Paper) to the credit of the Reserve Account an amount equal to an amount
necessary to fund the Reserve Account to the Re quired Reserve Account Amount.
The amount of any Reserve Account Guaranty shall be counted toward the amount of
funds available in the Reserve Account.
(2) Funds on deposit in the Reserve Account shall be invested
in Eligible Investments by or at the written direction of the Debtor, provided
that if a Termination Event shall have occurred, such investments shall be made
as directed by the Collateral Agent. Any such written directions shall specify
the particular investment to be made and shall certify that such investment is
an Eligible Investment and is permitted to be made under this Agreement.
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(3) The Collateral Agent agrees that it shall not accept for
credit to the Reserve Account any investment as to which it has knowl edge of
any adverse claim thereto. Bank of America hereby agrees (and any other
Securities Intermediary holding the Reserve Account shall so agree) to comply
with all Entitlement Orders (as defined in Section 8-102 of the 1994 Official
Text of the Uniform Commercial Code) received by it with respect to the Reserve
Account from the Collateral Agent.
(4) No Eligible Investment in the Reserve Account may be
liquidated or disposed of prior to its maturity. All proceeds of any such
Eligible Investment shall be deposited in the Reserve Account. Investments may
be made in the Reserve Account on any date (provided such investments mature in
accordance herewith), only after giving effect to deposits to and withdrawals
from such account on such date. Realized losses, if any, on amounts invested in
such Eligible Investments shall be charged against investment earnings on
amounts on deposit in the Reserve Account, as applicable.
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Reserve Account.
(6) Eligible Investments shall be maintained by the Collateral
Agent in such manner as may be necessary to maintain the first priority
perfected security interest in favor of the Collateral Agent on behalf of the
Secured Parties. Bank of America agrees (and any other Securities Intermediary
holding the Reserve Account shall so agree) that it shall not agree to comply
with Entitlement Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform Commercial Code) with respect to the
Reserve Account given to it by any Person other than the Collateral Agent.
(b) Funds on deposit in the Reserve Account shall be invested
by the Collateral Agent in Eligible Investments with maturities such that all
funds on deposit in the Reserve Account will be available on the next succeeding
Remittance Date following such investment. The Collateral Agent shall maintain
possession of the negotiable instruments or securities, if any, evidencing the
Eligible Investments from the time of purchase thereof until the time of sale or
maturity.
43
Such investments shall be held in the name of the Collateral Agent, for the
benefit of the Secured Parties.
(c) (i) In the event that Available Funds with respect to any
Remittance Date and any withdrawals from the Yield Supplement Account are
insufficient to provide for the payment of the amounts described in Sections
2.3(a)(ii), (iv) and (v), the Collateral Agent shall make a withdrawal from the
Reserve Account in the amount of such deficiency and the proceeds from such
withdrawal shall be applied by the Collateral Agent to the required
distributions and payments. Funds may also be released from the Reserve Account
each month in accordance with Section 2.3(c). To the extent that amounts
available in the Reserve Account are insufficient to cover such costs and the
Debtor fails to make a deposit to the Reserve Account in the amount of such
shortfall, the Agent shall make a demand for payment under the Policy in
accordance with its terms.
(ii) In the event that on any Remittance Date or day on which
a Take-Out occurs after giving effect to clause (c)(i) above, the amount on
deposit in the Reserve Account (calculated as of the related Determination Date
or the date of the Take-Out, as applicable) exceeds the Required Reserve Account
Amount, the Collateral Agent shall (x) if no Termination Event shall have
occurred, release to the Debtor an amount equal to the excess of the amount on
deposit in the Reserve Account over the Required Reserve Account Amount and (y)
if a Termina tion Event shall have occurred, apply as part of Available Funds
pursuant to Section 2.3 an amount equal to the excess of the amount on deposit
in the Reserve Account over the Required Reserve Account Amount.
(iii) After the occurrence of the Termination Date upon the
earlier of (i) the day on which the Net Investment is zero and the Secured
Parties shall have received all Aggregate Unpaids and (ii) the day on which the
aggregate Outstanding Balance of the Receivables shall be zero, the Collateral
Agent shall release to the Debtor all amounts on deposit in the Reserve Account.
SECTION 2.15 Optional Release.
(a) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
the Contracts and the related Receivables (excluding any Contracts and related
Receiv ▇▇▇▇▇ booked after the cut-off date applicable to a Securitization or
Warehouse Transfer, to which the released Contracts and related Receivables will
be subject) on
44
the terms and conditions set forth herein. It shall be a condition precedent to
any such release that (i) the Debtor shall pay to the Company and the Bank
Investors, as applicable, an amount equal to the amount necessary to cause the
Net Asset Test to be satisfied after giving effect to the proposed release, (ii)
the amount to be paid pursuant to clause (i) above shall (x) not be greater than
the principal component of the Company's maturing Commercial Paper which was
issued to fund the Net Investment or the principal component subject to the
funding period utilized by the Bank Investors and the Liquidity Provider to fund
the Net Investment, as applicable and (y) be at least $5,000,000, (iii) the
Debtor shall deposit to the Collection Account an amount equal to the sum of (x)
all unreimbursed Servicer Advances and (y) all interest costs associated with
the Company's Commercial Paper issued to fund its interest in the Contracts and
related Receivables proposed to be reassigned or all interest costs associated
with any funding periods utilized by the Bank Investors or the Liquidity
Provider with respect to their respective interests in such Contracts and
related Receivables, as applicable, as well as all Carrying Costs accrued
through the date of the maturity of such Commercial Paper or funding period,
(iv) the Debtor shall have given the Agent, the Collateral Agent and the Insurer
at least ten (10) days prior written notice of its intention to request release
with respect to such Contracts and Receivables, (v) after giving effect to such
release the amount on deposit in the Reserve Account shall be at least equal to
the Required Reserve Account Amount, and (vi) all amounts due and owing to the
Insurer from the Debtor shall have been paid in full. It is the intention of the
parties that the Debtor shall pay to the Agent, for the benefit of the Company
and the Bank Investors, as applicable, and the Collection Account, as
applicable, such amounts as are required under this Section on the closing date
of such Securitization or Warehouse Transfer.
The amount described in clause (i) above upon receipt by the
Agent, for the benefit of the Company and the Bank Investors, as applicable,
shall be applied in reduction of the Net Investment. From the amount described
in clause (iii) above an amount equal to unreimbursed Servicer Advances shall be
distributed to the Collection Agent and the remainder of such amounts shall be
remitted to the Agent, for the benefit of the Company and the Bank Investors, as
applicable.
The Debtor shall also be obligated to pay to the Collateral
Agent (i) an amount equal to $5,000 as an administrative fee in connection with
any such assignment and (ii) the reasonable legal fees and expenses of the
Collateral Agent and the Secured Parties arising in connection with any such
assignment.
45
Upon the deposit to the Collection Account and the payment by
the Debtor of the amounts described in this Section, the Collateral Agent shall
execute and deliver to the Debtor, at the Debtor's expense, such documents or
instruments as are necessary to terminate the Collateral Agent's security
interest in the Receivables and the Contracts related thereto. Any such
documents shall be prepared by or on behalf of the Debtor.
(b) In connection with a Take-Out, the Debtor shall have the
right, from time to time thereafter (but not more frequently than once per calen
dar week), on the maturity date of any Commercial Paper note issued by the Com
pany to fund the Net Investment or upon the termination of any funding period
utilized by the Liquidity Provider or the Bank Investors, as applicable, to
require the Collateral Agent to release its security interest in and Lien on
specified Contracts and the related Receivables, provided that (x) such
Contracts and related Receivables are to be assigned or sold by the Debtor,
directly or indirectly, to a structured finance vehicle established by or on
behalf of the Debtor or an affiliate, in connection with an asset-securitization
or other structured financing having a prefunding (or similar) feature, (y) the
aggregate Outstanding Balance of such Receivables shall be (i) not greater than
the principal component of such maturing Commercial Paper or the principal
component subject to such funding period, as applicable and (ii) at least
$5,000,000 and (z) the Debtor shall have given the Agent, the Collateral Agent
and the Insurer at least seven (7) days prior written notice of its intention to
effect a release with respect to such Contracts and Receivables. Any such
release shall be in consideration for the deposit by the Debtor into the
Collection Account of an amount equal to the sum of (i) the Outstanding Balance
of such Receivables on the day of such assignment plus (ii) all accrued and
unpaid interest thereon (whether or not due thereunder) at the rate set forth in
the related Contracts to such date of assignment. The amount described in clause
(i) above shall be allocated and applied on such day (whether or not a
Remittance Date) as described in Section 2.3(b) as a Receipt of Principal, and
the amount described in clause (ii) above shall be applied on such day (whether
or not a Remittance Date) in the order of priorities set forth in Section 2.3(a)
as a Receipt of Interest (in which case "Settlement Period" as used in said
Section 2.3(a) shall be considered to be the period from the last date of the
previous Settlement Period to the date on which the amounts required to be paid
under this Section 2.15(b) are paid). The Debtor shall also be obligated to pay
to the Agent (i) an amount equal to $2,500 as an administrative fee in
connection with any such assignment and (ii) the reasonable legal fees and
expenses of the Company, the Collateral Agent, the Bank Investors and the
Administrative Agent incurred in connection with any such release. Upon the
deposit to the Collection Account and
46
the payment by the Debtor of the amounts described in this Section, the
Collateral Agent shall execute and deliver to the Debtor, at the Debtor's
expense, such docu ments or instruments as are necessary to terminate the
Collateral Agent's interest in the Receivables and the Contracts related
thereto. Any such documents shall be prepared by or on behalf of the Debtor.
(c) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
specified Contracts and the related Receivables on the terms and conditions set
forth herein. It shall be a condition precedent to any such release that,
immediately after such release, (i) the Debtor shall pay to the Company and the
Bank Investors, as applicable, an amount equal to the amount necessary to cause
the Net Asset Test to be satisfied calculated after giving effect to the
proposed release, (ii) after giving effect to such release, the amount on
deposit in the Reserve Account shall be at least equal to the Required Reserve
Account Amount, and (iii) all amounts due and owing to the Insurer from the
Debtor shall have been paid in full.
(d) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and Lien on all
of the Contracts and the related Receivables on the terms and conditions set
forth herein. It shall be condition precedent to any such release that (i) the
Debtor shall pay to the Agent, for the benefit of the Company and the Bank
Investors, as applicable, an amount equal to the Net Investment at the time of
such release, (ii) the Debtor shall pay to the Agent, for the benefit of the
Company and the Bank Investors, as applica ble, an amount equal to all interest
costs associated with the Company's Commercial Paper issued to fund the Net
Investment through the date of maturity or all interest costs associated with
all funding periods utilized by the Bank Investors for the Liquidity Provider
with respect to its interest in the Contracts, related Receivables and
Transferred Interest, as applicable, as well as all Carrying Costs accrued
through the date of such release and all other costs which constitute Carrying
Costs which will accrue after such date, (iii) the Debtor shall have given the
Collateral Agent, the Administrative Agent and the Insurer at least thirty (30)
days prior written notice of its intention to effect such a release the
Contracts and Receivables, and (iv) all amounts due and owing to the Insurer
from the Debtor shall have been paid in full.
47
SECTION 2.16 Hedging Amounts.
(a) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segregated account (the "Hedge Proceeds Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess
all right, title and interest in and to all funds deposited from time to time in
the Hedge Proceeds Account. The Collateral Agent will maintain the Hedge
Proceeds Account at an Eligible Institution. If the Eligible Institution holding
the Hedge Proceeds Account shall cease to be an Eligible Institution, the
Collateral Agent shall have the right to direct the transfer of the Hedge
Proceeds Account to an Eligible Institution. Funds on deposit in the Hedge
Proceeds Account shall be invested by the Collateral Agent in overnight Eligible
Investments.
(2) Funds on deposit in the Hedge Proceeds Account shall be
invested in Eligible Investments by or at the written direction of the Debtor,
provided that if a Termination Event shall have occurred, such investments shall
be made as directed by the Collateral Agent. Any such written directions shall
specify the particular investment to be made and shall certify that such
investment is an Eligible Investment and is permitted to be made under this
Agreement.
(3) The Collateral Agent agrees that it shall not accept for
credit to the Hedge Proceeds Account any investment as to which it has knowledge
of any adverse claim thereto. Bank of America hereby agrees (and any other
Securities Intermediary holding the Hedge Proceeds Account shall so agree) to
comply with all Entitlement Orders (as defined in Section 8-102 of the 1994
Official Text of the Uniform Commercial Code) received by it with respect to the
Hedge Proceeds Account from the Collateral Agent.
(4) No Eligible Investment held in the Hedge
Proceeds Account may be liquidated or disposed of prior to its maturity. All
proceeds of any such Eligible Investment shall be deposited in the Hedge
Proceeds Account. Investments may be made in the Hedge Proceeds Account on any
date (provided such investments mature in accordance herewith), only after
giving effect to deposits to and withdrawals from such account on such date.
Realized losses, if any, on amounts invested in such Eligible Investments shall
be charged against investment earnings on amounts on deposit in the Hedge
Proceeds Account.
48
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Hedge Proceeds Account.
(6) Eligible Investments shall be maintained in the Hedge
Proceeds Accounts by the Collateral Agent in such manner as may be necessary to
maintain the first priority perfected security interest in favor of the
Collateral Agent on behalf of the Secured Parties. Bank of America, agrees (and
any other Securities Intermediary holding the Reserve Account shall so agree)
that it shall not agree to comply with Entitlement Orders (as defined in Section
8-102 of the 1994 version of the Official Text of Article 8 of the Uniform
Commercial Code) with respect to the Hedge Proceeds Account given to it by any
Person other than the Collateral Agent.
(b) On and after the occurrence of any Termination Event or in
the event of the receipt of any proceeds received by the Collection Agent
pursuant to any Acceptable Hedging Arrangement and immediately thereafter
Acceptable Hedging Arrangements which satisfy the requirements of Section 5.3
are not in place, the Collection Agent, for the benefit of the Debtor, shall
remit to the Collateral Agent for deposit into the Hedge Proceeds Account any
proceeds received by the Collection Agent of any Acceptable Hedging Arrangement.
Such amounts shall be held by the Collateral Agent as security for the repayment
to the Company, the Bank Investors and the Insurer, as applicable, of the Net
Investment and the Aggregate Unpaids. At any time after the deposit of such
amounts to the credit of the Hedge Proceeds Account, the Collateral Agent may
apply such amounts either (i) to reduce the Net Investment, (ii) to provide for
the payment to the Company, the Bank Investors and the Insurer, as applicable,
of the Aggregate Unpaids, or (iii) to purchase an interest rate hedge acceptable
to the Insurer. Upon the termination of this Agreement, provided that the Net
Investment shall be zero and all other Aggre gate Unpaids shall have been paid
in full, the Collateral Agent shall release to the Debtor any amounts remaining
on deposit in the Hedge Proceeds Account.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Debtor. The
Debtor represents and warrants to the Collateral Agent and the Secured Parties
that:
(a) Corporate Existence and Power. The Debtor is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate power and all material
govern mental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is now conducted.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Debtor of this Agreement and the
other Transaction Documents are within the Debtor's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (except as
contemplated by Section 2.6), and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the Certificate of
Incorporation or Bylaws of the Debtor or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Debtor or result in the
creation or imposition of any lien on assets of the Debtor (except as
contemplated by Section 2.6), or require the consent or approval of, or the
filing of any notice or other documentation with, any governmental authority or
other Person (except as contemplated by Section 2.6).
(c) Binding Effect. Each of this Agreement and the other
Transaction Documents constitutes the legal, valid and binding obligation of the
Debtor, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors.
(d) Perfection. Immediately preceding each Funding, the Debtor
shall be the owner of all of the Receivables, free and clear of all liens,
encumbrances, security interests, preferences or other security arrangement of
any kind or nature whatsoever, except as permitted by this Agreement and the
other Transaction Documents. On or prior to each Funding and each day on which a
Receivable is sold to the Debtor or Seller by UAC pursuant to the Sale and
Purchase Agreement, the UAFC Sale and Purchase Agreement, as applicable, and
subse quently sold to the Debtor by the Seller pursuant to the UAFCC Sale and
Purchase Agreement or sold to the Debtor by a Warehouse pursuant to a Warehouse
Transfer Agreement, all financing statements and other documents required to be
recorded or filed in order to perfect and protect (i) the Debtor's interest in
the Receivables, the Contracts related thereto, the Related Security with
respect thereto and all Proceeds thereof against all creditors of and purchasers
from UAC, the Seller, PFC, any Warehouse or any Acquisition Subsidiary, and (ii)
the Collateral Agent's interest in the Collateral against all creditors of and
purchasers from the Debtor, and all filing fees and taxes, if any, payable in
connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore
furnished by the Debtor (including without limitation, the Settlement
Statements, any reports delivered pursuant to Section 2.9 and UAC's financial
statements) to the Collateral Agent, the Secured Parties, the Administrative
Agent or any of the other Persons party hereto for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Debtor to any such Person will be, true
and accurate in every material respect, on the date such information is stated
or certified.
(f) Tax Status. All tax returns (federal, state and local)
required to be filed with respect to the Debtor have been filed (which filings
may be made by an Affiliate of the Debtor on a consolidated basis covering the
Debtor and other Persons) and there has been paid or adequate provision made for
the payment of all taxes, assessments and other governmental charges in respect
of the Debtor (or in the event consolidated returns have been filed, with
respect to the Persons subject to such returns).
(g) Action, Suits. Except as set forth in Exhibit F, there are
no actions, suits or proceedings pending, or to the knowledge of the Debtor
threatened, against or affecting the Debtor or any Affiliate of the Debtor or
their respective properties, in or before any court, arbitrator or other body,
which may have a material adverse effect on the Debtor's ability to perform its
obligations hereunder or under the Sale and Purchase Agreement or the UAFCC Sale
and Purchase Agreement.
(h) Use of Proceeds. The proceeds of any Funding will be used
by the Debtor to (a) acquire the Receivables, the Contracts related thereto and
the Related Security with respect thereto from the Seller pursuant to the UAFCC
50
Sale and Purchase Agreement or from a Warehouse pursuant to a Warehouse Transfer
Agreement, (b) to pay down debt in connection with the purchase of the
Receivables and Contracts pursuant to the Sale and Purchase Agreement or the
UAFCC Sale and Purchase Agreement or pursuant to a Warehouse Transfer Agree
ment, or (c) to make distributions constituting a return of capital.
(i) Place of Business. The chief place of business and chief
executive office of the Debtor are located at the address of the Debtor
indicated in Section 9.3 hereof and the offices where the Debtor keeps all its
Records, are located at the address(es) described on Exhibit G or such other
locations notified to the Company in accordance with Section 2.6 in
jurisdictions where all action required by Section 2.6 has been taken and
completed.
(j) Good Title. Upon each Funding and on each day on which a
Receivable and related Contract is sold to the Debtor by the Seller pursuant to
the UAFCC Sale and Purchase Agreement or by a Warehouse pursuant to a Warehouse
Transfer Agreement, the Collateral Agent shall acquire a valid and perfected
first priority security interest in each Receivable and related Contract that
exists on the date of such Funding and sale and in the Related Security and
Collec tions with respect thereto free and clear of any Adverse Claim.
(k) Tradenames, Etc. As of the date hereof: (i) the Debtor has
only the subsidiaries and divisions listed on Exhibit H hereto; and (ii) the
Debtor has, within the last five (5) years, operated only under the tradenames
identified in Exhibit H hereto, and, within the last five (5) years, has not
changed its name, merged with or into or consolidated with any other corporation
or been the subject of any proceeding under ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code
(Bankruptcy), except as disclosed in Exhibit H hereto.
(l) Nature of Receivables. Each Receivable represented by the
Debtor as an Eligible Receivable hereunder or in any report, document or
instrument delivered hereunder or in connection with the other Transaction Docu
ments is an Eligible Receivable at the time of such representation.
(m) Coverage; Amount of Receivables. The Net Asset Test is
currently satisfied. As of September 17, 1998, the aggregate Outstanding Balance
of the Receivables in existence was $86,193,823.44 and the aggregate Outstanding
Balance of all Eligible Receivables was $85,808,215.61.
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(n) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or a
Potential Termination Event.
(o) Not an Investment Company. The Debtor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or is exempt from all provisions of such Act.
(p) ERISA. The Debtor is in compliance in all material
respects with ERISA and no lien in favor of the Pension Benefit Guaranty Corpora
tion on any of the Receivables shall exist.
(q) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at
such Lock-Box Banks, are specified in Exhibit B hereto (or at such other Lock-
Box Banks and/or with such other Lock-Box Accounts as have been notified to the
Administrative Agent). All Obligors have been instructed to make payment to a
Lock-Box Account.
(r) Insurance Policies. At the time of the sale of each
Receivable and related Contract by UAC to the Seller pursuant to the UAFC Sale
and Purchase Agreement and subsequent sale by the Seller to the Debtor pursuant
to the UAFCC Sale and Purchase Agreement or by a Warehouse to the Debtor
pursuant to a Warehouse Transfer Agreement, each Financed Vehicle is required to
be covered by physical damage and liability insurance obtained by the related
Obligor at least in the amount required by the related Contract, and each such
required insurance policy is required to name UAC as loss payee and is required
to be in full force and effect.
Any document, instrument, certificate or notice delivered to
the Company by the Debtor hereunder shall be deemed a representation and
warranty by the Debtor.
SECTION 3.2 Representations and Warranties of the Collection
Agent. The Collection Agent represents and warrants to the Collateral Agent and
the Secured Parties that:
(a) Corporate Existence and Power. The Collection Agent is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation and has all corporate power and all material
governmental licenses,
52
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is now conducted.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Collection Agent of this
Agreement and the other Transaction Documents are within the Collection Agent's
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official (except as contemplated by Section 2.6), and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the Certificate of Incorporation or Bylaws of the Collection
Agent or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Collection Agent or result in the creation or
imposition of any lien on assets of the Collection Agent or any of its
Subsidiaries (except as contemplated by Section 2.6), or require the consent or
approval of, or the filing of any notice or other documentation with, any
governmental authority or other Person (except as contemplated by Section 2.6).
(c) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of the Collection Agent, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors.
(d) Accuracy of Information. All information heretofore
furnished by the Collection Agent to the Collateral Agent, the Secured Parties
or the Administrative Agent for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such information hereafter
furnished by the Collection Agent to the Collateral Agent, the Secured Parties
or the Administra tive Agent will be, true and accurate in every material
respect, on the date such information is stated or certified.
(e) Credit and Collection Policy. Since June 30, 1998, (except
for any changes as received by the Administrative Agent in writing), there have
been no material changes in the Credit and Collection Policy; since such date,
no material adverse change has occurred in the overall rate of collection of the
Receivables.
(f) Collections and Servicing. Since the Closing Date, there
has been no material adverse change in the ability of UAC, as Collection Agent
hereunder, to service and collect the Receivables.
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Any document, instrument, certificate or notice delivered by the
Collection Agent to the Collateral Agent, the Secured Parties hereunder shall be
deemed a representation and warranty by the Collection Agent.
SECTION 3.3 Reaffirmation of Representations and Warranties.
On each Determination Date, Remittance Date and day on which a Funding is made,
each of the Debtor and the Collection Agent, shall be deemed to have certified
that all of its respective representations and warranties described in Sections
3.1 and 3.2 are correct on and as of such day as though made on and as of such
day.
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Effectiveness. This Agreement shall
become effective on the first day on which all of the following conditions have
been satisfied:
(a) A Certificate of the Secretary of the Debtor certifying
(i) the names and signatures of the officers and other agents authorized on its
behalf to execute this Agreement and the other Transaction Documents and any
other documents to be delivered by it hereunder or thereunder (on which
Certificate the Collateral Agent and the Secured Parties may conclusively rely
until such time as the Collateral Agent and the Secured Parties shall receive
from the Debtor a revised Certificate meeting the requirements of this clause
(a)(i)), (ii) a copy of the Debtor's Certificate of Incorporation, as amended to
the date hereof, certified by the Secretary of State of the State of Delaware,
(iii) a copy of the Debtor's By-laws, as amended to the date hereof, (iv) a copy
of resolutions of the Debtor's Board of Directors approv ing the transactions
contemplated hereby and (v) a certificate of the Secretary of State of the State
of Delaware certifying the Debtor's good standing.
(b) A Certificate of the Secretary of the Collection Agent
certifying (i) the names and signatures of the officers authorized on its behalf
to execute this Agreement and any other documents to be delivered by it
hereunder (on which Certificate the Collateral Agent and the Secured Parties may
conclusively rely until such time as the Collateral Agent and Secured Parties
shall receive from the Collection Agent a revised Certificate meeting the
requirements of this clause (a)(i)), (ii) a copy of the Collection Agent's
Articles of Incorporation, as amended to the date hereof, certified by the
Secretary of State of the State of Indiana, (iii) a copy of the Collection
Agent's By-laws, as amended to the date hereof, (iv) a copy of resolutions of
the Collection Agent's Board of Directors approving the transactions
contemplated hereby and (v) a certificate of the Secretary of State of the State
of Indiana certifying the Collection Agent's existence.
(c) A Certificate of the Secretary of the Seller certifying
(i) the names and signatures of the officers and other agents authorized on its
behalf to execute this Agreement and the other Transaction Documents and any
other docu ments to be delivered by it hereunder or thereunder (on which
Certificate the Collateral Agent and the Secured Parties may conclusively rely
until such time as the
55
Collateral Agent and the Secured Parties shall receive from the Seller a revised
Certificate meeting the requirements of this clause (c)(i)), (ii) a copy of the
Seller's Articles of Incorporation, as amended to the date hereof, certified by
the Secretary of State of the State of Indiana, (iii) a copy of the Seller's
By-laws, as amended to the date hereof, (iv) a copy of resolutions of the
Seller's Board of Directors approving the transactions contemplated hereby and
(v) a certificate of the Secretary of State of the State of Indiana certifying
the Seller's existence.
(d) Copies of proper financing statements (Form UCC-1), naming
UAC as the debtor in favor of the Seller as secured party and the Debtor as
assignee of the secured party or other similar instruments or documents as may
be necessary or in the reasonable opinion of the Seller desirable under the
Relevant UCC to perfect the Seller's security interest in the Receivables,
Related Security and Collections, free and clear of any Adverse Claim.
(e) Copies of proper financing statements (Form UCC-1), naming
the Seller as the debtor in favor of the Debtor as secured party and the
Collateral Agent, for the benefit of the Secured Parties, as assignee of the
secured party or other similar instruments or documents as may be necessary or
in the reasonable opinion of the Collateral Agent desirable under the Relevant
UCC to perfect the Debtor's security interest in the Receivables, Related
Security and Collections, free and clear of any Adverse Claim.
(f) Copies of proper financing statements (Form UCC-3), naming
the Collateral Agent, for the benefit of the Secured Parties, as assignee of the
UCC-1 financing statement referenced in Section 4.1(d).
(g) Copies of proper financing statements (Form UCC-3),
amending the Form UCC-1 that names UAC as the debtor and Debtor as a secured
party to reflect the Debtor's name change from Union Acceptance Funding Corpora
tion to UAFC Corporation.
(h) Copies of proper financing statements (Form UCC-3),
amending the Form UCC-1 that names the Debtor (when known as Union Accep tance
Funding Corporation) as debtor and the Company as secured party to reflect the
Debtor's name change from Union Acceptance Funding Corporation to UAFC
Corporation.
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(i) Copies of proper financing statements (Form UCC-3), if
any, necessary under the Relevant UCC to terminate all security interests and
other rights of any person in the Collateral, including the Receivables, Related
Security and Collections, previously granted by the Debtor.
(j) Certified copies of request for information or copies
(Form UCC-11) (or a similar search report certified by parties acceptable to the
Collateral Agent) dated a date reasonably near the date of the [Initial Funding]
listing all effective financing statements which name the Debtor, the Seller or
UAC(under its present name and any previous name) as debtor and which are filed
in jurisdic tions in which the filings were made pursuant to item (e) above
together with copies of such financing statements (none of which shall cover any
Receivables or Con tracts).
(k) Opinions of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special counsel to the
Seller, Debtor and the Collection Agent, covering the matters set forth in (i)
Exhibit I hereto, and (ii) Exhibit J hereto.
(l) An opinion of ▇▇▇▇▇▇▇ & McNagny, special counsel to the
Seller, Debtor and the Collection Agent, covering matters relating to Florida
law.
(m) Such other documents as the Collateral Agent or the
Secured Parties shall reasonably request.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Debtor, the Seller
and UAC. At all times from the date hereof to the later to occur of (i) the
Termination Date or (ii) the date on which the Net Investment is zero, unless
the Secured Parties shall otherwise consent in writing:
(a) Financial Reporting. The Debtor, the Seller and UAC each
will maintain, for itself and each Subsidiary, a system of accounting
established and administered in accordance with generally accepted accounting
principles, and UAC (or, in the case of the first sentence of clauses (iii),
(iv), and clause (ix), the
57
Debtor) will furnish to the Administrative Agent, the Collateral Agent and the
Insurer:
(i) Annual Reporting. Within ninety (90) days after
the close of each of its fiscal years, audited financial state ments,
prepared in accordance with generally accepted accounting principles on
a consolidated basis for itself and its Subsidiaries, including balance
sheets as of the end of such period, related state ments of operations,
shareholder's equity and cash flows, accompa ▇▇▇▇ by an audit report of
a nationally recognized firm of independent certified public
accountants (or such other firm of independent certi fied public
accountants acceptable to the Administrative Agent, the Collateral
Agent, and the Insurer) which report shall be unqualified as to going
concern and scope of audit and shall state that such ▇▇▇▇▇▇▇ dated
financial statements present fairly the financial position of UAC and
its Subsidiaries at the dates indicated and the results of their
operations and their cash flow for the periods indicated is in confor
mity with GAAP and that the examination had been made in accor dance
with generally accepted auditing standards.
(ii) Quarterly Reporting. Within forty-five (45) days
after the close of the first three quarterly periods of each of its
fiscal years, for itself and its Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and consolidated
related statements of operations, shareholder's equity and cash flows
for the period from the beginning of such fiscal year to the end of
such quarter, all certified by its chief financial officer.
(iii) Compliance Certificate. Concurrently with the
delivery by UAC of the financial statements required hereun der, a
compliance certificate signed by its treasurer or vice president
stating that no Termination Event or Potential Termination Event
exists, or if any Termination Event or Potential Termination Event
exists, stating the nature and status thereof. On and after the date of
any change in ownership of UAC contemplated by Section 5.2(k), together
with the financial statements hereunder, a compliance certifi cate
signed by the chief financial officer of UAC showing the compu tation
of, and showing compliance with, each of the quarterly ▇▇▇▇▇ cial tests
or conditions set forth in Section 5.2(k).
58
(iv) Notice of Termination Events or Potential
Termination Events. As soon as possible and in any event within two (2)
days after the occurrence of each Termination Event or each Potential
Termination Event, a statement of the treasurer or vice president of
the Debtor setting forth details of such Termination Event or Potential
Termination Event and the action which the Debtor proposes to take with
respect thereto.
(v) Change in Credit and Collection Policy. Within
ten (10) days after the date any material change in or amend ment to
the Credit and Collection Policy is made, a copy of the Credit and
Collection Policy then in effect indicating such change or amend ment.
(vi) Credit and Collection Policy. Upon request by
the Collateral Agent or any Secured Party, a complete copy of the
Credit and Collection Policy then in effect.
(vii) Blue Book. Within forty-five (45) days after
the close of the quarterly period of each of its fiscal years, a copy
of the UAC Quarterly Statistical Update (a/k/a/ UAC's "blue book").
(viii) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event (as defined in Article IV of ERISA) which the Debtor,
UAC or any ERISA Affiliate of the Debtor, the Seller or UAC files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the Debtor, UAC or
any ERISA Affiliates of the Debtor, the Seller or UAC receives from the
Internal Revenue Ser vice, the Pension Benefit Guaranty Corporation or
the U.S. Depart ment of Labor.
(ix) Other Information. Such other information
(including non-financial information) as the Administrative Agent, the
Collateral Agent or any Secured Party may from time to time reasonably
request.
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(b) Conduct of Business. Each of the Debtor, the
Seller and UAC will (x) carry on and conduct its business in
substantially the same manner and in substantially the same or related
fields of enterprise (including, in the case of UAC, consumer finance
activities) as it is presently conducted and do all things necessary to
remain duly incorporated, validly existing and in good standing as a
domestic corporation in its jurisdiction of incorporation and (y)
maintain all requisite authority to conduct its business in each
jurisdiction in which its business is con ducted.
(c) Compliance with Laws. Each of the Debtor, the Seller and
UAC will comply in all material respects with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject.
(d) Furnishing of Information and Inspection of Records. The
Debtor will furnish to the Collateral Agent and the Secured Parties from time to
time such information with respect to the Receivables as the Collateral Agent or
any Secured Party may reasonably request, including, without limitation,
listings identifying the Obligor and the Outstanding Balance for each
Receivable. Upon at least two (2) Business Days prior notice, the Debtor, the
Seller and UAC will during regular business hours permit the Collateral Agent or
any Secured Party, or their agents or representatives, (i) to examine and make
copies of and abstracts from all Records and (ii) to visit the offices and
properties of the Debtor, the Seller and UAC for the purpose of examining such
Records, and to discuss matters relating to Receivables or the Debtor's, the
Seller's or UAC's performance hereunder or under the Sale and Purchase
Agreement, the UAFC Sale and Purchase Agreement or the UAFCC Sale and Purchase
Agreement, as applicable, with any of the officers, employees or independent
public accountants of the Debtor, the Seller or UAC having knowledge of such
matters.
(e) Keeping of Records and Books of Account. The Debtor, the
Seller and UAC (consistent with its role as Collection Agent) will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). The Debtor, the
Seller and UAC will give the Collateral
60
Agent, the Insurer, ▇▇▇▇▇'▇ and S&P notice of any material
change in the administrative and operating procedures referred to in the
previous sentence.
(f) Performance and Compliance with Receivables and Contracts.
The Debtor, the Seller and UAC will at their expense timely and fully perform
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts related to the Receivables.
(g) Credit and Collection Policies. UAC will comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
(h) Collections. The Debtor and UAC shall instruct all
Obligors to cause all Collections to be deposited directly to a Lock-Box
Account.
(i) Collections Received. The Debtor and UAC shall hold in
trust, and deposit, immediately, but in any event not later than two (2)
Business Days of its receipt thereof, to a Lock-Box Account all Collections
received from time to time by them.
(j) Separate Business. The Debtor shall at all times (a) to
the extent the Debtor's office is located in the offices of UAC or any Affiliate
of UAC, pay fair market rent for its executive office space located in the
offices of UAC or any Affiliate of UAC, (b) maintain the Debtor's books,
financial statements, accounting records and other corporate documents and
records, as applicable, separate from those of UAC or any other entity, (c) not
commingle the Debtor's assets with those of UAC or any other entity (it being
understood that certain Collections on Receivables owned by the Debtor may be
temporarily commingled with collections on other receivables serviced by UAC);
(d) act solely in its corporate name and through its own authorized officers and
agents, (e) make investments directly or by brokers engaged and paid by the
Debtor or its agents (provided that if any such Agent is an Affiliate of the
Debtor it shall be compensated at a fair market rate for its services), (f)
separately manage the Debtor's liabilities from those of UAC or any Affiliates
of UAC and pay its own liabilities, including all administrative expenses, from
its own separate assets, and (g) pay from the Debtor's assets all obligations
and indebtedness of any kind incurred by the Debtor. The Debtor shall abide by
all corporate formalities, including the maintenance of current minute books,
and the Debtor shall cause its financial statements to be prepared in accor
dance with generally accepted accounting principles in a manner that indicates
the
61
separate existence of the Debtor and its assets and liabilities. The Debtor
shall (i) pay all its liabilities, (ii) not assume the liabilities of UAC or any
Affiliate of UAC and (iii) not guarantee the liabilities of UAC or any Affiliate
of UAC. The officers and directors of the Debtor (as appropriate) shall make
decisions with respect to the business and daily operations of the Debtor
independent of and not dictated by any controlling entity.
(k) Corporate Documents. The Debtor shall only amend, alter,
change or repeal Articles III, IV, V, VI, and XI of its Certificate of Incorpora
tion as in effect on the date hereof with the prior written consent of the
Administra tive Agent.
SECTION 5.2 Negative Covenants of Debtor, the Seller and UAC.
During the term of this Agreement, unless the Secured Parties shall otherwise
consent in writing:
(a) No Sales, Liens, Etc. Except as otherwise provided herein,
including a Year-end Receivable Transfer, none of the Debtor, the Seller or UAC
will sell, assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon (or the filing of any financing
statement) or with respect to, any Receivable or related Contract, or upon or
with respect to any account which concentrates in a Lock-Box Bank to which any
Collec tions of any Receivable are sent, or assign any right to receive income
in respect thereof.
(b) No Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.2, none of the Debtor, the Seller or UAC will
extend, amend or otherwise modify the terms of any Receivable, or amend, modify
or waive any term or condition of any Contract related thereto.
(c) No Amendment of UAFC Sale and Purchase Agreement. The
Seller shall not amend or otherwise modify the UAFC Sale and Purchase Agreement
without the prior written consent of the Secured Parties.
(d) No Amendment of UAFCC Sale and Purchase Agreement. The
Debtor shall not amend or otherwise modify the UAFCC Sale and Purchase Agreement
without the prior written consent of the Secured Parties.
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(e) No Amendment of Sale and Purchase Agreement. The
Debtor shall not amend or otherwise modify the Sale and Purchase Agreement
without the prior written consent of the Secured Parties.
(f) No Change in Business or Credit and Collection
Policy. None of the Debtor, the Seller or UAC shall, without the prior written
consent of the Agent, make any change in the character of its business or in the
Credit and Collection Policy, which change would, in either case (i) impair the
collectibility of any Receivable or (ii) change the write-off policy in effect
as of the Closing Date, with respect to the Receivables and the Contracts.
(g) Sale of Assets, Etc. None of the Debtor, the
Seller or UAC will sell, lease or transfer all or substantially all of its
assets to any other person, provided, however, that no such sale shall be deemed
to occur solely as a result of a Take-Out, Year-end Receivable Transfer or
solely as a result of the sale of Contracts and related Receivables which are
released to the Debtor pursuant to Section 2.15(c) and 2.15(d).
(h) Change in Payment Instructions to Obligors. None
of the Debtor, the Seller, or UAC or the Collection Agent will add or terminate
any bank as a Lock-Box Bank or any account as a Lock-Box Account to or from
those listed in Exhibit B hereto or make any change in its instructions to
Obligors regard ing payments to be made to any Lock-Box Account, unless (i) such
instructions are to deposit such payments to another existing Lock-Box Account
or (ii) the Collateral Agent and the Administrative Agent shall have received
written notice of such addition, termination or change at least 15 days prior
thereto.
(i) Change of Name, Etc. The Debtor will not change
its name, identity or structure or its chief executive office, unless at least
30 days prior to the effective date of any such change the Debtor delivers to
the Collateral Agent UCC financing statements, executed by the Debtor necessary
to reflect such change and to continue the perfection of the Collateral Agent's
security interest in the Receivables.
(j) No Mergers, Etc. None of the Debtor, the Seller
or UAC will (i) consolidate or merge with or into any other Person, or (ii)
sell, lease or transfer all or substantially all of its assets to any other
person, unless the Debtor, the Seller or UAC, respectively, is the surviving
entity.
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(k) Sale Treatment.
(i) Neither the Seller nor UAC will account for (including for
accounting and tax purposes), or otherwise treat, the transactions
contemplated by the UAFC Sale and Purchase Agree ment in any manner
other than as a sale of Receivables by UAC to the Seller;
(ii) Neither the Debtor nor UAC will account for (including
for accounting and tax purposes), or otherwise treat, the transactions
contemplated by the Sale and Purchase Agree ment, as applicable, in any
manner other than as a sale of Receivables by UAC to the Debtor; and
(iii) Neither the Debtor nor the Seller will account for
(including for accounting and tax purposes), or otherwise treat, the
transactions contemplated by the UAFCC Sale and Purchase Agreement in
any manner other than as a sale of Receivables by the Seller to the
Debtor.
(l) Other Debt. Except as provided for herein, the
Debtor will not create, incur, assume or suffer to exist any indebtedness
whether current or funded, or any other liability other than (i) indebtedness of
the Debtor representing fees, expenses and indemnities arising hereunder, under
the UAFCC Sale and Purchase Agreement for the purchase price of the Receivables
under the UAFCC Sale and Purchase Agreement or under the Sale and Purchase
Agreement for the purchase price of the Receivables under the Sale and Purchase
Agreement, and (ii) other indebtedness incurred in the ordinary course of its
business in an amount not to exceed $9,500 (except for indebtedness incurred in
connection with the repurchase of Receivables from UARC) at any time
outstanding.
SECTION 5.3 Acceptable Hedging Arrangements. The Collection
Agent shall (i) at or prior to the time of any Funding, provide to the
Administrative Agent, the Collateral Agent and the Insurer an officer's
certificate stating that the Collection Agent has Acceptable Hedging
Arrangements in place satisfying the conditions of this Section 5.3 as set forth
below and after January 1, 1999, qualifies as an Acceptable Hedging Arrangement
(as defined in the Insurance Agreement), and (ii) in connection with any
Settlement Statement provided hereunder, provide an
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executed copy of all existing Acceptable Hedging Arrangements, which Acceptable
Hedging Arrangements shall be satisfactory to the Administrative Agent, the
Collateral Agent and the Insurer, and with respect to which at any time after
the occurrence of a Termination Event the Debtor shall be the beneficiary, in
respect of an aggregate notional amount at least equal to the Net Investment.
The form and structure and counterparty to each Acceptable Hedging Arrangement
shall be acceptable to the Administrative Agent, the Collateral Agent and the
Insurer and must be in full force and effect at all times during which the Net
Investment is greater than zero (however such required amount may be reduced for
the period of time between the pricing and the funding of a structured financing
utilizing Receiv ▇▇▇▇▇ released to the Debtor pursuant to Section 2.15 by the
aggregate Outstanding Balance of such Receivables).
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent. The servicing,
administering and collection of the Receivables shall be conducted by such
Person (the "Collection Agent") so designated from time to time in accordance
with this Section 6.1. Until the Collateral Agent gives notice to UAC of the
designation of a new Collection Agent, UAC is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Collection Agent pursuant
to the terms hereof. The Collateral Agent, upon the written request of the
Insurer shall, or may, with the consent of the Insurer, upon the occurrence of a
Collection Agent Default or any other Termination Event, designate as Collection
Agent any Person (including itself) acceptable to the Insurer to succeed UAC or
any successor Collection Agent, on the condition in each case that any such
Person so designated shall agree to perform the duties and obligations of the
Collection Agent pursuant to the terms hereof, but in any event the Company
shall notify ▇▇▇▇▇'▇ and S&P of any Collection Agent Default. The Company may
notify any Obligor of its security interest in the Con tracts and the related
Receivables.
SECTION 6.2 Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be
taken all such action as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable
65
care and diligence, and in accordance with the Credit and Collection Policy.
Each of the Debtor, the Company, each Bank Investor and the Insurer hereby
appoints as its agent the Collection Agent, from time to time designated
pursuant to Section 6.1, to enforce its respective rights and interests in and
under the Receivables, the Related Security and the Contracts. The Collection
Agent shall remit daily, within two (2) Business Days of receipt, to the
Collection Account all Collections received with respect to any Receivables. The
Collection Agent shall segregate and deposit to the Agent's, the Company's, the
Bank Investor's or the Insurer's account, as applicable, such Person's allocable
share of Collections of Receivables when required pursuant to Article II hereof.
So long as no Termination Event shall have occurred and be continuing, the
Collection Agent may, unless otherwise required by law, in accor dance with the
Credit and Collection Policy, extend the maturity of Receivables as the
Collection Agent may determine to be appropriate to maximize Collections
thereof. The Debtor shall hold in trust for the Secured Parties in accordance
with their security interest, all Records which evidence or relate to
Receivables or Related Security. In the event that a successor Collection Agent
is appointed by the Com pany, upon the direction or with the consent of the
Insurer, the Debtor shall deliver to the Collection Agent and the Collection
Agent shall hold in trust for the Debtor and the Secured Parties in accordance
with their respective interests, all Records which evidence or relate to
Receivables or Related Security. Notwithstanding anything to the contrary
contained herein, the Collateral Agent shall have the absolute and unlimited
right to direct the Collection Agent (whether the Collection Agent is the Debtor
or any other Person) to commence or settle any legal action to enforce
collection of any Receivable or to foreclose upon or repossess any Related
Security.
(b) The Collection Agent shall, as soon as
practicable following receipt thereof, turn over to the Debtor any collections
of any indebtedness of any Obligor which is not a Receivable. If UAC or any
affiliate thereof is not the Collection Agent, the Collection Agent, by giving
three (3) Business Days' prior written notice to the Collateral Agent, the Agent
and the Insurer, may revise the percentage used to calculate the Servicing Fee
so long as the revised percentage will not result in a Servicing Fee that
exceeds 110% of the reasonable and appropriate out-of-pocket costs and expenses
of such Collection Agent incurred in connection with the performance of its
obligations hereunder as documented to the reasonable satisfaction of the
Collateral Agent, the Agent and the Insurer. The Collection Agent, if other than
the Debtor, shall as soon as practicable upon demand, deliver to the Debtor all
Records in its possession which evidence or relate to indebtedness of an Obligor
which is not a Receivable.
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(c) On or before ninety (90) days after the end of
each fiscal year of the Collection Agent, beginning with the fiscal year ending
June 30, 1999, the Collection Agent shall cause a firm of independent public
accountants (who may also render other services to the Collection Agent or the
Debtor) to furnish a report on applying agreed upon procedures to the Collateral
Agent to the effect that they have (i) compared the information contained in the
Settlement Statements and Withdrawal Notices delivered during such fiscal year,
based on a sample size provided by the Agent, with the information contained in
the Contracts and the Collection Agent's records and computer systems for such
period, (ii) verified the Net Receivables Balance as of the end of each
Settlement Period during such fiscal year, and (iii) verified that a sample of
Receivables treated by the Collection Agent as Eligible Receivables in fact
satisfied the requirements of the definition thereof contained herein, and (iv)
conducted a 'negative confirmation' of a sample of the Receivables and verified
that the Collection Agent's records and computer system used in servicing the
Receivables contained correct information with regard to due dates and
outstanding balances, except, in each case for (a) such exceptions as such firm
shall believe to be immaterial (which exceptions need not be enumerated) and (b)
such other exceptions as shall be set forth in such report.
(d) Notwithstanding anything to the contrary
contained in this Article VI, the Collection Agent, if not the Debtor, shall
have no obligation to collect, enforce or take any other action described in
this Article VI with respect to any Receivable that is not included in the
Collateral other than to deliver to the Debtor the Collections and documents
with respect to any such Receivable as described in Section 6.2(b).
(e) In the event that a Take-Out does not occur at
least once in any period of sixteen (16) consecutive calendar weeks, the
Collateral Agent, the Company or the Insurer shall have the right to conduct (or
to cause its accoun tants or other third parties to conduct) an audit of the
Collection Agent's records (including all Records and Contracts) and servicing,
reporting and collection procedures.
SECTION 6.3 Collection Agent Defaults. The occurrence of any
one or more of the following events shall constitute a Collection Agent Default:
(a) any representation, warranty, certification or
statement made by the Collection Agent (including UAC, if it is the Collection
Agent) in this
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Agreement or in any other document delivered pursuant hereto shall prove to have
been incorrect in any material respect when made or deemed made; or
(b) the Collection Agent shall default in the
performance of any payment, covenant or undertaking hereunder; or
(c) any Event of Bankruptcy shall occur with respect
to the Collection Agent or any Subsidiary of Collection Agent.
SECTION 6.4 Rights After Designation of New Collection Agent.
At any time following the designation of a Collection Agent (other than UAC)
pursuant to Section 6.1:
(i) The Agent or the Insurer may direct that payment of all
amounts payable under any Receivable be made directly to the Collateral
Agent and the Insurer, as applicable, or their respective designees.
(ii) The Debtor shall, at the Agent's or the Insurer's request
and at the Debtor's expense, give notice of the Collat eral Agent's
interest in the Receivables to each Obligor and direct that payments be
made directly to the Collateral Agent or its designee.
(iii) The Debtor shall, at the Agent's or the Insurer's
request, (A) assemble all of the Records, and shall make the same
available to the Collateral Agent and the Insurer at a place selected
by the Collateral Agent and the Insurer or their respective designees,
and (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections of Receiv ▇▇▇▇▇ in a manner
acceptable to the Collateral Agent and the Insurer and shall, promptly
upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the
Collateral Agent or its designee.
(iv) The Debtor hereby authorizes the Collateral Agent to take
any and all steps in the Debtor's name and on behalf of the Debtor
necessary or desirable, in the determination of the Collateral Agent,
to collect all amounts due under any and all Receivables and Related
Security with respect thereto, including,
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without limitation, endorsing the Debtor's name on checks and other
instruments representing Collections and enforcing such Receivables and
the related Contracts.
SECTION 6.5 Responsibilities of the Debtor. Anything herein to
the contrary notwithstanding, the Debtor shall (i) perform all of its
obligations under the Contracts related to the Receivables to the same extent as
if interests in such Receiv ▇▇▇▇▇ had not been pledged hereunder and the
exercise by the Collateral Agent of its rights hereunder shall not relieve the
Debtor from such obligations and (ii) pay when due any taxes, including without
limitation, any sales taxes payable in connection with the Receivables and their
creation and satisfaction. Neither the Collateral Agent nor any Secured Party
shall have any obligation or liability with respect to any Receivable or related
Contracts, nor shall any of them be obligated to perform any of the obligations
of the Debtor thereunder.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events. The occurrence of any one or
more of the following events shall constitute a Termination Event:
(a) any representation, warranty, certification or
statement made by the Debtor, the Seller or UAC in this Agreement, the UAFCC
Sale and Purchase Agreement, the UAFC Sale and Purchase Agreement, the Sale and
Pur chase Agreement or in any other Transaction Document shall prove to have
been incorrect in any material respect when made or deemed made;
(b) the Debtor, the Seller or UAC shall default in
the performance of (i) any payment obligation hereunder or under the UAFCC Sale
and Purchase Agreement or under the UAFC Sale and Purchase Agreement or under
the Sale and Purchase Agreement or (ii) any other covenant or undertaking
hereunder or under the UAFCC Sale and Purchase Agreement or under the UAFC Sale
and Purchase Agreement or under the Sale and Purchase Agreement which in the
case of this clause (ii) shall remain unremedied for five (5) days; or
(c) any Event of Bankruptcy shall occur with respect
to the Debtor, the Seller or the Collection Agent or any Subsidiary of any of
them; or
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(d) a Collection Agent Default shall have occurred or
for any reason UAC is not the Collection Agent; or
(e) the Collection Agent shall at any time not be in
compliance with the requirements of Section 5.3; or
(f) the Collateral Agent shall, for any reason, fail
to have a valid and perfected first priority security interest in the
Receivables and Related Security and Collections with respect thereto, free and
clear of any Adverse Claim; or
(g) any of the Debtor, the Seller or the Collection
Agent shall consolidate or merge with or into any other Person whereby it is not
the surviving entity; or
(h) there shall have occurred any material adverse
change in the operations of the Debtor, the Seller or the Collection Agent since
the Closing Date, or any other event shall have occurred which materially
affects the Debtor's, the Seller's or the Collection Agent's ability to either
collect the Receivables or to perform under this Agreement, the UAFCC Sale and
Purchase Agreement, the UAFC Sale and Purchase Agreement, the Sale and Purchase
Agreement or any other Transaction Document; or
(i) the Liquidity Provider or the Credit Support
Provider shall have given notice that an event of default has occurred and is
continuing under its agreements with the Company; or
(j) the Commercial Paper issued by the Company shall
not be rated at least "A-2" by S&P and at least "P-2" by ▇▇▇▇▇'▇; or
(k) (i) the Net Investment minus amounts on deposit
in the Prefunding Account shall at any time exceed the Net Receivables Balance,
or (ii) the Net Asset Test is not satisfied; or
(l) a Take-Out shall not occur at least once in any
period of six consecutive calendar months; or
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(m) the Net Yield as of any Determination Date is
less than 2.00%;
(n) a draw is made under the Policy or an Insurer
Default has occurred and is continuing;
(o) the Insurer shall have given notice that an event
of default has occurred and is continuing under the Insurance Agreement;
(p) the term of the Policy is not of the term
required by the Company (which term shall be at least equal to the term of the
latest maturing Receivable in the facility plus 90 days); and
(q) the sum of the (i) amount on deposit in the
Reserve Account and (ii) the amount available pursuant to any Reserve Account
Guaranty is less than the Required Reserve Account Amount for two (2)
consecutive Business Days.
Notwithstanding the foregoing, with respect to an event occurring described in
paragraph (a) or (f), to the extent such event is related to a particular
Receivable or Receivables, such event shall not constitute a Termination Event
if the Debtor timely fulfills its obligations with respect to such Receivable or
Receivables pursuant to Section 2.7 hereof.
SECTION 7.2 Termination. If a Termination Event occurs
hereunder and is continuing, the Collateral Agent, at the written direction of
the Insurer shall, or the Collateral Agent may, with the consent of the Insurer,
in either case by notice to the Debtor, (i) if UAC is the Collection Agent at
the time, terminate UAC as Collec tion Agent hereunder, or (ii) declare any date
as the date upon which the Note shall become due and payable, and, subject to
the limitations on recourse set forth in Section 2.1 hereof and Section 6.8 of
the Note Purchase Agreement, the Collateral Agent shall have all of the rights
and remedies provided to a secured creditor or a purchaser of chattel paper
under the Relevant UCC by applicable law in respect thereto (including, but not
limited to, initiating foreclosure and/or liquidation proceedings with respect
to all of the Receivables and Contracts or any portion thereof). In addition,
the Agent shall have the right to designate the Base Rate plus, if an Insurer
Default shall have occurred, 2%, to be applicable to the Net Investment (except
in the case of a Termination Event described under clauses (i) and (j) above, in
which case the Adjusted LIBOR Rate or the Base Rate, as applicable, shall be
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applicable), and the Company shall have the right to cease issuing Commercial
Paper in order to maintain the Net Investment and may assign to the Bank
Investors all of its right, title and interest hereunder.
No waiver of any Termination Event or Potential Termination
Event shall be effective without the prior written consent of the Insurer.
If the Note is declared due and payable in accordance with
this Section 7.2, the Collateral Agent shall, at the direction of the Insurer,
and may, with the consent of the Insurer, do any one or more of the following:
(i) take all necessary action to foreclose upon the
Collateral;
(ii) retain in satisfaction of any amounts owing from
the Debtor all amounts otherwise payable to the Debtor pursuant to this
Agreement to the extent necessary to pay in full all amounts (including
principal and interest) (i) due and payable under the Note, (ii) due and payable
by the Debtor under the Note Purchase Agreement, and (iii) all amounts due and
payable by the Debtor under the Insurance Agreement;
(iii) subject to the limitations on recourse set forth in
Section 2.1 hereof and Section 6.8 of the Note Purchase Agreement,
pursue any available remedy by proceeding at law or in equity including
complete or partial foreclosure of the lien upon the Collateral and
sale of the Collateral or any portion thereof or rights or interest
therein as may appear necessary or desirable (i) to collect amounts
owed pursuant to the Note and any other payments then due and
thereafter to become due under the Note or (ii) to enforce the
performance and observance of any obligation, covenant, agreement or
provision contained in this Agreement to be observed or performed by
the Debtor; or
(iv) subject to the limitations on recourse set forth in
Section 2.1 hereof and Section 6.8 of the Note Purchase Agreement,
exercise any remedies of a secured party under the Uni form Commercial
Code and take any other appropriate action to
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protect and enforce the rights and remedies of the Collateral Agent on
behalf of the Secured Parties
The Debtor and the Collection Agent agree that they shall take
all actions (including reliening of the certificates of title or other title
documents in the name of the Collateral Agent on behalf of the Secured Parties)
and execute all documents as may be necessary or requested by the Collateral
Agent to perfect its interest in the Collateral, including, without limitation,
to perfect the Collateral Agent's security interest in the Financed Vehicles.
The Debtor, the Seller and UAC hereby grant to the Collateral Agent, on behalf
of the Secured Parties, a power of attorney to act in their place and stead to
take all actions as may be necessary to perfect the Collateral Agent's security
interest in the Financed Vehicles. Each of UAC, the Debtor and the Seller
acknowledge that such power of attorney is irrevoca ble and is coupled with an
interest. In connection with any sale of the Receivables by the Collateral Agent
after the occurrence of a Termination Event, the Debtor shall have, for a period
of five (5) Business Days after notice of such proposed sale from or on behalf
of the Secured Parties, the right to repurchase the Receivables and related
Contracts for a price, payable in immediately available funds, in an amount
equal to the Aggregate Unpaids.
SECTION 7.3 Proceeds. The proceeds from the sale, disposition
or liquidation of the Receivables pursuant to Section 7.2 above shall be treated
as Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions governing allocations set forth herein.
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Duties of the Collateral Agent. The Secured
Parties hereby appoint Bank of America to act solely on their behalf as
Collateral Agent hereunder, and Bank of America hereby accepts such appointment.
The Collateral Agent, both prior to the occurrence of a Termination Event
hereunder and after a Termination Event shall have been cured or waived, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. The Collateral Agent shall at all times after the
occurrence of a Termination Event which has not been cured or waived exercise
such of the rights and powers vested in it
73
pursuant to this Agreement using the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs.
All Collections received by the Collateral Agent from the
Collection Agent or otherwise will, pending remittance to the Secured Party
entitled thereto, be held in trust by the Collateral Agent for the benefit of
the Secured Parties and together with all other payment obligations of the
Debtor hereunder owing to the Secured Parties shall be payable to the Secured
Parties in accordance with the provisions of Article II hereof.
The Collateral Agent shall only resign if it shall (i) become
incapable of acting as Collateral Agent in accordance with the terms of this
Agreement, (ii) be adjudicated insolvent or bankrupt or otherwise become subject
to any bankruptcy, insolvency, reorganization or liquidation proceeding, (iii)
be no longer qualified as the Collateral Agent as such term is defined in the
agreement governing its responsi bility as Collateral Agent or otherwise be
subject to replacement pursuant to or such agreement governing its
responsibility as Collateral Agent or (iv) materially breach any of the
provisions of this Agreement or provided, further, that, without the consent of
the Agent and the Insurer, such resignation shall not be effective until a
successor Collateral Agent acceptable to the Insurer shall have accepted
appointment as Collateral Agent hereunder and shall have agreed to be bound by
the terms of this Agreement.
Except as otherwise provided herein, the Collateral Agent
shall not resign from the obligations and duties hereby imposed on it except
upon determina tion that (i) the performance of its duties hereunder is no
longer permissible under applicable law and (ii) there is no reasonable action
which the Collateral Agent could take to make the performance of its duties
hereunder permissible under applicable law. Any such determination permitting
the resignation of the Collateral Agent shall be evidenced as to clause (i)
above by an opinion of counsel to such effect delivered to the Collateral Agent
and the Secured Parties. Notwithstanding the foregoing, the Collateral Agent may
resign if, after demand therefor, it does not receive payment of any
compensation due from the Debtor pursuant to the letter agreement described in
Section 8.2. No resignation of the Collateral Agent shall become effective until
a successor Collateral Agent approved by the Agent and the Insurer and the
successor Collateral Agent shall have assumed the responsibilities and
obligations of the Collateral Agent hereunder.
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SECTION 8.2 Compensation and Indemnification of Collateral
Agent. The Collateral Agent shall be compensated for its activities hereunder
and reimbursed for reasonable out-of-pocket expenses (including (i) securities
transaction charges not waived due to the Collateral Agent's receipt of a
payment from a financial institution with respect to certain Eligible
Investments, as specified by the Debtor and (ii) the compensation and expenses
of its counsel and agents) pursuant to a separate letter agreement between the
Collateral Agent and the Debtor. All such amounts shall be payable from funds
available therefor in accordance with Section 2.3(a)(iii) hereof with any
increase in such amounts to be approved by the Insurer. Subject to the terms of
such letter agreement, the Collateral Agent shall be required to pay the
expenses incurred by it in connection with its activities hereunder from its own
account. Notwithstanding any other provisions in this Agreement, the Collat eral
Agent shall not be liable for any liabilities, costs or expenses of the Debtor
arising under any tax law, including without limitation any Federal, state or
local income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or from a failure to
comply therewith).
(a) The Debtor shall indemnify the Collateral Agent,
its officers, directors, employees and agents for, and hold it harmless against
any loss, liability or expense incurred without willful misconduct, gross
negligence or bad faith on its part, arising out of or in connection with (i)
the acceptance or administra tion of this Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties under this Agreement
and (ii) the negligence, willful misconduct or bad faith of the Debtor in the
performance of its duties hereunder. All such amounts shall be payable in
accordance with Section 2.3(a)(iii) hereof. The provisions of this Section 8.2
shall survive the termination of this Agreement.
SECTION 8.3 Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent agrees to make the following
representations, warranties and covenants, and further agrees that the Secured
Parties shall be deemed to have relied upon such representations, warranties and
covenants in accepting their interest in the Receivables.
(a) Organization and Good Standing. The Collateral
Agent is a national banking association duly organized, validly existing and in
good standing under the laws of the United States of America, and has full
corporate power, authority and legal right to own its properties and conduct its
business as such
75
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement.
(b) Due Authorization. The execution, delivery, and
performance of this Agreement and any other Transaction Document to which the
Collateral Agent is a party have been duly authorized by the Collateral Agent by
all necessary corporate action on the part of the Collateral Agent.
(c) Binding Obligation. This Agreement and the other
Transaction Documents to which the Collateral Agent is a party each constitutes
a legal, valid and binding obligation of the Collateral Agent, enforceable in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereinafter in effect, affecting the enforcement of creditors'
rights in general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity).
(d) No Conflict. The execution and delivery by the
Collateral Agent of this Agreement and the other Transaction Documents to which
the Collateral Agent is a party, and the performance of the transactions
contemplated by this Agreement and the other Transaction Documents and the
fulfillment of the terms hereof and thereof applicable to the Collateral Agent,
will not conflict with, violate, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any Requirement of Law applicable to the Collateral Agent or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Collateral Agent is a party or by which it is bound.
SECTION 8.4 Liability of the Collateral Agent.
(a) The Collateral Agent shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Collat eral Agent in such capacity herein. No implied
covenants or obligations shall be read into this Agreement against the
Collateral Agent and, in the absence of bad faith on the part of the Collateral
Agent, the Collateral Agent may conclusively rely on the truth of the statements
and the correctness of the opinions expressed in any certifi ▇▇▇▇▇ or opinions
furnished to the Collateral Agent and conforming to the require ments of this
Agreement.
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(b) The Collateral Agent shall not be liable for an
error of judgment made in good faith by a Trust Officer, unless it shall be
proved that the Collateral Agent shall have been negligent in ascertaining the
pertinent facts.
(c) The Collateral Agent shall not be liable with
respect to any action taken, suffered or omitted to be taken in good faith in
accordance with this Agreement or at the direction of a Secured Party relating
to the exercise of any power conferred upon the Collateral Agent under this
Agreement.
(d) The Collateral Agent shall not be charged with
knowledge of any Termination Event unless a Trust Officer assigned to the Collat
eral Agent's Corporate Trust Office obtains actual knowledge of such event or
the Collateral Agent receives written notice of such event from the Debtor, the
Seller, the Company, any Bank Investor, the Insurer or the Agent, as the case
may be.
(e) Without limiting the generality of this Section
8.4, the Collateral Agent shall have no duty (i) to see to any recording, filing
or depositing of this Agreement or any other Transaction Document or any
financing statement or continuation statement evidencing a security interest in
the Receivables or the Financed Vehicles, or to see to the maintenance of any
such recording or filing or depositing or to any recording, refiling or
redepositing of any thereof, (ii) to see to any insurance of the Financed
Vehicles or Obligors or to effect or maintain any such insurance, (iii) to see
to the payment or discharge of any tax, assessment or other governmental charge
or any Lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Receivables, (iv) to confirm or verify the contents of
any reports or certificates of the Collection Agent or the Debtor delivered to
the Collateral Agent pursuant to this Agreement believed by the Collateral Agent
to be genuine and to have been signed or presented by the proper party or
parties or (v) to inspect the Financed Vehicles at any time or ascertain or
inquire as to the performance or observance of any of the Debtor's, the Seller's
or the Collection Agent's representations, warranties or covenants or the
Collection Agent's duties and obligations as Collection Agent and as custodian
of books, records, files and com puter records relating to the Receivables.
(f) The Collateral Agent shall not be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability
shall not be reasonably assured to it, and none
77
of the provisions contained in this Agreement shall in any event require the
Collat eral Agent to perform, or be responsible for the manner of performance
of, any of the obligations of the Collection Agent under this Agreement.
(g) The Collateral Agent may rely and shall be
protected in acting or refraining from acting upon any resolution, officer's
certificate, any Settlement Statement, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties.
(h) The Collateral Agent may consult with counsel and
any opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it under
this Agreement in good faith and in accordance with such opinion of counsel.
(i) The Collateral Agent 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 in relation
to this Agree ment, at the request, order or direction of the Agent pursuant to
the provisions of this Agreement, unless the Agent shall have offered to the
Collateral Agent reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; nothing contained in
this Agreement, however, shall relieve the Collateral Agent of its obligations,
upon the occurrence of a Termination Event (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(j) The Collateral Agent shall not be liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement.
(k) Prior to the occurrence of a Termination Event
and before the Collateral Agent has received notice of such Termination Event
and after the waiver of any Termination Event that may have occurred, the
Collateral Agent shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing so to
78
do by a Secured Party; provided, however, that if the payment within a
reasonable time to the Collateral Agent of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation shall be, in the
opinion of the Collateral Agent, not reasonably assured by the Debtor, the
Collateral Agent may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Debtor or, if paid by the Collateral Agent,
shall be reimbursed by the Debtor upon demand.
(l) The Collateral Agent may execute any of the
trusts or powers hereunder or perform any duties under this Agreement either
directly or by or through agents or attorneys or a custodian. The Collateral
Agent shall not be respon sible for any misconduct or negligence of any such
Agent or custodian appointed with due care by it hereunder.
SECTION 8.5 Merger or Consolidation of, or Assumption of the
Obligations of, the Collateral Agent. The Collateral Agent shall not consolidate
with or merge into any other corporation or convey or transfer its properties
and assets substantially as an entirety to any Person, unless:
(i) the corporation formed by such ▇▇▇▇▇▇▇ dation or
into which the Collateral Agent is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Collateral Agent
substantially as an entirety shall be a corporation organized and existing under
the laws of the United States of America or any State or the District of
Columbia and, if the Collateral Agent is not the surviving entity, shall
expressly assume, by an agreement supplemental hereto, executed and delivered to
the Secured Parties in form satisfactory to the Secured Parties, the performance
of every covenant and obligation of the Collateral Agent hereunder; and
(ii) the Collateral Agent has delivered to the
Secured Parties an officer's certificate and an opinion of counsel each stating
that such consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section 8.5 and that all conditions precedent herein
provided for relating to such transac tion have been complied with.
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SECTION 8.6 Limitation on Liability of the Collateral Agent
and Others. The directors, officers, employees or agents of the Collateral Agent
shall not be under any liability to the Agent, any Secured Party or any other
Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consider ation for, the execution of this Agreement;
provided, however, that this provision shall not protect the directors,
officers, employees and agents of the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfea sance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. Except as provided in Section 8.4, the
Collateral Agent shall not be under any liability to any Secured Party or any
other Person for any action taken or for refraining from the taking of any
action in its capacity as Collateral Agent pursuant to this Agreement whether
arising from express or implied duties under this Agreement; provided, however,
that this provision shall not protect the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Collateral Agent may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Collateral Agent shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to administer the Collections and the Collection
Account in accordance with this Agreement which in its reasonable opinion may
involve it in any expense or liability.
SECTION 8.7 Indemnification of the Secured Parties. The
Collateral Agent shall indemnify and hold harmless the Agent and the Secured
Parties from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of willful misfeasance, bad faith, or gross negligence in
the performance of the duties of the Collateral Agent or by reason of reckless
disregard of obligations and duties of the Collateral Agent hereunder or by
reason of the acts, omissions or alleged acts or omissions of the Collateral
Agent pursuant to this Agreement. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
80
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Term of Agreement. This Agreement shall terminate
following the Termination Date when the Net Investment has been reduced to zero,
all accrued Carrying Costs have been paid in full and all other Aggregate
Unpaids have been paid in full; provided, however, that (i) the rights and
remedies of the Collateral Agent and the Secured Parties with respect to any
representation and warranty made or deemed to be made by the Debtor, the Seller
or UAC pursuant to this Agreement, (ii) the indemnification and payment
provisions of Article VIII, and (iii) the agreement set forth in Section 9.9,
shall be continuing and shall survive any termination of this Agreement.
SECTION 9.2 Waivers; Amendments. (a) No failure or delay on
the part of the Collateral Agent or any of the Secured Parties in exercising any
power, right or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or remedy
preclude any other further exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement may be amended or waived
if, but only if, such amendment is in writing and is signed by the Debtor, the
Collection Agent, the Insurer and the Majority Investors (and, if Article VI or
the rights or duties of the Collateral Agent are affected thereby, by the
Collateral Agent); pro vided, that no such amendment or waiver shall, unless
signed by each Bank Investor directly affected thereby, (i) increase the
Commitment of a Bank Investor, (ii) reduce the Net Investment or rate of
interest to accrue thereon or any fees or other amounts payable hereunder, (iii)
postpone any date fixed for the payment of any scheduled distribution in respect
of the Net Investment or interest with respect thereto or any fees or other
amounts payable hereunder or for termination of any Commitment, (iv) change the
percentage of the Commitments or the number of Bank Investors, which shall be
required for the Bank Investors or any of them to take any action under this
Section or any other provision of this Agreement, (v) extend or permit the
extension of the Commitment Termination Date, (vi) reduce or impair Collections
or the payment of fees payable hereunder to the Bank Investors or delay the
scheduled dates for payment of such amounts, (vii) increase the Servicing Fee to
a percentage greater than 1.0% per annum of the aggregate Outstanding Balance of
the Receiv ▇▇▇▇▇ as of the first day of the related Settlement Period, (viii)
modify any provisions of this Agreement, the UAFCC Sale and Purchase Agreement,
the UAFC Sale and Purchase Agreement or the Sale and Purchase Agreement relating
to the timing of payments required to be made by the Issuer, the Seller or UAC
or the application of the proceeds of such payments, or (ix) provide for the
appointment of any Person (other than the Agent) as a successor Collection
Agent. In the event the Collateral Agent requests the Company's or a Bank
Investor's consent pursuant to the foregoing provisions and the Collateral Agent
does not receive a consent (either positive or negative) from the Company or
such Bank Investor within 10 Business Days of the Company's or Bank Investor's
receipt of such request, then the Company or such Bank Investor (and its
percentage interest hereunder) shall be disregarded in deter mining whether the
Collateral Agent shall have obtained sufficient consent hereun der.
SECTION 9.3 Notices. Except as provided below, all communica
tions and notices provided for hereunder shall be in writing (including bank
wire, telex, telecopy or electronic facsimile transmission or similar writing)
and shall be given to the other party at its address or telecopy number set
forth below or at such other address or telecopy number as such party may
hereafter specify for the pur poses of notice to such party. Each such notice or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and
confirmation is received, (ii) if given by mail 3 Business Days following such
posting, or (iii) if given by any other shall mean, when received at the address
specified in this Section. Notice to Moody's and S&P will be provided for all
waivers, consents, approvals, amendments and extensions with respect to or under
the Transaction Documents. Each of the Debtor and the Collec tion Agent agrees
to deliver promptly to the Collateral Agent, for distribution to each of the
Secured Parties, a written confirmation of each telephonic notice signed by an
authorized officer of Debtor or the Collection Agent, as applicable. However,
the absence of such confirmation shall not affect the validity of such notice.
If the written confirmation differs in any material respect from the action
taken by the Company, the records of the Company shall govern absent manifest
error.
If to the Company:
-----------------
ENTERPRISE FUNDING CORPORATION
c/o Global Securitization Services, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
81
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Payment Information:
Bankers Trust Company
ABA# ▇▇▇▇▇▇▇▇▇
Account# ▇▇▇▇▇▇▇▇
Reference Enterprise Funding - UAC
(with a copy to the Administrative Agent)
If to the Debtor:
----------------
UAFC CORPORATION
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Payment Information:
Union Federal Savings Bank
of Indianapolis
ABA #: ▇▇▇▇-▇▇▇▇-▇
Account #: 590070304
Reference: Nations Line
If to the Seller:
----------------
UNION ACCEPTANCE FUNDING CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to UAC:
---------
UNION ACCEPTANCE CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Finance Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Collateral Agent:
--------------------------
BANK OF AMERICA, N.A.
Bank of America Corporate ▇▇▇▇▇▇--▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇--
Investment Banking
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Administrative Agent:
------------------------------
BANK OF AMERICA, N.A.
Bank of America Corporate ▇▇▇▇▇▇--▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇--
Investment Banking
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If the to Insurer:
-----------------
MBIA INSURANCE CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Insured Portfolio Management - SF
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Payment Information: MBIA Insurance Corporation
ABA #: ▇▇▇-▇▇▇-▇▇▇
Account #: ▇▇▇-▇-▇▇▇▇▇▇
Reference: UAFCC Enterprise Auto WH
83
If to the Agent:
---------------
BANK OF AMERICA, N.A.
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
NC1-007-10-07
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Payment Information: Bank of America, N.A.
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: 1093601650000
Reference: UAC
If to S&P:
---------
STANDARD & POOR'S RATINGS SERVICES
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Moody's:
-------------
▇▇▇▇▇'▇ INVESTORS SERVICE
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.4 Governing Law; Submission to Jurisdiction;
Integration.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Each of the Debtor, the
Seller, UAC and the Collection Agent hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New
84
York State court sitting in The City of New York for purposes of all legal
proceed ings arising out of or relating to this agreement or the transactions
contemplated hereby. Each of the Debtor, UAC and the Collection Agent hereby
irrevocably waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Nothing in
this Section 9.4 shall affect the right of the Company to bring any action or
proceeding against the Debtor, the Seller, UAC or the Collection Agent or their
respective properties in the courts of other jurisdictions.
(b) This Agreement contains the final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire Agreement between the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written under standings.
SECTION 9.5 Severability; Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdic tion 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 9.6 Successors and Assigns.
(a) This Agreement shall be binding on the parties
hereto and their respective successors and assigns; provided, however, that none
of the Debtor, the Seller, UAC or the Collection Agent may assign any of its
rights or delegate any of its duties hereunder without the prior written consent
of the Collat eral Agent and the Insurer. No provision of this Agreement shall
in any manner restrict the ability of the Collateral Agent to assign,
participate, grant security interests in, or otherwise transfer any portion of
the Collateral.
(b) Each of the Debtor, the Seller and UAC hereby
agrees and consents to the assignment by the Company from time to time of all or
any part
85
of its rights under, interest in and title to this Agreement and the Note to any
Liquid ity Provider.
(c) The parties hereto agree that the counterparties
to Acceptable Hedging Arrangements shall be third party beneficiaries of this
Agreement and that the provisions of Section 2.3 (a) may not be amended without
the prior consent of such counterparties.
SECTION 9.7 Waiver of Confidentiality. Each of the Debtor, the
Seller and UAC hereby consents to the disclosure of any non-public information
with respect to it received by the Company or the Administrative Agent to any of
the Company, any nationally recognized rating agency rating the Company's
commercial paper, the Administrative Agent, the Insurer, the Liquidity Provider
or the Credit Support Provider in relation to this Agreement.
SECTION 9.8 Confidentiality Agreement. Each of the Debtor, the
Seller and UAC hereby agrees that it will not disclose the contents of this
Agreement or any other proprietary or confidential information of any of the
Secured Parties, the Collateral Agent, the Administrative Agent, the Liquidity
Provider or the Credit Support Provider to any other Person except (i) its
auditors and attorneys, employees or financial advisors (other than any
commercial bank) and any nationally recognized rating agency, provided such
auditors, attorneys, employees, financial advisors or rating agencies are
informed of the highly confidential nature of such information or (ii) as
otherwise required by applicable law, under the Securities Exchange Act of 1934,
as amended, in connection with an offering of securities issued by the Debtor or
an Affiliate thereof, or order of a court of competent jurisdiction (provided,
however, that no such disclosure shall occur without the prior review by the
Admin istrative Agent of the material to be disclosed).
SECTION 9.9 No Bankruptcy Petition Against the Company. Each
of the Debtor, the Seller, UAC, the Insurer and the Collection Agent hereby cove
nants and agrees that, prior to the date which is one year and one day after the
payment in full of all outstanding Commercial Paper or other indebtedness of the
Company (or, if the Net Investment (or any portion thereof) has been assigned to
a Conduit Assignee, one year and one day after the payment in full of all
Commercial Paper issued by such Conduit Assignee), it will not institute
against, or join any other Person in instituting against, the Company any
bankruptcy, reorganization, arrange ment, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.
86
SECTION 9.10 No Recourse Against Stockholders, Officers or
Directors. Notwithstanding anything to the contrary contained in this Agreement,
the obligations of the Company under this Agreement and all other Transaction
Documents are solely the corporate obligations of the Company and shall be
payable solely from the assets of the Company in excess of funds necessary to
pay matured and maturing Commercial Paper. No recourse under any obligation,
covenant or agreement of the Company contained in this Agreement shall be had
against ▇▇▇▇▇▇▇ ▇▇▇▇▇ Money Markets Inc. (or any affiliate thereof), or any
stockholder, officer or director of the Company, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise; it being expressly agreed and understood that this Agreement is
solely a corporate obligation of the Company, and that no personal liability
whatsoever shall attach to or be incurred by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Money Markets Inc.
(or any affiliate thereof), or the stockholders, officers or directors of the
Company, as such, or any of them, under or by reason of any of the obligations,
covenants or agreements of the Company contained in this Agreement, or implied
therefrom, and that any and all personal liability for breaches by the Company
of any of such obligations, covenants or agreements, either at common law or at
equity, or by statute or constitution, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Money Markets Inc. (or
any affiliate thereof) and every such stockholder, officer or director of the
Company is hereby expressly waived as a condition of and consideration for the
execution of this Agreement.
SECTION 9.11 Further Assurances. The Debtor agrees to do such
further acts and things and to execute and deliver to the Secured Parties, the
Admin istrative Agent or the Collateral Agent such additional assignments,
agreements, powers and instruments as are required by the Collateral Agent or
the Insurer to carry into effect the purposes of this Agreement or to better
assure and confirm unto the Collateral Agent or the Insurer its rights, powers
and remedies hereunder.
SECTION 9.12 Exercise of Rights by Insurer. All rights granted
to the Insurer pursuant to this Agreement shall terminate during the pendency of
a payment default by the Insurer under the Policy or during the pendency of a
Surety Insolvency (as defined in the Insurance Agreement as in effect on the
date hereof) and during such time the Insurer's rights may be exercised by the
Collateral Agent or Company, provided, however, the Insurer's rights shall be
reinstated in full, immedi ately upon the cure of such default.
87
SECTION 9.13 Characterization of the Transactions Contemplated
by the Agreement; Tax Treatment. (a) The parties hereto agree that this
Agreement shall constitute a security agreement under applicable law. The Seller
hereby assigns to the Debtor all of its rights to payment under the UAFC Sale
and Purchase Agree ment with respect to the Receivables and with respect to any
obligations thereunder of UAC with respect to the Receivables; and the Debtor
hereby assigns to the Collateral Agent, for the benefit of the Secured Parties,
all of its rights to payment (i) under the Sale and Purchase Agreement, the
UAFCC Sale and Purchase Agreement or pursuant to each Warehouse Transfer
Agreement with respect to the Receivables and with respect to any obligations
thereunder of the Seller, UAC or any party to the aforementioned agreements, as
applicable, with respect to the Receivables, (ii) under or in connection with
any Acceptable Hedging Arrangement and (iii) the rights assigned to the Debtor
under this Section 9.13. The Collateral Agent agrees that upon any release of a
Receivable or Contract to the Debtor, the Collateral Agent shall be deemed to
have released its security interest therein and reassigned to the Debtor all of
the Collateral Agent's rights under the Sale and Purchase Agreement, the UAFC
Sale and Purchase Agreement, any Warehouse Transfer Agreement or the UAFCC Sale
and Purchase Agreement with respect to such Receivable or Contract. The Debtor
agrees that neither it nor the Collection Agent shall give any consent or waiver
required or permitted to be given under the Sale and Purchase Agreement, the
UAFC Sale and Purchase Agreement or the UAFCC Sale and Purchase Agreement with
respect to the Receivables or the Contracts without the prior consent of either
the Collateral Agent, the Administrative Agent or the Insurer.
(b) Each of the parties hereto agrees to treat the
transac tions contemplated by this Agreement as a financing for federal income
tax purposes and further agree to file on a timely basis all federal and other
income tax returns consistent with such treatment.
88
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Security Agreement as of the date first written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
UAFC CORPORATION, as Debtor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
UNION ACCEPTANCE FUNDING
CORPORATION, as Seller
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
UNION ACCEPTANCE CORPORATION,
individually and as Collection Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:
89
MBIA INSURANCE CORPORATION,
as Insurer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
BANK OF AMERICA, N.A.,
as Collateral Agent and Bank Investor
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
90