EXECUTION COPY
UAC SECURITIZATION CORPORATION
Seller
UNION ACCEPTANCE CORPORATION
Servicer
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
Owner Trustee
TRUST AND SERVICING AGREEMENT,
Dated as of February 24, 2001
UACSC 2001-A Owner Trust
TABLE OF CONTENTS
Page
ARTICLE I Creation of Trust ..................................................5
SECTION 1.01. Name .......................................................5
SECTION 1.02. Office ......................................................5
SECTION 1.03. Purposes and Powers. ........................................5
SECTION 1.04. Appointment of Owner Trustee ................................6
SECTION 1.05. Initial Capital Contribution of Trust Estate ................6
SECTION 1.06. Declaration of Trust ........................................6
SECTION 1.07. Title to Trust Property .....................................7
SECTION 1.08. Situs of Trust ..............................................7
ARTICLE II Definitions ...................................................7
SECTION 2.01. Definitions .............................................. .7
SECTION 2.02. Usage of Terms ............................................19
SECTION 2.03. Closing Date and Record Date ..............................19
SECTION 2.04. Section References ........................................19
ARTICLE III Conveyance of Receivables ...................................19
SECTION 3.01. Conveyance of Initial Receivables .........................19
SECTION 3.02. Conveyance of Subsequent Receivables ......................20
ARTICLE IV Acceptance by Trustee ........................................24
ARTICLE V Information Delivered to the Rating Agencies ..................24
ARTICLE VI Agent for Service ............................................25
ARTICLE VII The Receivables .............................................25
SECTION 7.01. Representations and Warranties of Seller ..................25
SECTION 7.02. Repurchase Upon Breach ....................................26
SECTION 7.03. Custody of Receivable Files ...............................26
SECTION 7.04. Duties of Servicer as Custodian ...........................27
SECTION 7.05. Instructions; Authority to Act ............................28
SECTION 7.06. Custodian's Indemnification ...............................28
SECTION 7.07. Effective Period and Termination ..........................28
ARTICLE VIII Administration and Servicing of Receivables ................28
SECTION 8.01. Duties of Servicer ........................................28
SECTION 8.02. Collection of Receivable Payments .........................29
SECTION 8.03. Realization Upon Receivables ..............................30
SECTION 8.04. Physical Damage Insurance .................................30
SECTION 8.05. Maintenance of Security Interests in Financed Vehicles ....30
SECTION 8.06. Covenants of Servicer .....................................31
SECTION 8.07. Purchase of Receivables Upon Breach .......................31
SECTION 8.08. Servicing Fee .............................................31
SECTION 8.09. Servicer's Certificate ....................................32
SECTION 8.10. Annual Statement as to Compliance; Notice of Default ......32
SECTION 8.11. Annual Independent Certified Public Accountant's Report ...33
SECTION 8.12. Access to Certain Documentation and Information Regarding
Receivables ..................................33
SECTION 8.13. Servicer Expenses .........................................33
SECTION 8.14. Reports to Noteholders ....................................34
ARTICLE IX Collections; Distributions to Noteholders and
Certificateholder ............................34
SECTION 9.01. Collection Account ........................................34
SECTION 9.02. Collections .............................................. 34
SECTION 9.03. Purchase Amounts ..........................................35
SECTION 9.04. Application of Funds ......................................35
SECTION 9.05. Advances .............................................. 37
SECTION 9.06. Net Deposits ..............................................37
SECTION 9.07. No Segregation of Moneys; No Interest .....................37
SECTION 9.08. Accounting and Reports to the Certificateholder,
the Internal Revenue Service and Others ......37
SECTION 9.09. Payahead Account ..........................................38
SECTION 9.10. Pre-Funding Account .......................................39
ARTICLE X Intentionally Blank ...........................................39
ARTICLE XI The Certificate ..............................................39
SECTION 11.01. The Certificate ..........................................39
SECTION 11.02. Authentication of Certificate ............................39
SECTION 11.03. Registration of Transfer and Exchange of Certificate .....39
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates .......40
ARTICLE XII The Seller .............................................. 41
SECTION 12.01. Representations and Undertakings of Seller ...............41
SECTION 12.02. Liability of Seller; Indemnities .........................43
SECTION 12.03. Merger or Consolidation of, or Assumption of the
Obligations of Seller ........................44
SECTION 12.04. Limitation on Liability of Seller and Others .............45
ARTICLE XIII The Servicer .............................................. 45
SECTION 13.01. Representations of Servicer ..............................45
SECTION 13.02. Indemnities of Servicer ..................................46
SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of Servicer ......................48
SECTION 13.04. Limitation on Liability of Servicer and Others ...........48
SECTION 13.05. Servicer Not to Resign ...................................49
SECTION 13.06. Delegation of Duties .....................................49
ARTICLE XIV Servicer Default ............................................49
SECTION 14.01. Events of Servicer Default ...............................49
SECTION 14.02. Appointment of Successor .................................51
SECTION 14.03. Notice of Events of Servicer Default .....................52
SECTION 14.04. Waiver of Past Defaults ..................................52
ARTICLE XV The Owner Trustee ............................................53
SECTION 15.01. Duties of Owner Trustee ..................................53
SECTION 15.02. Owner Trustee's Certificate ..............................55
SECTION 15.03. Trust's Assignment of Purchased Receivables ..............55
SECTION 15.04. Certain Matters Affecting the Owner Trustee ..............56
SECTION 15.05. Owner Trustee Not Liable for Certificate or Receivables ..57
SECTION 15.06. Owner Trustee May Own Notes ..............................58
SECTION 15.07. Owner Trustee's and Indenture Trustee's Fees
and Expenses; Indemnification ................58
SECTION 15.08. Eligibility Requirements for Owner Trustee ...............59
SECTION 15.09. Resignation or Removal of Owner Trustee ..................59
SECTION 15.10. Successor Owner Trustee ..................................60
SECTION 15.11. Merger or Consolidation of Owner Trustee .................61
SECTION 15.12. Appointment of Co-Trustee or Separate Owner Trustee ......61
SECTION 15.13. Representations and Warranties of Owner Trustee ..........62
ARTICLE XVI Termination .............................................. 63
SECTION 16.01. Termination of the Trust .................................63
SECTION 16.02. Optional Disposition of All Receivables ..................63
ARTICLE XVII Miscellaneous Provisions ...................................64
SECTION 17.01. Amendment .............................................. 64
SECTION 17.02. Protection of Title to Trust .............................65
SECTION 17.03. Limitation on Rights of Certificateholder ................67
SECTION 17.04. Governing Law ............................................68
SECTION 17.05. Notices .............................................. 68
SECTION 17.06. Severability of Provisions ...............................68
SECTION 17.07. Assignment .............................................. 69
SECTION 17.08. Certificate Nonassessable and Fully Paid .................69
SECTION 17.09. Nonpetition Covenant .....................................69
SECTION 17.10. Counterparts .............................................69
SECTION 17.11. Third Party Beneficiary ..................................64
EXHIBIT 1 - Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3 - Servicer's Certificate
EXHIBIT 4 - Form of Subsequent Transfer Assignment
EXHIBIT A - Form of Certificate of Trust
EXHIBIT B - Form of Certificate
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
This TRUST AND SERVICING AGREEMENT, dated as of February 24, 2001, is
made with respect to the formation of the UACSC 2001-A Owner Trust, among UAC
SECURITIZATION CORPORATION, a Delaware corporation, as depositor (the "Seller"),
UNION ACCEPTANCE CORPORATION, an Indiana corporation, as servicer (the
"Servicer"), and FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking corporation with its principal place of business in the State of
Delaware, as owner trustee (in such capacity the "Owner Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Creation of Trust
Upon the execution of this Agreement by the parties hereto and the
prompt filing thereafter of the Certificate of Trust in the State of Delaware,
there is hereby created the UACSC 2001-A Owner Trust.
SECTION 1.01. Name. The Trust created hereby shall be known as "UACSC
2001-A Owner Trust", in which name the Owner Trustee may conduct the business
and affairs of the Trust, make and execute contracts and other instruments on
behalf of the Trust and xxx and be sued on behalf of the Trust. The Trust shall
constitute a business trust within the meaning of Section 3801(a) of the
Delaware Business Trust Act for which the Owner Trustee has filed a certificate
of trust with the Secretary of State of the State of Delaware pursuant to
Section 3810(a) of the Delaware Business Trust Act.
SECTION 1.02. Office. The office of the Trust shall be in care of the
Owner Trustee at its Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholder, the
Servicer, the Seller, the Insurer and the Indenture Trustee.
SECTION 1.03. Purposes and Powers. The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificate pursuant to this Agreement and to sell or transfer the
Notes and the Certificate in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the
Certificate, to purchase the Initial Receivables and the Subsequent
Receivables pursuant to this Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholder pursuant to the terms of this
Agreement any portion of the Trust estate released from the Lien of,
and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
related documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the related documents, to
engage in such other activities as may be required in connection with
conservation of the Trust estate and the making of distributions to the
Certificateholder, the Noteholders and the others specified in this
Agreement.
The Trust is hereby authorized to engage in the foregoing activities.
The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms
of this Agreement or the other Basic Documents.
SECTION 1.04. Appointment of Owner Trustee. The Seller hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein and in the Delaware
Business Trust Act.
SECTION 1.05. Initial Capital Contribution of Trust Estate. The Seller
hereby sells, assigns, transfers, conveys and sets over to the Trust, as of the
date hereof, the Trust estate. The Owner Trustee on behalf of the Trust hereby
acknowledges receipt in trust from the Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust estate. The
Seller shall pay the organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 1.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholder, subject to
the obligations of the Trust under the other related documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Delaware Business Trust Act and that this Agreement constitute the governing
instrument of such Trust. Furthermore, it is the intention of the parties hereto
that, solely for federal, state and local income and franchise tax purposes (i)
so long as there is a sole Certificateholder, the Trust shall be disregarded as
a separate entity, with the assets of the Trust being treated as the assets of
such sole Certificateholder, and the Notes being non-recourse debt of the sole
Certificateholder, and (ii) if there is more than one Certificateholder, the
Trust shall be treated as a partnership, with the assets of the partnership
being the Trust estate, the partners of the partnership being the
Certificateholders and the Notes being non-recourse debt of the partnership. The
Trust shall not elect to be treated as an association under Treasury Regulations
Section 301.7701-3(a) for federal income tax purposes. The parties agree that,
unless otherwise required by appropriate tax authorities, the sole
Certificateholder or the Administrator on behalf of the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as provided in the second
preceding sentence for such tax purposes. The Owner Trustee, the Seller as the
initial Certificateholder and each successor Certificateholder (as a condition
to acquiring its Certificate) agree to disregard the trust as a separate entity
(if there is one Certificateholder) or to treat it as a partnership (if there
are two or more Certificateholders) and to treat the Notes as indebtedness for
purposes of federal, state, and local income or franchise taxes.
SECTION 1.07. Title to Trust Property. Legal title to all of the Trust
estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 1.08. Situs of Trust. The Trust will be located and
administered in the State of Delaware. Any bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware. The
Trust shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee from
having employees within or without the State of Delaware. Payments, if any, will
be received by the Trust only in Delaware, and payments, if any, will be made by
the Trust only from Delaware. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
ARTICLE II
Definitions
SECTION 2.01. Definitions. Capitalized terms which are used in this
Agreement but are not defined herein shall have the meanings provided in the
Indenture. Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Accrued Interest" means all interest accrued on the Receivables prior
to the opening of business on the day following the Cutoff Date.
"Administration Agreement" means the Administration Agreement dated as
of February 24, 2001, between the Trust and the Administrator and acknowledged
by the Indenture Trustee.
"Administrator" means the Administrator under the Administration
Agreement, which is initially UAC, and its successors and assigns thereunder.
"Advance" means, with respect to a Receivable and with respect to a
Collection Period, the amount that the Servicer is required to advance pursuant
to Section 9.05.
"Agreement" means this Trust and Servicing Agreement executed by the
Seller, the Servicer and the Owner Trustee, and all amendments and supplements
thereto.
"Amount Financed" means, with respect to a Receivable, the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"Approved Rating" means a short-term rating of P-1 by Moody's and A-l+
by Standard & Poor's.
"Available Funds" means the amount defined as such in Section
9.04(a)(i).
"Available Spread Amount" means, on any Payment Date, the amount on
deposit in the Spread Account, including any income or gain from any investment
of funds in the Spread Account, net of any losses from such investment before
giving effect to deposits into or withdrawals from the Spread Account on such
Payment Date pursuant to Article IX of the Indenture.
"Basic Documents" has the meaning provided in the Indenture.
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in Wilmington,
Delaware, Chicago, Illinois or New York, New York (or, if the Servicer has
provided prior written notice to each of the Owner Trustee, the Indenture
Trustee and the Insurer that such day is not a Business Day, in Little Rock,
Arkansas or Indianapolis, Indiana) shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Owner Trustee substantially in the form attached hereto as
Exhibit B, which represents ownership of a 100% interest in the Trust.
"Certificate of Trust" means the Certificate of Trust of the Trust in
substantially the form of Exhibit A hereto.
"Certificate Register" means the register maintained by the Owner
Trustee pursuant to Section 11.03.
"Certificateholder" or "Holder" means the Person in whose name the
Certificate shall be registered in the Certificate Register.
"Closing Date" means March 12, 2001.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collected Interest" on a Receivable, as of the last day of a
Collection Period, means the portion of all payments received by the Servicer
allocable to interest relating to such Collection Period.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 9.01.
"Collection Period" means (i) initially, the period from the day after
the Cutoff Date to the end of the calendar month of March 2001, and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article XVI.
"Consolidated Net Income" means, for any period, the consolidated net
income of UAC and its subsidiaries determined in accordance with GAAP and, with
respect to Consolidated Net Income for any fiscal year, as reported in UAC's
audited consolidated financial statements.
"Consolidated Tangible Net Worth" means the excess, if any, of the
consolidated assets of UAC and its subsidiaries over the consolidated
liabilities of UAC and its subsidiaries less any goodwill, trade names,
trademarks, patents, unamortized debt discount and expense, and other
intangibles, except that dealer premium rebates and excess servicing shall not
be so deducted, determined in accordance with GAAP.
"Contract Rate" means, with respect to a Receivable, the contract rate
of interest on such Receivable, exclusive of prepaid finance charges.
"Corporate Trust Office" means the office of the Owner Trustee at which
its corporate trust business shall, at any particular time, be administered,
which office at the date of the execution of this Agreement is located at One
Xxxxxx Square, Suite 102, 000 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000, Attention:
Corporate Trust Administration, Telecopy (000) 000-0000 or at such other address
as the Owner Trustee may designate from time to time by notice to the
Certificateholder, the Seller, the Servicer and the Indenture Trustee.
"Cutoff Date" means, individually, the Initial Cutoff Date or a
particular Subsequent Cutoff Date.
"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to UAC, UAC Finance Corporation, PAC or the
Predecessor under an existing agreement with UAC, UAC Finance Corporation, PAC
or the Predecessor or who arranged for a loan from UAC, PAC or the Predecessor
to the purchaser of a Financed Vehicle under an existing agreement with UAC, PAC
or the Predecessor.
"Defaulted Receivable" means, for any Collection Period, a Receivable
as to which the earliest to occur of any of the following has occurred: (i) any
payment, or part thereof, in excess of $10.00 was delinquent 120 days or more as
of the last day of such Collection Period, (ii) the Financed Vehicle that
secures the Receivable has been repossessed, or (iii) the Servicer has
determined that the Receivable is uncollectible in accordance with the
Servicer's customary practices on or before the last day of such Collection
Period; provided, however, that "Defaulted Receivable" shall not include any
Receivable that is to be repurchased pursuant to Section 7.02 or purchased
pursuant to Section 8.07; provided further, that any Advances made with respect
to a Receivable shall not be considered in the determination of the delinquency
status of such Receivable.
"Delaware Business Trust Act" means the Delaware Business Trust Act, 12
Del. C.ss.3801 et seq.
"Determination Date" means, for each Collection Period, the second
Business Day prior to the related Payment Date.
"Eligible Bank" means any depository institution with trust powers
(including the Owner Trustee and the Indenture Trustee), organized under the
laws of the United States or any State having a net worth in excess of
$50,000,000, the deposits of which are insured to the full extent permitted by
law by the Federal Deposit Insurance Corporation, which is subject to
supervision and examination by Federal or State authorities and which (i) has a
long-term unsecured debt rating of at least Baa3 from Moody's or (ii) is
approved by each Rating Agency.
"Eligible Investment" means any of the following:
(i) direct obligations of, and obligations the full and timely
payment of principal and interest on which is fully guaranteed by, the
United States of America, the Federal National Mortgage Association, or
any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(ii) (A) demand and time deposits in, certificates of deposits
of, bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Owner Trustee,
the Indenture Trustee or any of their agents, acting in their
respective commercial capacities) incorporated under the laws of the
United States of America, any State thereof or the District of Columbia
or any foreign depository institution with a branch or agency licensed
under the laws of the United States of America or any State, in each
case subject to supervision and examination by Federal and/or State
banking authorities and having an Approved Rating at the time of such
investment or contractual commitment providing for such investment or
(B) any other demand or time deposit or certificate of deposit which is
fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) (A) above;
(iv) short-term securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the
United States of America or any State the short-term unsecured
obligations of which have an Approved Rating at the time of such
investment; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the corpus of
the Trust to exceed 10% of amounts held in the Collection Account;
(v) commercial paper having an Approved Rating at the time of
such investment;
(vi) a guaranteed investment contract issued by any insurance
company or other corporation with an Approved Rating and acceptable to
the Rating Agencies and the Insurer (so long as no Insurer Default
shall have occurred and be continuing and the Policy shall be in
effect), provided that the Owner Trustee or the Indenture Trustee shall
have received written notice from the Rating Agencies to the effect
that the investment of funds in such a contract will not result in the
reduction or withdrawal of any rating on the Notes;
(vii) interests in any money market fund having a rating of
Aaa by Moody's or AAAm by Standard & Poor's (including the money market
funds of the Owner Trustee and the Indenture Trustee in their
commercial capacities); and
(viii) any other investment approved in advance in writing by
the Rating Agencies and the Insurer.
"Event of Servicer Default" means an event specified in Section 14.01.
"Financed Vehicle" means a new or used automobile, light truck or van,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Funding Period" means the period beginning on and including the
Closing Date and ending on the first to occur of (i) the date on which the
amount on deposit in the Pre-Funding Account (after giving effect to any
transfers therefrom in connection with the transfer of Subsequent Receivables to
the Trust) is less than $100,000, (ii) the date on which an Event of Default,
Event of Servicer Default or Trigger Event occurs, (iii) the date on which an
Insolvency Event occurs with respect to the Seller or (iv) the close of business
on April 30, 2001.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements that are
described in Statement on Auditing Standards No. 69 "The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles in the
Independent Auditor's Report" that are applicable to the circumstances as of the
date of determination, applied on a consistent basis.
"Holder" -- see "Certificateholder."
"Indenture" means the Indenture dated as of February 24, 2001, between
the Trust and the Indenture Trustee, which provides for the issuance of the
Notes.
"Indenture Trustee" means BNY Midwest Trust Company, an Illinois
banking corporation, in its role as Indenture Trustee under the Indenture, and
its permitted successors and assigns.
"Indenture Trustee Office" means the office of the Indenture Trustee at
which its business as Indenture Trustee under the Indenture shall be
administered, which office is presently located at 0 Xxxxx XxXxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration,
Telecopy (000) 000-0000 or at such other address as the Indenture Trustee may
designate from time to time by notice to the Owner Trustee, the Servicer and the
Noteholders.
"Initial Cutoff Date" means February 23, 2001.
"Initial Pre-Funded Amount" means $142,996,839.51.
"Initial Receivables" means the Receivables conveyed to the Trust by
the Seller, listed as of the Initial Cutoff Date in Schedule A hereto.
"Insolvency Event" with respect to a party means (i) the entry of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee-in-bankruptcy or
similar official for such party in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings, or for the
winding up or liquidation of their respective affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or (ii) the consent by such party to the appointment of a
trustee-in-bankruptcy or similar official in any insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to such party or of or relating to substantially all of its property;
or (iii) such party shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations.
"Insurance Agreement" means the Insurance and Reimbursement Agreement,
dated as of the Closing Date, among the Trust, the Seller, UAC individually and
as Servicer, the Warehouse Subsidiaries and the Insurer pursuant to which the
Insurer issued the Policy.
"Insurer" means MBIA Insurance Corporation, a New York domiciled
insurance company.
"Insurer Default" has the meaning specified in the Indenture.
"Interest Advance Amount" with respect to a simple interest Receivable
as to which an Advance is required to be made on the last day of a Collection
Period, shall mean an amount equal to 30 days of interest upon the Principal
Balance of such Receivable as of such date; and, with respect to a Precomputed
Receivable as to which an Advance is required to be made on the last day of a
Collection Period, shall mean an amount equal to that portion of the earliest
delinquent Scheduled Payment allocable to interest (using the actuarial or
constant yield method).
"Interest Shortfall" means, as to any simple interest Receivable as of
the last day of any Collection Period, the amount, if any, by which (a) interest
due on such Receivable exceeds (b) the Collected Interest on such Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method except that the amount of Collected
Interest in respect of Precomputed Receivables shall be increased by giving
effect to the withdrawal for the related Payment Date of any previously received
Scheduled Payments in respect of such Receivable from the Payahead Account in
accordance with Sections 8.02(b) hereof and Section 9.09 of the Indenture).
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable or related Financed Vehicle by
operation of law.
"Liquidation Proceeds" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor. "Liquidation Proceeds" with
respect to a Payment Date means such monies collected during the preceding
Collection Period. In no event shall Liquidation Proceeds be less than zero.
"Monthly Interest" has the meaning specified in the Indenture.
"Monthly Principal" has the meaning specified in the Indenture.
"Monthly Servicing Fee" means, (i) for the first Payment Date, the
product of the following: the (a) monthly Servicing Rate (b) the number of days
from and including the Closing Date to the end of the first Collection Period,
assuming each month is a 30-day month, divided by 30 and (c) the Original Pool
Balance less the Initial Pre-Funded Amount and (ii) for any subsequent Payment
Date, the product of (a) the Pool Balance as of the beginning of the related
Collection Period less the Pre-Funded Amount and (b) the monthly Servicing Rate.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Notes" has the meaning specified in the Indenture.
"Noteholders" has the meaning specified in the Indenture.
"Obligor" on a Receivable means the purchaser or the co-purchasers of
the Financed Vehicle or any other Person who owes payments under the Receivable.
The phrase "payment made on behalf of an Obligor" shall mean all payments made
with respect to a Receivable except payments made by UAC, the Seller or the
Servicer.
"Officers' Certificate" means a certificate signed by any two of the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, or the controller of UAC, the Seller or the Servicer,
as the case may be; provided that no individual shall sign in a dual capacity.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Seller and/or Servicer, which counsel shall be acceptable to the
Owner Trustee.
"Optional Disposition Price" means the amount specified as such in
Section 16.02.
"Original Pool Balance" means $573,000,000, which equals the sum of (i)
the Pool Balance of the Initial Receivables as of the Initial Cutoff Date, or
$430,003,160.49, plus (ii) the Initial Pre-Funded Amount.
"Outstanding Advances" as of any date, with respect to a Receivable,
means the total amount of Advances made on such Receivable for which the
Servicer has not been reimbursed.
"Owner Trustee" means First Union Trust Company, National Association,
a national banking association with its principal place of business in the State
of Delaware, acting not in its individual capacity but solely as trustee under
this Agreement and its successors or any corporation resulting from or surviving
any merger or consolidation to which it or its successors may be a party or any
successor trustee at the time serving as successor trustee hereunder.
"Owner Trustee's Certificate" means a certificate completed and
executed by the Owner Trustee by a Responsible Officer pursuant to Section
15.02, substantially in the form of, in the case of an assignment to UAC,
Exhibit 1, and in the case of an assignment to the Servicer, Exhibit 2.
"PAC" means Performance Acceptance Corporation, a subsidiary of UAC
which was merged into UAC, and/or UAC doing business as Performance Acceptance
Corporation.
"Payahead" on a Precomputed Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 8.02(b) with respect to such Receivable.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 9.09.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed Receivable, as
reduced by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09 hereof and Section 9.09 of the
Indenture.
"Payment Date" means, for each Collection Period, the eighth calendar
day of the month following the end of the related Collection Period or, if such
day is not a Business Day, the first Business Day thereafter. The first Payment
Date shall be April 9, 2001.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Policy" means the irrevocable Financial Guaranty Insurance Policy
dated as of the Closing Date issued by the Insurer to the Indenture Trustee for
the benefit of the Noteholders as required under the Indenture.
"Pool Balance" as of any date means the aggregate Principal Balance of
the Receivables plus the Pre-Funded Amount, if any, as of such date; provided,
however, that for purposes of determining Monthly Principal, the Principal
Balance of a Defaulted Receivable or a Purchased Receivable (if actually
purchased by the Servicer or repurchased by UAC) shall be deemed to be zero on
and after the close of business on the last day of the Collection Period in
which the Receivable becomes a Defaulted Receivable or a Purchased Receivable
that is actually purchased or repurchased.
"Pre-Funded Amount" means, the amount on deposit from time to time in
the Pre-Funding Account.
"Pre-Funding Account" means the account designated as such, established
and maintained pursuant to Section 9.10.
"Pre-Funding Reserve Amount" means $282,403.89 for the April 2001
Payment Date and $282,403.89 for the May 2001 Payment Date; provided that the
Pre-Funding Reserve Amount shall reduce to $58,971.33 for each Payment Date
should the Pre-Funding Reserve Deposit Amount be reduced to $117,942.66.
"Pre-Funding Reserve Balance" means, the amount of funds on deposit in
the Spread Account equal to the Pre-Funding Reserve Deposit Amount less the sum
of all Pre-Funding Reserve Amounts previously withdrawn.
"Pre-Funding Reserve Deposit Amount" means $564,807.79; provided that
the Pre-Funding Reserve Deposit Amount shall be reduced to $117,942.66 with
Standard & Poor's consent.
"Precomputed Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related contract as an add-on finance charge) and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances, the sum
of monthly balances, the rule of 78's or any equivalent method.
"Predecessor" means Union Federal Savings Bank of Indianapolis, a
federally chartered stock savings bank.
"Prepayment Charges," as used in the Agreement, shall be interpreted to
include, without limitation, in the case of a Precomputed Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance of
such Receivable computed in accordance with the method provided for in the
contract governing such Receivable, such as the rule of 78's.
"Principal Balance" of a simple interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a Precomputed Receivable, as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer, net of unearned or accrued interest reflected therein, and as of the
close of business on the last day of a Collection Period, means the Principal
Balance as of the Cutoff Date minus that portion of all Scheduled Payments
received with respect to such Receivable in respect of such Collection Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.
"Purchase Agreements" means the UAFCC Purchase Agreement dated as of
the date hereof by and among the Seller, UAC and UAFCC, and/or the UAFC-1
Purchase Agreement dated as of the date hereof by and among the Seller, UAC and
UAFC-1, as applicable, as amended, supplemented or modified from time to time
pursuant to which the Seller purchases Receivables which have been or shall be
transferred to the Trust.
"Purchase Amount" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus any unpaid interest accrued and due
during or prior to such Collection Period on such Receivable.
"Purchased Receivable" means a Receivable purchased by the Servicer
pursuant to Section 8.07 or repurchased by UAC pursuant to Section 7.02 not
later than the respective dates required thereby.
"Rating Agency" means each of Moody's and Standard & Poor's and their
successors and assigns. "Rating Agency Condition" has the meaning specified in
the Indenture.
"Receivable" means any simple interest or pre-computed (add-on)
interest installment sales contract or installment loan and security agreement
which shall appear on Schedule A to the Agreement.
"Receivable Files" means the documents specified in Section 7.03.
"Receivables" or "Receivables Pool" means, collectively, the Initial
Receivables and the Subsequent Receivables.
"Record Date" has the meaning specified in the Indenture.
"Responsible Officer" means, when used with respect to the Owner
Trustee, any officer within the Corporate Trust Office (or any successor group
of the Owner Trustee) including any managing director, vice president, assistant
vice president, assistant treasurer, assistant secretary or any other officer of
the Owner Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Scheduled Payment" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance and to provide interest at the
Contract Rate.
"Secured Parties" means each of the Indenture Trustee, the Noteholders
and the Insurer pursuant to the Indenture.
"Seller" means UAC Securitization Corporation, a Delaware corporation,
in its capacity as the seller of the Receivables under this Agreement, and each
successor to UAC Securitization Corporation (in the same capacity) pursuant to
Section 12.03.
"Servicer" means Union Acceptance Corporation, an Indiana corporation,
in its capacity as the servicer of the Receivables and each successor to Union
Acceptance Corporation (in the same capacity) pursuant to Section 13.03 or
14.02.
"Servicer's Certificate" means a certificate completed and executed by
an officer of the Servicer pursuant to Section 8.09.
"Servicing Rate" means 1.00% per annum, payable monthly at one-twelfth
of the annual rate, subject to adjustment with respect to a successor Servicer
pursuant to Section 14.02.
"Spread Account" means the account designated as such, established and
maintained pursuant to the Indenture.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc.
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
"Stated Final Payment Date" means April 8, 2009.
"Subsequent Cutoff Date" means each date designated as such by the
Seller. Receivables acquired by UAC as of each such date will be conveyed to the
Trust on the related Subsequent Transfer Date.
"Subsequent Receivables" means additional simple interest or
precomputed interest installment sales contracts or installment loan and
security agreements which the Seller will convey to the Trust from time to time
during the Funding Period, having an aggregate value up to the Initial
Pre-Funded Amount and listed as of a Subsequent Cutoff Date on Schedule I to the
related Subsequent Transfer Assignment.
"Subsequent Transfer Assignments" means the document of assignment,
attached as Exhibit 4 to this Agreement, for the transfer of Subsequent
Receivables to the Trust on any Subsequent Transfer Date.
"Subsequent Transfer Date" means each date designated as such by the
Seller, during the Funding Period, on which Subsequent Receivables acquired by
UAC as of the related Subsequent Cutoff Date are conveyed to the Trust.
"Trigger Event" means any of the events identified as such in Section
6.01 of the Insurance Agreement.
"Trust" means the Delaware business trust created by the Agreement, the
estate of which shall generally comprise the Pledged Assets, as defined in the
Indenture.
"UAC" means Union Acceptance Corporation, an Indiana corporation, and
its successors and assigns, other than in its capacity as Servicer.
"UAC Finance Corporation" means UAC Finance Corporation, an Indiana
corporation, and its successors and assigns.
"UAFC-1" means UAFC-1 Corporation, a Delaware corporation, and its
successors and assigns.
"UAFCC" means UAFC Corporation, a Delaware corporation (F/K/A Union
Acceptance Funding Corporation), and its successors and assigns.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"Warehouse Subsidiaries" means UAFCC and UAFC-1.
SECTION 2.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 2.03. Closing Date and Record Date. All references to the
Record Date prior to the first Record Date in the life of the Trust shall be to
the Closing Date.
SECTION 2.04. Section References. All section references in this
Agreement shall be to Sections in this Agreement unless otherwise specified.
ARTICLE III
Conveyance of Receivables
SECTION 3.01. Conveyance of Initial Receivables. In consideration of
the Trust's issuance of, and the Owner Trustee's delivery to the Seller of, the
Certificate and the proceeds to be realized by the Trust from the issuance of
the Notes pursuant to the Indenture, the Seller does hereby sell, transfer,
assign, and otherwise convey to the Trust, without recourse (subject to the
obligations herein):
(i) all right, title, and interest of the Seller in and to the
Initial Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Initial Receivables;
(iii) any Liquidation Proceeds 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 related to the Initial Receivables;
(iv) funds deposited in the Collection Account and the
Pre-Funding Account;
(v) the interest of the Seller in any proceeds from recourse
to Dealers relating to the Initial Receivables;
(vi) all documents contained in the Receivable Files for the
Initial Receivables;
(vii) all monies paid and all monies due, including Accrued
Interest, as of and after the Initial Cutoff Date, with respect to the
Initial Receivables held by the Servicer or Seller (but excluding
Accrued Interest paid prior to the Closing Date);
(viii) the rights of the Seller pursuant to the Purchase
Agreements to require UAC to repurchase any Receivables as to which
there has been a breach of the representations and warranties contained
therein;
(ix) the benefits of the Policy; and
(x) all proceeds of the foregoing.
The Seller does hereby further assign, convey, pledge and grant a
security interest in (i) any and all other right, title and interest, including
any beneficial interest the Seller may have in the Collection Account, the
Spread Account, the Pre-Funding Account and the funds deposited therein, and
(ii) any proceeds of any of the foregoing, to the Owner Trustee and for the
benefit of the Noteholders to secure amounts payable to Noteholders as provided
under this Agreement. The Seller acknowledges that all of the foregoing shall
constitute the "Pledged Assets" pursuant to the terms of the Indenture and the
Seller hereby consents to the pledge of all of such assets to the Indenture
Trustee for the benefit of the Secured Parties pursuant to the Indenture.
The Seller does not convey to the Trust any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
SECTION 3.02. Conveyance of Subsequent Receivables. (a) Subject to the
conditions set forth in paragraph (b) below, in consideration of the Indenture
Trustee's delivery on the related Subsequent Transfer Date to or upon the order
of the Seller of the amount described in Section 9.10 of the Indenture, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Trust without recourse (subject to the obligations set forth herein):
(i) all right, title, and interest of the Seller in and to the
Subsequent Receivables listed in Schedule I to the related Subsequent
Transfer Assignment, which Schedule I shall be deemed a supplement to
Schedule A to this Agreement;
(ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Subsequent Receivables;
(iii) any Liquidation Proceeds 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
such Financed Vehicles or Obligors related to the Subsequent
Receivables;
(iv) the interest of the Seller in any proceeds from recourse
to Dealers related to the Subsequent Receivables;
(v) all documents contained in the Receivable Files for the
Subsequent Receivables;
(vi) all monies paid and all monies due, including Accrued
Interest, as of and after the applicable Subsequent Cutoff Date, with
respect to the Subsequent Receivables held by the Servicer or Seller
(but excluding Accrued Interest paid prior to such Subsequent Transfer
Date); and
(vii) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Trust the Subsequent Receivables
and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions precedent on or prior to the related Subsequent Transfer
Date:
(A) the Seller shall have delivered to the Owner
Trustee a duly executed Subsequent Transfer Assignment, which
shall include a Schedule I listing the Subsequent Receivables
conveyed to the Trust on such date, and which Schedule I shall
be deemed a supplement to Schedule A to this Agreement;
(B) the Seller shall have deposited in the Collection
Account, to the extent required by Section 3.02(a)(vi), all
collections in respect of the Subsequent Receivables;
(C) as of each Subsequent Transfer Date, (1) the
Seller shall not be insolvent and shall not become insolvent
as a result of the transfer of Subsequent Receivables on such
Subsequent Transfer Date, (2) the Seller shall not intend to
incur or believe that it will incur debts that would be beyond
its ability to pay as such debts mature, (3) such transfer
shall not have been made with actual intent to hinder, delay
or defraud any Person and (4) the assets of the Seller shall
not constitute unreasonably small capital to carry out its
business as conducted;
(D) the Funding Period shall not have terminated;
(E) As of the Subsequent Transfer Date, after
giving effect to the transfer of Subsequent
Receivables on such Subsequent Transfer
Date, the Receivables shall meet the
following criteria (based on the
characteristics of the Initial Receivables
on the Initial Cutoff Date and the
Subsequent Receivables on their respective
Subsequent Cutoff Dates): (1) not more than
80% of the Principal Balances of the
Receivables shall represent used vehicles;
(2) the weighted average Contract Rate of
the Receivables shall not be less than
13.30%; (3) the weighted average remaining
term (as of the Subsequent Cutoff Date) of
the Receivables shall not be greater than 76
months; (4) not more than 12% of the
aggregate principal balance of the
Receivables will have been originated in the
State of Texas; and (5) no Receivable will
have a final Scheduled Payment due later
than June 30, 2008;
(F) The Indenture Trustee shall have received
written confirmation from a firm of
independent certified public accountants
that the Receivables, as of the date
specified therein, meet the criteria
specified in paragraph (E) above.
(G) each of the representations and warranties made
by the Seller provided pursuant to the first paragraph of
Section 7.01 of this Agreement with respect to the Subsequent
Receivables shall be true and correct as of the related
Subsequent Transfer Date, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to
such Subsequent Transfer Date;
(H) the Seller and/or Servicer shall, at its own
expense, on or prior to the Subsequent Transfer Date, indicate
in its computer files that the Subsequent Receivables
identified in Schedule I to the Subsequent Transfer Assignment
have been sold to the Trust pursuant to this Agreement;
(I) the Seller shall have taken any action required
to maintain the first priority perfected ownership interest of
the Trust in the Trust property, other than causing the
certificates of title with respect to the Financed Vehicles to
be endorsed or otherwise amended to identify the Trust as the
new secured party;
(J) no selection procedures believed by the Seller to
be adverse to the interests of the Noteholders shall have been
utilized in selecting the Subsequent Receivables;
(K) the addition of any such Subsequent Receivables
shall not result in a material adverse federal tax consequence
to the Trust or the Noteholders;
(L) the prior written consent of the Insurer shall
have been obtained;
(M) the Seller shall have delivered to the Indenture
Trustee an Officers' Certificate in substantially the form of
Annex A hereto, and UAC shall have delivered to the Indenture
Trustee an Officer's Certificate in substantially the form of
Annex B hereto;
(N) the Seller shall have delivered to the Indenture
Trustee, the Insurer and the Rating Agencies a statement
listing the aggregate Principal Balance of the Subsequent
Receivables conveyed to the Trust on such Subsequent Transfer
Date and any other information reasonably requested by any of
the foregoing with respect to such Subsequent Receivables; and
(O) the Seller shall have delivered (x) to the Rating
Agencies and the Insurer an Opinion of Counsel with respect to
the transfer of such Subsequent Receivables stating that the
Subsequent Receivables have been duly and validly assigned and
delivered by the Seller to the Trust under this Agreement and
(y) to the Indenture Trustee and the Insurer the Opinion of
Counsel required by Section 17.02(i); and
(P) the Rating Agency Condition shall have been
satisfied.
The Seller covenants that in the event any of the foregoing conditions
identified in this Section 3.02(b) are not satisfied with respect to any
Subsequent Receivable conveyed by the Seller to the Trust on or prior to the
date specified above, the Seller will immediately repurchase, or cause its
designee to repurchase, such Subsequent Receivable from the Trust, at a price
equal to the Purchase Amount thereof, in the manner specified in Section 7.02.
(c) During the Funding Period, the Seller shall sell to the Trust, and
the Trust shall purchase from the Seller, Subsequent Receivables having an
aggregate principal balance equal to not more than the Initial Pre-Funded Amount
to the extent that such Subsequent Receivables are available. The Seller
covenants to transfer to the Trust, pursuant to the preceding sentence,
Subsequent Receivables with an aggregate Principal Balance equal to the Initial
Pre-Funded Amount. In the event that the Seller shall fail to deliver and sell
to the Trust any or all of such Subsequent Receivables, any funds remaining in
the Pre-Funding Account shall be distributed in accordance with Section 9.10 of
the Indenture to the Noteholders on the Payment Date next following the end of
the Funding Period. The foregoing shall be the sole remedy of the Trust or the
Noteholders with respect to a failure of the Seller to comply with such
covenant.
ARTICLE IV
Acceptance by Trustee
The Owner Trustee does hereby accept on behalf of the Trust all
consideration conveyed by the Seller pursuant to Article III, and declares that
the Owner Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of all present and future Certificateholders, subject to the
terms and provisions of this Agreement.
ARTICLE V
Information Delivered to the Rating Agencies
(a) The Servicer hereby expresses its intention to deliver
promptly to each Rating Agency (i) a copy of each Servicer's Certificate that it
delivers to the Owner Trustee, the Indenture Trustee and the Insurer pursuant to
Section 8.09, (ii) a copy of each annual Officers' Certificate as to compliance
and any notice of default that it delivers to the Indenture Trustee or the Owner
Trustee pursuant to Section 8.10, (iii) delinquency and loss information for the
Receivables, the amount of any draws on the Policy, the amount of Subsequent
Receivables purchased from the Seller, written notice of any merger,
consolidation, or other succession of the Servicer, pursuant to Section 13.03,
or the Seller, pursuant to Section 12.03, (iv) a copy of each amendment to this
Agreement and (v) any Opinion of Counsel delivered to the Owner Trustee pursuant
to Section 17.02(i).
(b) The Owner Trustee hereby expresses its intention to
deliver promptly to each Rating Agency (i) a copy of each annual certified
public accountant's report received by the Owner Trustee pursuant to Section
8.11, (ii) a copy of each amendment to this Agreement and (iii) a copy of the
notice of termination of the Trust provided to the Certificateholder pursuant to
Section 16.01.
(c) For purposes of delivery pursuant to paragraphs (a) and
(b) of this Article V, the addresses for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 10041-0003
Xxxxx'x Investors Service, Inc.
Attention: ABS Monitoring Department
4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(d) The provisions of this Article V are included herein for
convenience of reference only and shall not be construed to be contractual
undertakings or obligations. The failure of the Servicer or the Owner Trustee to
comply with any or all of the provisions of this Article V shall not constitute
an Event of Servicer Default or a default of any kind under this Agreement or
make any remedy available to any Person.
ARTICLE VI
Agent for Service
The agent for service for the Seller shall be The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
The agent for service for the Servicer shall be The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
A copy of any service of process served on the Seller or the Servicer
hereunder shall also be sent to the parties to receive notices on behalf of the
Seller or Servicer, as the case may be, under Section 17.05 of this Agreement.
ARTICLE VII
The Receivables
SECTION 7.01. Representations and Warranties of Seller. Pursuant to
Article III, the Seller has assigned to the Trust the benefit of, and its rights
respecting, the representations and warranties made to the Seller in the
Purchase Agreements as to the Receivables on which the Trust relies in accepting
the Receivables, issuing the Certificate and executing and delivering the
Indenture. The Seller agrees that the representations shall also be for the
benefit of the Secured Parties. Such representations and warranties speak as of
the execution and delivery of the Purchase Agreements in the case of the Initial
Receivables, and as of the applicable Subsequent Transfer Date in the case of
the Subsequent Receivables, but shall survive the sale, transfer, and assignment
of the Initial Receivables and the Subsequent Receivables to the Trust.
(a) The Seller hereby represents and warrants to the Trust that it has
entered into the Purchase Agreements with UAC and the applicable Warehouse
Subsidiaries, that UAC and the Warehouse Subsidiaries have made the
representations and warranties set forth therein, that such representations and
warranties run to and are for the benefit of the Seller, and that pursuant to
Article III of this Agreement the Seller has transferred and assigned to the
Trust all rights of the Seller to cause UAC under the Purchase Agreements to
repurchase Receivables in the event of a breach of such representations and
warranties.
(b) It is the intention of the Seller that, other than for Federal and
applicable state and local income and franchise tax purposes, the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial interest in and
title to the Receivables not be part of the receivership estate in the event of
the appointment of a receiver for the Seller. No Receivable has been sold,
transferred, assigned, or pledged by the Seller to any Person other than the
Trust. Immediately prior to the transfer and assignment herein contemplated, the
Seller had good and marketable title to each Receivable free and clear of all
liens, and, immediately upon the transfer thereof, the Trust (for the benefit of
the Certificateholder and the Secured Parties pursuant to the Indenture) shall
have good and marketable title to each Receivable, free and clear of all liens
and rights of others, except for the rights of the Certificateholder and the
Insurer; and the transfer has been perfected under the UCC. On or prior to the
Closing Date, all filings (including, without limitation, UCC filings) necessary
in any jurisdiction to give the Trust a first perfected ownership interest in
the Receivables shall have been made.
SECTION 7.02. Repurchase Upon Breach. The Seller, UAC, the Servicer, or
the Owner Trustee, as the case may be, shall inform the Indenture Trustee, the
Insurer and the other parties promptly, in writing, upon the discovery of any
breach of the representations and warranties contained in the Purchase
Agreements. This obligation shall not constitute an obligation on the part of
the Owner Trustee to actively seek to discover any such breaches. Unless the
breach shall have been cured by the second Record Date following the discovery,
UAC, pursuant to its obligations under the Purchase Agreements, shall repurchase
any Receivable materially and adversely affected by the breach as of such Record
Date (or, at UAC's option, the first Record Date following the discovery). In
consideration of the purchase of the Receivable, UAC shall remit the Purchase
Amount, in the manner specified in Section 9.03. The sole remedy of the Owner
Trustee, the Trust, or the Indenture Trustee with respect to a breach of the
representations and warranties referred to in Section 7.01 shall be to require
UAC to repurchase Receivables pursuant to the Purchase Agreements and this
Section 7.02.
SECTION 7.03. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trust, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, for the benefit of
the Trust and the Indenture Trustee, to act as the agent of the Trust as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trust with respect to each Receivable, which,
except for item (i) below, may be in microfiche or electronic form:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor.
(iii) The original certificate of title or such documents that
the Seller or Servicer shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Seller in
the Financed Vehicle; provided that such documents shall not be in
electronic or microfiche form unless permitted by the laws of the state
in which such Financed Vehicle is registered.
(iv) Any and all other documents that the Servicer or the
Seller shall keep on file, in accordance with its customary procedures,
relating to a Receivable, an Obligor, or a Financed Vehicle.
SECTION 7.04. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Receivable Files on behalf of the Trust for the use and benefit of the
Trust, and maintain such accurate and complete accounts, records, and computer
systems pertaining to each Receivable File as shall enable the Trust to comply
with this Agreement and the other Basic Documents to which it is a party. In
performing its duties as custodian the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable automotive
receivables that the Servicer services for itself. The Servicer shall conduct,
or cause to be conducted, periodic audits of the Receivable Files held by it
under this Agreement, and of the related accounts, records, and computer
systems, in such a manner as shall enable the Trust to verify the accuracy of
the Servicer's record keeping. The Servicer shall promptly report to the Owner
Trustee and the Indenture Trustee any failure on its part to hold the Receivable
Files and maintain its accounts, records, and computer systems as herein
provided and promptly take appropriate action to remedy any such failure;
provided, however, notwithstanding anything to the contrary in Section 7.03 or
this Section 7.04, the Servicer shall not be required to possess the original of
Receivables representing less than 2% of the Original Pool Balance until 30 days
following the Closing Date.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Owner Trustee
and the Indenture Trustee by prior written notice. The Servicer shall make
available to the Owner Trustee and the Indenture Trustee and their duly
authorized representatives, attorneys, or auditors a list of locations of the
Receivables, the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Owner Trustee
shall instruct.
(c) Release of Documents. Upon instruction from the Owner Trustee, the
Servicer shall release any document in a Receivable File to the Owner Trustee,
the Owner Trustee's agent, or the Owner Trustee's designee, as the case may be,
at such place or places as the Owner Trustee may designate, as soon as
practicable.
SECTION 7.05. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Owner Trustee on behalf of the Trust.
SECTION 7.06. Custodian's Indemnification. The Servicer, shall
indemnify the Trust, the Owner Trustee and the Indenture Trustee (which shall
include, for purposes of this Section 7.06, their directors, officers, employees
and agents) for any and all liabilities, obligations, losses, compensatory
damages, payments, costs, or expenses of any kind whatsoever that may be imposed
on, incurred, or asserted against the Trust, the Owner Trustee or the Indenture
Trustee as the result of any improper act or omission in any way relating to the
maintenance and custody by the Servicer of the Receivable Files; provided,
however, that the Servicer shall not be liable for any portion of any such
amount resulting from the willful misfeasance, bad faith, or negligence of the
Owner Trustee or the Indenture Trustee. This indemnity shall survive the
termination of this Agreement and the resignation or removal of the Owner
Trustee or the Indenture Trustee.
SECTION 7.07. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
7.07. If the Servicer shall resign in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 14.01, the appointment of the Servicer as
custodian may be terminated by the Trust with the consent of the Indenture
Trustee and the Insurer (so long as the Insurer is not in default of its
obligations under the Policy). In addition, the Trust may terminate the
Servicer's appointment as custodian with cause at any time upon written
notification to the Servicer and the Indenture Trustee. As soon as practicable
after any termination of such appointment, the Servicer shall deliver the
Receivable Files to the Indenture Trustee or the Trust's agent at such place or
places as the Owner Trustee on behalf of the Trust, with the consent of the
Insurer and the Indenture Trustee, may reasonably designate.
ARTICLE VIII
Administration and Servicing of Receivables
SECTION 8.01. Duties of Servicer. The Servicer, for the benefit of the
Trust and the Secured Parties, shall manage, service, administer, and make
collections on the Receivables with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself. The Servicer's duties shall
include collection and posting of all payments, making Advances (in the
Servicer's sole discretion), responding to inquiries of Obligors or of federal,
state or local governmental authorities with respect to the Receivables,
investigating delinquencies, sending payment coupons to Obligors, accounting for
collections, and furnishing monthly and annual statements to the Owner Trustee
and the Indenture Trustee with respect to distributions. The Servicer shall
follow its customary standards, policies, and procedures in performing its
duties as Servicer. Without limiting the generality of the foregoing, the
Servicer is authorized and empowered by the Trust to execute and deliver, on
behalf of itself, the Trust, the Owner Trustee, the Indenture Trustee or any of
them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable or a
Defaulted Receivable, the Trust and the Indenture Trustee shall thereupon be
deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. The Owner Trustee and the Indenture Trustee
shall execute any documents prepared by the Servicer and delivered to the Trust
for execution that are necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
SECTION 8.02. Collection of Receivable Payments. (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
automotive receivables that it services for itself. If payments are extended in
the ordinary course of the Servicer's collection procedures, and, as a result,
any Receivable would be outstanding at the Stated Final Payment Date, then the
Servicer shall be obligated to purchase such Receivable pursuant to Section 8.07
(unless such Receivable is otherwise being purchased pursuant to Section 16.02)
as of the last day of the Collection Period immediately preceding the Stated
Final Payment Date. The Servicer may in its discretion waive any late payment
charge or any other fees that it is entitled to retain under Section 8.08, or
other fee (to the extent consistent with its credit and collection policy) that
may be collected in the ordinary course of servicing a Receivable.
(b) All allocations of payments with respect to a simple-interest
Receivable to principal and interest and determinations of periodic charges and
the like shall be made using the simple interest method, based on either the
actual number of days elapsed and the actual number of days in the calendar year
or on the basis of a thirty-day month and a 360-day calendar year, as specified
in the related installment sales contract or installment loan and security
agreement. Each payment on a simple interest Receivable shall be applied first
to the amount of interest accrued on such Receivable to the date of receipt;
second, to principal due on such Receivable; third, to late charges or other
fees, if any, accrued on such Receivable; and last, to reduce the remaining
principal amount outstanding on such Receivable. Payments made by or on behalf
of an Obligor on a Precomputed Receivable including any Payaheads previously
made and added to the Payahead Balance with respect to such Precomputed
Receivable shall be applied first to overdue Scheduled Payments (including
reduction of Outstanding Advances as provided in Section 9.05). Next, any excess
shall be applied to the Scheduled Payment and any remaining excess shall be
added to the Payahead Balance, and shall be applied to prepay the Precomputed
Receivable, but only if such Payahead Balance shall be sufficient to prepay the
Receivable in full. Otherwise, any such remaining excess payments shall
constitute a Payahead and shall increase the Payahead Balance.
SECTION 8.03. Realization Upon Receivables. (a) On behalf of the Trust
and the Secured Parties the Servicer shall use its best efforts, consistent with
its customary servicing procedures, to repossess or otherwise convert the
ownership of the Financed Vehicle securing any Receivable as to which the
Servicer shall have determined that eventual payment in full is unlikely. The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of automotive receivables,
which may include reasonable efforts to realize upon any recourse to Dealers and
selling the Financed Vehicle at public or private sale. The foregoing shall be
subject to the provision that, in any case in which the Financed Vehicle shall
have suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds. After appropriate disposition of the Financed Vehicle, the
Servicer shall also take such measures as it deems reasonable and appropriate to
realize value in respect of any deficiency balance of the Receivable including
pursuit of action on behalf of the Trust and/or the Secured Parties against the
Obligor with respect to such deficiency.
(b) Unless otherwise stated in this Agreement, the Servicer shall
either purchase or liquidate each Financed Vehicle that has not previously been
liquidated and that secures, or previously secured, a Defaulted Receivable
either (i) by the end of the Collection Period preceding the Stated Final
Payment Date or (ii) if earlier, by the end of the ninth Collection Period
following the Collection Period during which such Receivable became a Defaulted
Receivable. Any purchase of a Financed Vehicle by the Servicer shall be made at
a price equal to the fair market value of the Financed Vehicle as determined by
the Servicer in accordance with the Servicer's normal servicing standards.
SECTION 8.04. Physical Damage Insurance. The Servicer, in accordance
with its customary servicing procedures and underwriting standards, shall
require that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle.
SECTION 8.05. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. The Trust hereby authorizes the Servicer
to take such steps as are necessary to re-perfect such security interest on
behalf of the Trust in the event of the relocation of a Financed Vehicle or for
any other reason. Without limiting the foregoing, in the event that the Servicer
consigns a repossessed Financed Vehicle to an affiliate for liquidation, it
shall take such measures as are necessary or appropriate to maintain the
security interest in the Financed Vehicle in the hands of the consignee until
such Financed Vehicle is liquidated, including appropriate precautionary UCC-1
filings. In addition, UAC and/or such affiliate will notify such affiliate's
creditors, if any, of such consignee affiliate arrangements described above on
or before such arrangements are made.
SECTION 8.06. Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholder or the Secured Parties in the Receivables, nor shall
the Servicer change the amount of the Scheduled Payment under a Receivable or
change the Amount Financed under a Receivable or reduce the Contract Rate of a
Receivable (except if so ordered by a bankruptcy court in a proceeding
concerning the Obligor or otherwise mandated by law).
SECTION 8.07. Purchase of Receivables Upon Breach. The Servicer, the
Indenture Trustee or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
(i) any breach by the Servicer of its obligations under Section 8.06 or (ii) the
existence of the Servicer's obligation to purchase a Receivable pursuant to
Section 8.02(a). This obligation shall not constitute an obligation on the part
of the Owner Trustee or the Indenture Trustee to discover any such breaches or
circumstances. Unless the breach under Section 8.06 shall have been cured by the
second Record Date following the discovery, the Servicer shall purchase any
Receivable materially and adversely affected by such breach as of such day (or,
at the Servicer's election, as of the first Record Date following the
discovery). In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount with respect to such Receivable in the manner
specified in Section 9.03. The sole remedy of the Owner Trustee, the Trust, or
the Secured Parties with respect to a breach pursuant to Section 8.06 or the
grant of an extension which triggers an obligation of the Servicer under Section
8.02(a) shall be to require the Servicer to purchase Receivables pursuant to
this Section 8.07, except as provided in Section 13.02.
SECTION 8.08. Servicing Fee. The servicing fee for a Collection Period
shall equal the Monthly Servicing Fee (except that in the case of a successor
Servicer, the servicing fee shall equal such amount as is arranged in accordance
with Section 14.02(c)). The Servicer shall be entitled to retain from payments
of interest on the Receivables collected during a Collection Period an amount
equal to the Monthly Servicing Fee due the Servicer in respect of such
Collection Period and need not deposit such amount in the Collection Account.
The Servicer shall also be entitled to retain, and need not deposit in the
Collection Account, all late fees, Prepayment Charges, other administrative fees
or similar charges allowed by applicable law with respect to Receivables, if
any, collected (from whatever source) on the Receivables. The Monthly Servicing
Fee will be paid only out of the funds of the Trust and not from the Owner
Trustee's own funds. So long as UAC is the Servicer, if the Servicer fails to
pay the fees and expenses of the Owner Trustee or the Indenture Trustee pursuant
to Section 15.07 hereof or pursuant to the Indenture, the Owner Trustee and
Indenture Trustee shall be entitled to receive such amount from the Monthly
Servicing Fee prior to payment thereof to the Servicer and the Servicer shall
not retain from collections that portion of the Monthly Servicing Fee equal to
any fees of the Owner Trustee and Indenture Trustee that are due and payable and
any unpaid amount that the Servicer has received notice is due the Owner Trustee
or the Indenture Trustee as reimbursement for expenses.
SECTION 8.09. Servicer's Certificate. On or before the Determination
Date following each Collection Period, the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and the Insurer a Servicer's Certificate in
substantially the form of Exhibit 3 attached hereto containing all information
necessary to make the distributions pursuant to Section 9.04 of the Indenture
(so long as the Notes remain outstanding) for the Collection Period preceding
the date of such Servicer's Certificate and all information necessary for the
Indenture Trustee to send statements to the Noteholders and the Owner Trustee to
send statements to the Certificateholder, including (A) the amount of aggregate
collections on the Receivables, (B) the aggregate Purchase Amount of the
Receivables repurchased by UAC and purchased by the Servicer, (C) with respect
to Precomputed Receivables the net deposit from the Collection Account to the
Payahead Account or the net withdrawal from the Payahead Account to the
Collection Account required for the Collection Period in accordance with Section
9.09 of the Indenture, and in the case of a net withdrawal, the Monthly Interest
and Monthly Principal reported on such Servicer's Certificate shall reflect the
portions of such withdrawal allocable to interest and principal, respectively,
in accordance with this Agreement, (D) the amount, if any, to be withdrawn from
the Spread Account and the amount, if any, to be drawn on the Policy, (E)
information respecting (i) delinquent Receivables that are 30, 60 and 90 days
past due, and (ii) the number of repossessions of Financed Vehicles during the
preceding Collection Period, number of unliquidated repossessed Financed
Vehicles, gross and net losses on the Receivables, and recoveries on charged off
Receivables; and (F) each other item listed in Section 9.04 of the Indenture
reasonably requested by a Rating Agency, the Indenture Trustee or the Insurer in
order to monitor the performance of the Receivables. Receivables purchased by
UAC as of the last day of such Collection Period shall be identified by the UAC
account number with respect to such Receivable (as specified in Schedule A to
this Agreement).
SECTION 8.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and the
Insurer, on or before April 30 of each year, beginning on the first April 30
that is at least six months after the Closing Date, an Officers' Certificate,
dated as of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or in the case
of the initial Officer's Certificate, the period from the Closing Date to and
including the date of such Officer's Certificate) and of its performance under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. A
copy of such certificate and the report referred to in Section 8.11 may be
obtained by any Certificateholder at its own expense by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Owner
Trustee, the Indenture Trustee and the Insurer, promptly after having obtained
knowledge thereof, but in no event later than 5 Business Days thereafter,
written notice in an Officers' Certificate of any event which with the giving of
notice or lapse of time, or both, would become an Event of Servicer Default
under Section 14.01. The Seller or UAC shall deliver to a Responsible Officer of
the Owner Trustee, the Indenture Trustee and the Insurer, promptly after having
obtained knowledge thereof, but in no event later than 5 Business Days
thereafter, written notice in an Officers' Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of
Servicer Default under clause (ii) of Section 14.01.
SECTION 8.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of independent certified public accountants, who
may also render other services to the Servicer, to deliver to the Owner Trustee,
the Indenture Trustee and the Insurer on or before September 30 of each year
concerning the 12-month period ended June 30 of such year (or shorter period
since the date of this Agreement), beginning on the first September 30 following
the first June 30 after the Closing Date, a report addressed to the Board of
Directors of the Servicer to the effect that such firm has reviewed the
servicing of the Receivables by the Servicer and that such review (1) included
tests relating to new or used automobile, van and light truck loans serviced for
others in accordance with the requirements of the Uniform Single Audit Program
for Mortgage Bankers, to the extent the procedures in such program are
applicable to the servicing obligations set forth in the Agreement, and (2)
except as described in the report, disclosed no exceptions or errors in the
records relating to automobile, van or light truck loans serviced for others
that, in the firm's opinion, paragraph four of such program requires such firm
to report.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 8.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Owner Trustee, Indenture Trustee
and the Insurer access to the Receivables Files in such cases where such parties
shall be required by applicable statutes or regulations to review such
documentation. Access shall be afforded without charge, but only upon reasonable
request and during the normal business hours at the respective offices of the
Servicer. Nothing in this Section shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section 8.12.
SECTION 8.13. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with regular payments and
reports to Noteholders.
SECTION 8.14. Reports to Noteholders. The Owner Trustee shall provide
to any Noteholder who so requests in writing (addressed to the Corporate Trust
Office) a copy of any certificate described in Section 8.09, the annual
statement described in Section 8.10, or the annual report described in Section
8.11. The Owner Trustee may require the requesting party to pay a reasonable sum
to cover the cost of the Owner Trustee complying with such request.
ARTICLE IX
Collections; Distributions to Noteholders and Certificateholder
SECTION 9.01. Collection Account. The Seller shall establish the
Collection Account as a segregated trust account in the name of the Trust for
the benefit of the Secured Parties with the Indenture Trustee (at the Indenture
Trustee Office) or another Eligible Bank. The Servicer shall direct the
Indenture Trustee to invest the amounts in the Collection Account in Eligible
Investments that mature not later than the Business Day prior to the next
succeeding Payment Date and to hold such Eligible Investments to maturity. The
Servicer shall instruct the Indenture Trustee (or its custodian) to and the
Indenture Trustee shall at all times (i) maintain possession of any negotiable
instruments or securities evidencing Eligible Investments until the time of sale
or maturity and each certificated security or negotiable instrument evidencing
an Eligible Investment shall be endorsed in blank or to the Indenture Trustee or
registered in the name of the Owner Trustee and (ii) cause any Eligible
Investment represented by an uncertificated security to be registered in the
name of the Indenture Trustee.
SECTION 9.02. Collections. (a) The Servicer shall remit to the
Collection Account all payments by or on behalf of the Obligors on the
Receivables and all Liquidation Proceeds, both as collected during the
Collection Period net of Monthly Servicing Fees and administrative fees allowed
to be retained by the Servicer pursuant to Section 8.08 and net of charge backs
(attributable to errors in posting, returned checks, or rights of offset for
amounts that should not have been paid or that must be refunded as the result of
a successful claim or defense under bankruptcy or similar laws) not later than
the second Business Day following the Business Day on which such amounts are
received by the Servicer. Notwithstanding the foregoing, for so long as (a) UAC
remains the Servicer, (b) no Event of Servicer Default shall have occurred and
be continuing and (c)(1) UAC maintains a short-term rating of at least A-1 by
Standard & Poor's and P-l by Moody's (and for five Business Days following a
reduction in either such rating) or (2) prior to ceasing daily remittances, the
Rating Agency Condition shall have been satisfied (and any conditions or
limitations imposed by the Rating Agencies in connection therewith are complied
with) and the prior written consent of the Insurer (not to be unreasonably
withheld) shall have been obtained, the Servicer may remit all such payments and
Liquidation Proceeds with respect to any Collection Period to the Collection
Account on a less frequent basis, but in no event later than the Determination
Date immediately preceding each Payment Date. The Servicer shall remit any
Advances with respect to a Collection Period to the Collection Account on or
before the Determination Date.
(b) The Servicer, the Owner Trustee and/or Indenture Trustee shall
deposit in the Collection Account any funds received by such parties in respect
of funds drawn under the Policy from the Insurer.
(c) If the Available Funds for a Payment Date are insufficient to pay
current and past due Insurance Premiums or the aggregate amount of unreimbursed
draws under the Policy plus accrued interest thereon to the Insurer, the
Servicer shall notify the Owner Trustee and the Indenture Trustee of such
deficiency, and the Available Spread Amount, if any, then on deposit in the
Spread Account shall be available to cover such deficiency in accordance with
Section 9.04(a) or 5.06(a) of the Indenture, as applicable.
SECTION 9.03. Purchase Amounts. (a) Not later than the Determination
Date, the Servicer, UAC or the Owner Trustee shall remit to the Collection
Account the aggregate Purchase Amount for such Collection Period pursuant to
Sections 7.02 and 8.07 and (b) not later than 11:00 a.m. (New York City time) on
the related Payment Date, the Servicer shall remit to the Collection Account the
aggregate Optional Disposition Price for Receivables on such Payment Date
pursuant to Section 16.02.
SECTION 9.04. Application of Funds. (a) On each Determination Date, the
Servicer shall determine (i) the amount of payments on all Receivables and all
Liquidation Proceeds received during such Collection Period, the amount of
Advances for such Collection Period, the Purchase Amount for all Receivables
purchased or repurchased with respect to such Collection Period which have been
deposited in the Collection Account (excluding amounts required to be paid
pursuant to Sections 7.02, 8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Collection Account to the Payahead Account or from
the Payahead Account to the Collection Account as provided in Section 9.09 of
the Indenture, all investment earnings during such Collection Period on amounts
on deposit in the Pre-Funding Account and the Pre-Funding Reserve Amount for
such Payment Date (the "Available Funds"), and (ii) the amount of funds
necessary to make the distributions required pursuant to Section 9.04(a) (i)
through (xv) of the Indenture, inclusive, on the next Payment Date. The Servicer
shall by a Servicer's Certificate on or before the Determination Date notify the
Owner Trustee and the Indenture Trustee of such amounts by telecopy to the
Corporate Trust Office and the Indenture Trustee Office or to such numbers as
the Owner Trustee or Indenture Trustee may from time to time provide, followed
promptly by mailing such notice to the Owner Trustee and the Indenture Trustee
and to the Insurer.
(b) On each Payment Date through and including the first Payment Date
immediately following the Funding Period, the Servicer (or the Indenture Trustee
at the Servicer's direction) shall withdraw from the Spread Account the
Pre-Funding Reserve Amount for such Payment Date and deposit such amount into
the Collection Account. On the first Payment Date immediately following the
Funding Period, any remaining Pre-Funding Reserve Balance shall be remitted
promptly to the Seller (after giving effect to any required transfers of the
Pre-Funding Reserve Amount made from the Spread Account on such Payment Date).
(c) On any Payment Date on which there are not sufficient Available
Funds to make the distributions required pursuant to Section 9.04(a) (i) through
(x) of the Indenture, the Indenture Trustee may, or the Servicer on its behalf
shall, withdraw from the Spread Account, to the extent of the Available Spread
Amount, an amount equal to such deficiency and promptly deposit such amount in
the Collection Account. If such deficiency exceeds the Available Spread Amount,
the Servicer shall simultaneously and in the same manner also notify the Owner
Trustee, the Indenture Trustee and the Insurer of the amount of such excess
deficiency.
(d) On each Payment Date, the Owner Trustee shall distribute to the
Certificateholder the amount of funds on deposit in the Spread Account in excess
of the Required Spread Amount, if any, for such Payment Date, as received from
the Indenture Trustee pursuant to Section 10.02(e) of the Indenture on such
Payment Date, after application in accordance with Section 10.02(e) of the
Indenture of such excess to pay any outstanding amounts owing to the Insurer
pursuant to the Insurance Agreement.
(e) On each Payment Date, the Owner Trustee shall send to the
Certificateholder the Servicer's Report provided to the Owner Trustee by the
Servicer for such Payment Date.
(f) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to the Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in accordance
with this Section 9.04. The Owner Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to the Certificateholder sufficient
funds for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding tax
imposed with respect to a Certificateholder shall be treated as cash distributed
to such Certificateholder at the time it is withheld by the Trust to be remitted
to the appropriate taxing authority. If there is a possibility that withholding
tax is payable with respect to a distribution (such as a distribution to a
non-U.S. Certificateholder), the Owner Trustee in its sole discretion may (but
unless otherwise required by law shall not be obligated to) withhold such
amounts in accordance with this paragraph (e). Upon request, any
Certificateholder shall provide its federal employer identification number or
any other information or tax forms the Owner Trustee or the Administrator may
reasonably request. In the event that a Certificateholder wishes to apply for a
refund of any such withholding tax, the Owner Trustee shall reasonably cooperate
with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
(g) Distributions required to be made to the Certificateholder on any
Payment Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Certificateholder at a bank or other entity having appropriate
facilities therefor, or by check mailed to such Certificateholder at the address
of such Certificateholder appearing in the Certificate Register.
SECTION 9.05. Advances. (a) As of the last day of the initial
Collection Period, the Servicer shall advance funds equal to the excess, if any,
of Monthly Interest due in respect of the initial Collection Period, over the
Collected Interest for such Collection Period; and (b) as of the last day of
each subsequent Collection Period, the Servicer shall advance funds in the
amount of the Interest Advance Amount (or such other amount as the Servicer
shall reasonably determine to cover an Interest Shortfall) with respect to each
Receivable that is delinquent for more than 30 days, in each such case, to the
extent that the Servicer, in its sole discretion, determines that the Advance
will be recoverable from payments by or on behalf of the Obligor, the Purchase
Amount, or Liquidation Proceeds. With respect to each Receivable, the Advance
paid pursuant to this Section 9.05 shall increase Outstanding Advances.
Outstanding Advances shall be reduced by subsequent payments by or on behalf of
the Obligor, collections of Liquidation Proceeds, or payments of the Purchase
Amount. The Servicer shall remit any Advances with respect to a Collection
Period to the Collection Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with
respect to any Receivable shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables in the Trust, and
Outstanding Advances with respect to such Receivable shall be reduced
accordingly.
SECTION 9.06. Net Deposits. For so long as Union Acceptance Corporation
is the Servicer, Union Acceptance Corporation (in whatever capacity) may make
the remittances with respect to any Payment Date pursuant to Section 9.02 above,
net of amounts to be distributed to itself or its delegee under Section 13.06
(also in whatever capacity), if it determines pursuant to Section 9.02 that
there is no deficiency in Available Funds for such Payment Date. Nonetheless,
the Servicer shall account for all of the above described amounts as if such
amounts were deposited and distributed.
SECTION 9.07. No Segregation of Moneys; No Interest. Subject to Section
9.04, moneys received by the Owner Trustee hereunder need not be segregated in
any manner except to the extent required by law or this Agreement and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
SECTION 9.08. Accounting and Reports to the Certificateholder, the
Internal Revenue Service and Others. The Owner Trustee shall deliver to the
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, or as may be requested by such Certificateholder, such information,
reports or statements as may be necessary to enable the Certificateholder to
prepare its federal and state income tax returns. Consistent with the Trust's
characterization for tax purposes as a disregarded entity so long as the Seller
or any other Person is the sole beneficial owner of the Trust, no federal income
tax return shall be filed on behalf of the Trust unless either (i) the Owner
Trustee shall receive an Opinion of Counsel that, based on a change in
applicable law occurring after the date hereof, or as a result of a transfer by
a selling Certificateholder permitted by Section 11.03, the Code requires such a
filing or (ii) the Internal Revenue Service shall determine that the Trust is
required to file such a return. In the event that there shall be two or more
beneficial owners of the Trust (including the treatment of any class of Notes as
a beneficial ownership in the Trust pursuant to a final determination of the
Internal Revenue Service or a court), the Owner Trustee shall inform the
Indenture Trustee in writing of such event, (x) the Administrator, on behalf of
the Trust shall prepare or shall cause to be prepared federal and, if
applicable, state or local partnership tax returns required to be filed by the
Trust (using the calendar year or its fiscal year, or such other taxable year as
may be required by the Code) and shall remit such returns to the Seller for
signature (or if the Seller no longer owns the Certificate, to the Seller to the
extent its tax liability is affected thereby and otherwise to the successor
Certificateholder owning the largest percentage interest in the Certificates) at
least (5) days before such returns are due to be filed, and (y) capital accounts
shall be maintained for each beneficial owner in accordance with the Treasury
Regulations under Section 704(b) of the Code reflecting each such beneficial
owner's share of the income, gains, deductions, and losses of the Trust and/or
guaranteed payments made by the Trust and contributions to, and distributions
from, the Trust. The Seller (or such successor Certificateholder, as applicable)
shall promptly sign such returns and deliver such returns after signature to the
Administrator, on behalf of the Trust and such returns shall be filed by the
Administrator, on behalf of the Trust with the appropriate tax authorities. In
the event that a "tax matters partner" (within the meaning of Code Section
6231(a)(7)) is required to be appointed with respect to the Trust, the Seller is
hereby designated as tax matters partner or, if the Seller is not the
Certificateholder, the Seller to the extent its tax liability is affected
thereby and otherwise the successor Certificateholder owning the largest
percentage interest in the Certificates, shall be designated as tax matters
partner. In no event shall the Owner Trustee, the Administrator or the Seller
(or such designee Certificateholder, as applicable) be liable for any
liabilities, costs or expenses of the Trust or the Noteholders arising out of
the application of any tax law, including federal, state, foreign or local
income or excise taxes or any other tax imposed on or measured by income (or any
interest, penalty or addition with respect thereto or arising from a failure to
comply therewith) except for any such liability, cost or expense attributable to
any act or omission by the Owner Trustee, the Administrator or the Seller (or
such designee Certificateholder as applicable), as the case may be, in breach of
its obligations under this Agreement. Unless otherwise instructed by a majority
in interest of the Certificateholders, none of the Owner Trustee, the
Administrator, or the Seller shall elect, or shall cause an election to be made
on behalf of the Trust, under (i) Section 1278 of the Code to accrue its market
discount income currently or (ii) Section 754 of the Code.
SECTION 9.09. Payahead Account. The Servicer shall establish the
Payahead Account in the name of the Trust on behalf of the Obligors and the
Noteholders as their interests may appear. The Servicer shall maintain the
Payahead Account pursuant to Section 9.09 of the Indenture.
SECTION 9.10. Pre-Funding Account. (a) The Indenture Trustee shall
establish and maintain the Pre-Funding Account in accordance with Section 9.10
of the Indenture. The Seller shall deposit an amount equal to the Initial
Pre-Funded Amount into the Pre-Funding Account on or before the Closing Date.
The Pre-Funding Account shall be maintained in the name of the Indenture Trustee
as trustee for the benefit of the Secured Parties. The Pre-Funding Account and
any amounts on deposit therein shall be part of the Trust and shall be held for
the benefit of the Secured Parties. The Pre-Funding Account shall be maintained
pursuant to Section 9.10 of the Indenture.
ARTICLE X
Intentionally Blank
ARTICLE XI
The Certificate
SECTION 11.01. The Certificate. The Certificate shall be issued in the
form of one or more certificates and shall initially be issued to the Seller.
The Certificate shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible Officer of the Owner Trustee. A Certificate bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be a valid and binding obligation of the Trust, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Certificate or did not hold such
offices at the date of such Certificate.
SECTION 11.02. Authentication of Certificate. The Owner Trustee shall
cause the Certificate to be executed on behalf of the Trust, authenticated and
delivered to or upon the written order of the Seller, signed by its chairman of
the board, its president, or any vice president, without further corporate
action by the Seller, in authorized denominations, pursuant to this Agreement.
No Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially as set forth in the form of
Certificate attached as an exhibit to this Agreement, executed by a Responsible
Officer of the Owner Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. Each Certificate shall be dated the date
of its authentication.
SECTION 11.03. Registration of Transfer and Exchange of Certificate.
The Owner Trustee shall keep or cause to be kept, at the Corporate Trust Office,
a Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Owner Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates subject to the
restrictions provided herein.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Owner Trustee shall execute, authenticate, and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates in authorized denominations of a like aggregate amount dated
the date of authentication by the Owner Trustee, provided, however, that
registration of transfer of a Certificate may not be effected unless (A) the
Owner Trustee receives an Opinion of Counsel, satisfactory to it, to the effect
that (i) such transfer may be made in reliance upon an exemption from the
registration requirements of the Securities Act of 1933, as amended, and (ii)
such transfer will not adversely affect the tax treatment of the Trust or the
Notes; (B) the Insurer has consented to such transfer and (C) the Rating Agency
Condition shall have been satisfied with respect to such transfer.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee duly executed by the Holder or his attorney
duly authorized in writing. Each Certificate surrendered for registration of
transfer and exchange shall be canceled and subsequently destroyed by the Owner
Trustee.
The Seller, as the initial Certificateholder, and each subsequent
Certificateholder by its acceptance of its Certificate, represents and warrants
to the Trust, the Owner Trustee and the Secured Parties that it is not a
"Benefit Plan" (as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended) or a person who is not a "United States
person" within the meaning of Section 7701(a)(30) of the Code and agrees to
indemnify and hold harmless the Trust, the Owner Trustee and the Secured Parties
in respect of any tax, loss, liability or expense incurred as a result of the
breach of such representation and warranty by such Certificateholder.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Owner Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of a Certificate.
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Owner Trustee, or if
the Owner Trustee shall receive evidence to its satisfaction of the destruction,
loss, or theft of any Certificate and (b) there shall be delivered to the Owner
Trustee such security or indemnity as may be required by it to save it harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute
and the Owner Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate
of like tenor and denomination. In connection with the issuance of any new
Certificate under this Section 11.04, the Owner Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 11.04 shall constitute conclusive evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
ARTICLE XII
The Seller
SECTION 12.01. Representations and Undertakings of Seller. (a) The
Seller makes the following representations on which the Trust relies in
accepting the Receivables and executing and authenticating the Certificate and
undertaking its obligations under the Indenture. The Seller agrees that the
representations and undertakings shall also be for the benefit of the Owner
Trustee and the Secured Parties. The representations speak as of the execution
and delivery of this Agreement and shall survive the sale of the Receivables to
the Trust.
(i) Organization and Good Standing. The
Seller has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and
to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all
relevant times, and has, power, authority, and legal right to
acquire and own the Receivables.
(ii) Due Qualification. The Seller is duly
qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such
qualifications.
(iii) Power and Authority. The Seller has
the power and authority to execute and deliver this Agreement
and to carry out its terms; the Seller has full power and
authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and has duly
authorized such sale and assignment to the Trust by all
necessary corporate action; and the execution, delivery, and
performance of the Agreement has been duly authorized by the
Seller by all necessary corporate action.
(iv) Valid Sale; Binding Obligations. This
Agreement evidences a valid sale, transfer, and assignment of
the Receivables, enforceable against creditors of and
purchasers from the Seller; and evidences a legal, valid, and
binding obligation of the Seller enforceable in accordance
with its terms.
(v) No Violation. The consummation of the
transactions contemplated by the Agreement and the fulfillment
of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the charter
or by-laws of the Seller, or any indenture, agreement, or
other instrument to which the Seller is a party or by which it
shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, or other instrument (other than
this Agreement); nor violate any law or, to the best of the
Seller's knowledge, any order, rule, or regulation applicable
to the Seller of any court or of any federal or State
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its
properties.
(vi) No Proceedings. There are no
proceedings or investigations pending, or, to the Seller's
best knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality
having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement, (B) seeking to
prevent the consummation of any of the transactions
contemplated by this Agreement, (C) seeking any determination
or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement, or (D) which
might adversely affect the federal income tax attributes of
the Trust.
(b) The Seller further covenants that, prior to termination of the
Trust:
(i) It will not engage at any time in any
business or business activity other than such activities
expressly set forth in its Certificate of Incorporation
delivered to the Insurer on or prior to the Closing Date, and
will not amend its Certificate of Incorporation without the
prior written consent of the Insurer.
(ii) It will not, without the consent of the
Insurer (not to be unreasonably withheld), sell, assign,
pledge or otherwise transfer, in whole, or in part or in any
series of related or unrelated transactions any of its right,
title or interest in or to the Certificate.
(iii) It will not:
(A) Fail to do all things necessary
to maintain its corporate existence separate and
apart from UAC and any other Person, including,
without limitation, holding regular meetings of its
stockholders and board of directors and maintaining
appropriate corporate books and records (including a
current minute book);
(B) Suffer any limitation on the
authority of its own directors and officers to
conduct its business and affairs in accordance with
their independent business judgment or authorize or
suffer any Person other than its own officers and
directors to customarily delegated to others under
powers of attorney for which a corporation's own
Officers and directors would customarily be
responsible;
(C) Fail to (I) maintain or cause to
be maintained by an agent of the Seller under the
Seller's control physical possession of all its books
and records, (II) maintain capitalization adequate
for the conduct of its business, (III) account for
and manage all its liabilities separately from those
of any other Person, including payment by it of all
payroll, administrative expenses and taxes, if any,
from its own assets, (IV) segregate and identify
separately all of its assets from those of any other
Person, (V) to the extent any such payments are made,
pay its employees, officers and agents for services
performed for the Seller or (VI) maintain a separate
office address with a separate telephone number from
those of UAC or any other affiliate thereof; or
(D) Except as may be provided in
this Agreement, or a similar agreement relating to
other securitizations in which the Seller has similar
rights and/or obligations, commingle its funds with
those of UAC or any affiliate thereof or use its
funds for other than the Seller's uses.
SECTION 12.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(i) The Seller shall indemnify, defend, and hold
harmless, the Owner Trustee in its individual and trust capacities, the
Indenture Trustee, their respective officers, directors, employees and
agents, the Trust and the Noteholders from and against any taxes that
may at any time be asserted against such parties with respect to, and
as of the date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Certificate and the Notes, including
any sales, gross receipts, general corporation, tangible or intangible
personal property, privilege, or license taxes (but, in the case of the
Trust, not including any taxes asserted with respect to ownership of
the Receivables or federal or other income taxes arising out of
distributions on the Certificate or the Notes) and costs and expenses
in defending against the same.
(ii) The Seller shall indemnify, defend, and hold
harmless, the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, their officers, directors, employees and agents
and the Trust from and against any loss, liability, or expense incurred
by reason of (a) the Seller's willful misfeasance, bad faith, or
negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this
Agreement and (b) the Seller's violation of federal or State securities
laws in connection with the registration of the sale of the
Certificate.
Indemnification under this Section 12.02 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
Neither the Seller nor any of the persons indemnified under this Section 12.02
will in any event be entitled to make any claim upon the Trust estate for the
payment or reimbursement of any losses, liabilities, taxes, costs, expenses or
fees under this Section 12.02. If the Seller shall have made any indemnity
payments to the Owner Trustee, the Indenture Trustee or the Trust pursuant to
this Section and the Owner Trustee, the Indenture Trustee or the Trust
thereafter shall collect any of such amounts from others, the Owner Trustee, the
Indenture Trustee or the Trust, as the case may be, shall repay such amounts to
the Seller, without interest. This indemnification shall survive the termination
of this Agreement and the resignation or removal of the Owner Trustee or the
Indenture Trustee. Notwithstanding the foregoing, any amounts Seller shall pay
pursuant to this Section 12.02 shall be paid solely from Available Funds in
excess of funds necessary to pay all outstanding interest and principal due to
the Noteholders in accordance with the priorities set forth in Section 9.04 of
the Indenture (or, if an Event of Default (as defined in the Indenture) has
occurred under the Indenture, in accordance with the priorities set forth in
Section 5.06 of the Indenture) and shall in any case be nonrecourse to the
Seller and to the Seller's assets and, to the extent funds are not so available
to pay any amounts when due and owing, the claims relating thereto shall not
constitute a claim (as defined in Section 101 of Title 11 of the United States
Bankruptcy Code) against the Seller but shall continue to accrue. Each party
hereto agrees that the payment of any claim of any such party pursuant to this
Section 12.02 shall be subordinated to the payment in full of all outstanding
interest and principal due to the Noteholders. The payment of any claim pursuant
to this Section 12.02 shall in no event be construed as a "fee" of the Indenture
Trustee or the Owner Trustee as such term is used in Section 5.06(a)(ii) of the
Indenture.
SECTION 12.03. Merger or Consolidation of, or Assumption of the
Obligations of Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party, or (c) which may succeed to all or substantially all of
the properties and assets of the Seller's business, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 7.01 shall have been breached and no Event of Servicer
Default, and no event that, after notice or lapse of time, or both, would become
an Event of Servicer Default shall have happened and be continuing, (ii) the
Seller shall have delivered to the Owner Trustee and the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, or succession and such agreement of assumption comply
with this Section 12.03 and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with and (iii)
the Seller shall have delivered an Opinion of Counsel to the Owner Trustee and
the Indenture Trustee either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Indenture Trustee in the Receivables, and reciting
the details of such filings, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and protect such
interest. Notwithstanding the foregoing, the Seller shall not engage in any
merger or consolidation with any Person, or a disposition of all or
substantially all of its assets without providing advance written notice thereof
to the Owner Trustee, the Indenture Trustee and the Rating Agencies and without
obtaining the prior written consent of the Insurer, not to be unreasonably
withheld.
SECTION 12.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute,
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE XIII
The Servicer
SECTION 13.01. Representations of Servicer. The Servicer makes the
following representations on which the Trust relies in accepting the Receivables
and issuing the Certificate and executing and delivering the Indenture. The
Servicer agrees that the representations shall also be for the benefit of the
Owner Trustee and the Secured Parties. The representations speak as of the
execution and delivery of this Agreement and shall survive the sale of the
Receivables to the Owner Trustee and the pledge to the Secured Parties pursuant
to the Indenture.
(i) Organization and Good Standing. The Servicer is
duly organized and validly existing as a corporation under the laws of
the State of Indiana, with power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is presently conducted, and had at all relevant times,
and has, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian
on behalf of the Trust.
(ii) Due Qualification. The Servicer is duly
qualified to do business as a foreign corporation in good standing, and
has obtained all necessary licenses and approvals in all jurisdictions
in which the ownership or lease of property or the conduct of its
business (including the servicing of the Receivables as required by
this Agreement) requires such qualifications.
(iii) Power and Authority. The Servicer has the power
and authority to execute and deliver this Agreement and to carry out
its terms; and the execution, delivery, and performance of this
Agreement has been duly authorized by the Servicer by all necessary
corporate action.
(iv) Binding Obligations. This Agreement constitutes
a legal, valid, and binding obligation of the Servicer enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall
be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the
transactions contemplated by this Agreement and the fulfillment of the
terms hereof does not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the charter or by-laws of the Servicer,
or any indenture, agreement, or other instrument to which the Servicer
is a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, or other instrument (other than this
Agreement); nor violate any law or, to the best of the Servicer's
knowledge, any order, rule, or regulation applicable to the Servicer of
any court or of any federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Servicer or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or
its properties: (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability
of, this Agreement, or (D) which might adversely affect the federal
income tax attributes of the Trust.
SECTION 13.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(i) The Servicer shall defend, indemnify, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, and their officers, directors, employees and
agents, the Trust, the Certificateholder and the Noteholders from and
against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership, or
operation by the Servicer or any affiliate thereof of a Financed
Vehicle.
(ii) The Servicer shall indemnify, defend and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, their officers, directors, employees and agents
and the Trust from and against any taxes that may at any time be
asserted against such parties with respect to the transactions
contemplated herein, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes (but, in the case of the Trust,
not including any taxes asserted with respect to, and as of the date
of, the sale of the Receivables to the Trust or the issuance and
original sale of the Certificate, the Notes, or asserted with respect
to ownership of the Receivables, or federal or other income taxes
arising out of distributions on the Certificate or the Notes) and costs
and expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, the Insurer, their officers, directors,
employees and agents, and the Trust, the Certificateholder and the
Noteholders from and against any and all costs, expenses, losses,
claims, actions, suits, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon such parties through, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement. This indemnity shall
survive the termination of this Agreement or the Trust and the
resignation or removal of the Owner Trustee.
(iv) The Servicer shall indemnify, defend, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, their respective officers, directors, employees
and agents and the Trust from and against all costs, expenses, losses,
claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein contained and contained in the Indenture and the Basic
Documents, except to the extent that such cost, expense, loss, claim,
damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence of the Owner Trustee or the Indenture Trustee; (b)
relates to any tax other than the taxes with respect to which either
the Seller or Servicer shall be required to indemnify the Owner Trustee
or the Indenture Trustee; (c) shall arise from the breach of any of the
representations or warranties of the Owner Trustee set forth in Section
15.13 or by the Indenture Trustee set forth in Section 6.13 of the
Indenture; (d) shall be one as to which the Seller is required to
indemnify the Owner Trustee or the Indenture Trustee under the
Agreement and the Seller has paid such indemnity claim; or (e) shall
arise out of or be incurred in connection with the acceptance or
performance by the Owner Trustee of the duties of successor Servicer.
(v) The Servicer agrees to pay to the Indenture
Trustee from time to time such compensation as the Servicer or Issuer
and the Indenture Trustee have agreed to in writing. Subject to Section
6.07 of the Indenture, the Servicer agrees to reimburse the Indenture
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with
any provision of the Indenture or any of the Basic Documents (including
the compensation and the expenses and disbursements of its agents,
counsel, experts and accountants).
Indemnification under this Section 13.02 shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest. This
indemnification shall survive the termination of this Agreement and the removal
of the Servicer.
SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party, or (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing and
receivables servicing business, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided,
however, that (i) immediately after giving effect to such transaction, no Event
of Servicer Default, and no event which, after notice or lapse of time, or both,
would become an Event of Servicer Default shall have happened and be continuing,
(ii) the Servicer shall have delivered to the Owner Trustee and the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section 13.03 and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with and (iii) the
Servicer shall have delivered an Opinion of Counsel to the Owner Trustee and its
Indenture Trustee either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Secured Parties in the Receivables, and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest. Notwithstanding the foregoing, the Servicer shall not engage in any
merger or consolidation in which it is not the surviving corporation without
providing advance written notice thereof to the Owner Trustee and the Indenture
Trustee and without obtaining the prior written consent of the Insurer, not to
be unreasonably withheld.
SECTION 13.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust, the Indenture Trustee, the
Certificateholder or the Noteholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement; provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith, or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement. The Servicer and any director or officer or
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement (collection actions with respect to Defaulted Receivables are
understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 13.05. Servicer Not to Resign. The Servicer shall not resign
from its obligations and duties under this Agreement except upon determination
that the performance of its duties shall no longer be permissible under
applicable law or otherwise with the consent of the Owner Trustee, the Indenture
Trustee and the Insurer. Any determination described above permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Owner Trustee. No such resignation shall become
effective until the Indenture Trustee or a successor servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
14.02.
SECTION 13.06. Delegation of Duties. Except as provided in Section
13.03 hereof, it is understood and agreed by the parties hereto that the
Servicer or the Seller may at any time delegate any duties including duties as
custodian to any Person willing to accept such delegation and to perform such
duties (including any affiliate of the Servicer) in accordance with the
customary procedures of the Servicer. In connection with such delegation, the
Servicer or the Seller may assign rights to the delegee or direct the payment to
the delegee of benefits or amounts otherwise inuring to the benefit of, or
payable to, the Seller or the Servicer hereunder. Any such delegation shall not
relieve the Servicer or the Seller of their respective liability and
responsibility with respect to such duties, and shall not constitute a
resignation within Section 13.05 hereof. The Servicer shall give written notice
to the Rating Agencies, the Owner Trustee, the Indenture Trustee and the Insurer
of any such delegation.
ARTICLE XIV
Servicer Default
SECTION 14.01. Events of Servicer Default. If any one of the following
events ("Events of Servicer Default") shall occur and be continuing:
(i) Any failure by the Servicer or UAC to deliver to
the Collection Account (or to the Indenture Trustee for distribution to
the Noteholders) any proceeds or payment required to be so delivered
under the terms of the Indenture, this Agreement or the Purchase
Agreements or any failure by the Servicer to deliver any Servicer's
Certificate pursuant to Section 8.09 that, in either case, shall
continue unremedied for a period of two Business Days (A) after written
notice from either the Owner Trustee, the Indenture Trustee or the
Insurer (so long as the Insurer is not in default of its obligations
under the Policy) or by the holders of Notes evidencing not less than
25% of the aggregate outstanding balance of the Notes is received by
the Servicer or UAC as specified in this Agreement or (B) after
discovery by an officer of the Servicer; or
(ii) Failure on the part of the Servicer, the Seller
or UAC duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer, the Seller or UAC, as the case
may be, set forth in this Agreement or the Purchase Agreements, which
failure shall (a) materially and adversely affect the rights of the
Certificateholder or the Secured Parties and (b) continue unremedied
for a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer, UAC or the Seller, as the case may be, by the Owner
Trustee, the Indenture Trustee or the Insurer (so long as the Insurer
is not in default of its obligations under the Policy) or by the
holders of Notes evidencing not less than 25% of the aggregate
outstanding balance of the Notes; or
(iii) The occurrence of an Insolvency Event with
respect to the Servicer;
then, and in each and every case, so long as an Event of Servicer Default shall
not have been remedied, the Insurer (so long as the Insurer is not in default of
its obligations under the Policy), or the Indenture Trustee (upon direction to
do so by the holders of Notes evidencing not less than 25% of the outstanding
principal balance of the Notes if the Insurer is in default under the Policy),
by notice then given in writing to the Servicer may, terminate all of the rights
and obligations of the Servicer under this Agreement. In addition, if a Trigger
Event (as defined in the Insurance Agreement) shall have occurred, the Insurer
may (A) require that the Indenture Trustee or the Administrator, on behalf of
the Owner Trustee, deliver a notice of termination to the Servicer and appoint a
successor Servicer designated by the Insurer in such notice pursuant to Section
14.02; (B) require that the Indenture Trustee or the Administrator, on behalf of
the Owner Trustee, amend certificates of title relating to the Financed Vehicles
and take other actions to identify the Indenture Trustee (on behalf of the
Secured Parties) as the new secured party on such certificates of title; (C) as
provided in the Insurance Agreement, require that the Servicer or successor
Servicer or the Indenture Trustee instruct Obligors in respect of the
Receivables to remit payment on the Receivable directly to the Owner Trustee or
a separate account established exclusively for the Trust; and (D) as provided in
the Insurance Agreement, compel transfer by the Servicer of all Receivables
Files and, if applicable, certain rights in respect of servicing systems assets
to the Insurer or to the successor Servicer designated by the Insurer. On or
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Certificate, the Notes or the Receivables or otherwise, shall, without further
action, pass to and be vested in the Indenture Trustee (except that the
Indenture Trustee may but shall not be required to make Advances) or such
successor Servicer as may be appointed under Section 14.02 pursuant to and under
this Section 14.01; and, without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related documents,
or otherwise. The predecessor Servicer shall cooperate with the successor
Servicer and the Indenture Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer of electronic records related
to the Receivables in such form as the successor Servicer may reasonably request
and the transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for deposit,
or shall thereafter be received with respect to a Receivable. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section 14.01
shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses.
SECTION 14.02. Appointment of Successor. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 14.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 45 days from the delivery to the Owner Trustee and the Indenture
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the Servicer's resignation or termination hereunder, the Indenture
Trustee shall appoint a successor Servicer, which successor Servicer shall be
reasonably acceptable to the Insurer (so long as the Insurer is not in default
of its obligations under the Policy and the Policy shall be in effect), and the
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Owner Trustee and the Indenture Trustee. In the event that a
successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section 14.02,
the Indenture Trustee without further action shall automatically be appointed
the successor Servicer. Notwithstanding the above, the Indenture Trustee shall,
if it shall be legally unable, or if it is unwilling so to act, appoint, or
petition a court of competent jurisdiction to appoint, any established financial
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automotive receivables, as the successor
to the Servicer under this Agreement and which financial institution is, in the
case of appointment by the Owner Trustee, reasonably acceptable to the Insurer
and the Indenture Trustee.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Monthly
Servicing Fee and all of the rights granted to the predecessor Servicer, by the
terms and provisions of this Agreement. The predecessor Servicer shall be
entitled to be reimbursed for Outstanding Advances.
(c) In connection with such appointment, the Indenture Trustee may make
such arrangements for the successor Servicer out of payments on Receivables it
and such successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of that permitted the original Servicer under
this Agreement. The Indenture Trustee and such successor Servicer shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
SECTION 14.03. Notice of Events of Servicer Default. Upon any notice of
an Event of Servicer Default or upon any termination of, or appointment of a
successor to, the Servicer pursuant to this Article XIV, the Owner Trustee shall
give prompt written notice thereof to the Certificateholder at the address
appearing in the Certificate Register, to the Insurer and to the Indenture
Trustee for further notice thereof to the Noteholders.
SECTION 14.04. Waiver of Past Defaults. The Insurer (so long as the
Insurer is not in default of its obligations under the Policy and the Policy
shall be in effect) or the Indenture Trustee (if the Insurer is in default under
the Policy or the Policy shall have terminated in accordance with its terms)
upon direction from holders of Notes evidencing not less than 51% of the
outstanding principal balance of the Notes may waive any default by the Servicer
in the performance of its obligations hereunder and/or its consequences, except
a default in making any required deposits to or payments from the Collection
Account in accordance with this Agreement; provided, that no waiver of any
default or provision of this Agreement shall become effective without the
consent of the Insurer (unless the Insurer is in default of its obligations
under the Policy). Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Servicer Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
ARTICLE XV
The Owner Trustee
SECTION 15.01. Duties of Owner Trustee. The Owner Trustee, both prior
to and after the occurrence of an Event of Servicer Default, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Servicer Default shall have occurred and shall not
have been cured and, in the case of an Event of Servicer Default described in
clause (i) of Section 14.01, the Owner Trustee has received notice of such Event
of Servicer Default, the Owner Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and shall 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 own affairs.
The Owner Trustee shall execute and deliver, on behalf of the Trust,
each Basic Document to which the Trust is a party and all certificates,
instruments and agreements contemplated thereby. The Owner Trustee shall execute
and authenticate the Certificates in accordance with this Agreement and shall
execute the Notes in accordance with the Indenture.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged) all its responsibilities pursuant to the terms of this Agreement and
to administer the Trust in the interest of the Certificateholder, subject to and
in accordance with the provisions of this Agreement and the other documents to
which the Trust is a party. Without limiting the foregoing, the Owner Trustee
shall, upon written direction of the Certificateholder and on behalf of the
Trust, file and prove any claim or claims that may exist on behalf of the Trust
against the Seller in connection with any claims paying procedure as part of an
insolvency or a receivership proceeding involving the Seller. Notwithstanding
the foregoing, the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the other documents to which the Trust
is a party to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Trust or the Owner
Trustee hereunder or under any other document to which the Trust is a party, and
the Owner Trustee shall not be held liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
Except as expressly provided in the documents to which the Trust is a party, the
Owner Trustee shall have no obligation to administer, service or collect the
Receivables or to maintain, monitor or otherwise supervise the administration,
servicing or collection of the Receivables.
The Owner Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Owner Trustee that shall be specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Owner
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Servicer
Default, and after the curing of all such Events of Servicer Default
that may have occurred, the duties and obligations of the Owner Trustee
shall be determined solely by the express provisions of this Agreement,
the Owner Trustee shall not be liable except for the performance of
such duties and obligations as shall be specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Owner Trustee and, in the absence of bad faith on
the part of the Owner Trustee, or manifest error, the Owner Trustee may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed in any certificates or opinions furnished to the
Owner Trustee and conforming to the requirements of this Agreement;
(ii) The Owner Trustee shall not be liable for an
error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Owner Trustee shall have been negligent in
ascertaining the pertinent facts;
(iii) The Owner Trustee 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 the
Certificateholder relating to the time, method, and place of conducting
any proceeding for any remedy available to the Owner Trustee, or
exercising any trust or power conferred upon the Owner Trustee, under
this Agreement;
(iv) The Owner Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the obligations
of the Servicer referred to in clauses (i) or (ii) of Section 14.01, or
of any failure by the Seller to comply with the obligations of the
Seller referred to in clause (ii) of Section 14.01, unless a
Responsible Officer of the Owner Trustee receives written notice of
such failure (it being understood that knowledge of the Servicer or the
Servicer as custodian, in its capacity as agent for the Owner Trustee,
is not attributable to the Owner Trustee) from the Servicer or the
Seller, as the case may be; and
(v) Without limiting the generality of this Section
or Section 15.04, the Owner Trustee shall have no duty (A) to see to
any recording, filing, or depositing of this Agreement or any agreement
referred to therein 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 rerecording, refiling or redepositing
of any thereof, (B) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (C) 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 Trust, (D) to confirm or
verify the contents of any reports or certificates of the Servicer
delivered to the Trust pursuant to this Agreement believed by the Owner
Trustee to be genuine and to have been signed or presented by the
proper party or parties, or (E) to inspect the Financed Vehicles at any
time or ascertain or inquire as to the performance or observance of any
of the Seller's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as Servicer and as
custodian of the Receivable Files under this Agreement.
The Owner Trustee 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 of the provisions contained in this Agreement shall in any event
require the Owner Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Owner Trustee shall be the successor to,
and be vested with the rights, duties, powers, and privileges of, the Servicer
in accordance with the terms of this Agreement. Except for actions expressly
authorized by this Agreement, the Owner Trustee shall take no action reasonably
likely to impair the security interests created or existing under any Receivable
or to impair the value of any Receivable.
SECTION 15.02. Owner Trustee's Certificate. On or as soon as
practicable after each Payment Date on which Receivables shall be (i) assigned
to UAC pursuant to Section 7.02 or deemed to be assigned to the Seller as a
result of the application of Available Funds in respect of Defaulted Receivables
pursuant to Sections 9.04 and 9.05 or (ii) assigned to the Servicer pursuant to
Section 8.07 or to the Servicer or any other Person designated by the Servicer
pursuant to Section 16.02, the Owner Trustee shall, at the written request of
the Servicer, execute an Owner Trustee's Certificate, substantially in the form
of, in the case of an assignment to UAC, Exhibit 1, or, in the case of an
assignment to the Servicer, Exhibit 2, based on the information contained in the
Servicer's Certificate for the related Collection Period, amounts deposited to
the Collection Account, and notices received pursuant to this Agreement,
identifying the Receivables repurchased or deemed to be repurchased by UAC
pursuant to Section 7.02 or 9.02 or purchased by the Servicer pursuant to
Section 8.07 or the Servicer or any other Person designated by the Servicer
pursuant to Section 16.02 during such Collection Period, and shall deliver such
Owner Trustee's Certificate, accompanied by a copy of the Servicer's Certificate
for such Collection Period to UAC or the Servicer, as the case may be with a
copy to the Indenture Trustee. The Owner Trustee's Certificate shall be an
assignment pursuant to Section 15.03.
SECTION 15.03. Trust's Assignment of Purchased Receivables. With
respect to each Receivable repurchased by UAC pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 8.02, purchased by the Servicer
pursuant to Section 8.07 or the Servicer or any other Person designated by the
Servicer pursuant to Section 16.02, the Trust shall assign, as of the last day
of the Collection Period during which such Receivable became a Defaulted
Receivable or became subject to repurchase by UAC or purchase by the Servicer or
such other Person, without recourse, representation, or warranty, to UAC, the
Servicer or such other Person (as the case may be) all the Trust's right, title,
and interest in and to such Receivables, and all security and documents relating
thereto, such assignment being an assignment outright and not for security. If
in any enforcement suit or legal proceeding it shall be held that the Servicer
may not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce the Receivable, the Owner Trustee
shall, at the Servicer's expense, take such steps as the Owner Trustee deems
necessary to enforce the Receivable, including bringing suit in its name and/or
the name of the Indenture Trustee.
SECTION 15.04. Certain Matters Affecting the Owner Trustee. Except as
otherwise provided in Section 15.01:
(i) The Owner Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution, Officers'
Certificate, Servicer's Certificate, certificate of auditors, or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(ii) The Owner Trustee may consult with counsel and
any written advice or Opinion of 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 written advice or Opinion of Counsel.
(iii) The Owner Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Agreement,
or to institute, conduct, or defend any litigation under this Agreement
or in relation to this Agreement, at the request, order, or direction
of the Certificateholder pursuant to the provisions of this Agreement,
unless the Certificateholder shall have offered to the Owner Trustee
reasonable security or indemnity reasonably satisfactory to the Owner
Trustee against the costs, expenses, and liabilities that may be
incurred therein or thereby. Nothing contained in this Agreement,
however, shall relieve the Owner Trustee of the obligations, upon the
occurrence of an Event of Servicer Default (that shall not have been
cured), 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 man would exercise or use under the circumstances
in the conduct of his own affairs.
(iv) The Owner Trustee 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.
(v) Prior to the occurrence of an Event of Servicer
Default and after the curing of all Events of Servicer Default that may
have occurred, the Owner Trustee 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 to do so by the Insurer or the Indenture Trustee
or holders of Notes evidencing not less than 25% of the outstanding
principal balance of the Notes; provided, however, that if the payment
within a reasonable time to the Owner Trustee 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 Owner Trustee, not
reasonably assured to the Owner Trustee by the security afforded to it
by the terms of this Agreement, the Owner Trustee 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 Servicer or, if paid by the Owner
Trustee, shall be reimbursed by the Servicer upon demand. Nothing in
this clause (v) shall affect the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Obligors.
(vi) The Owner Trustee 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 Owner
Trustee shall not be responsible for any misconduct or negligence
solely attributable to the acts or omissions of the Servicer in its
capacity as Servicer or custodian or the Administrator.
(vii) The Owner Trustee shall have no duty of
independent inquiry, except as may be required by Section 15.01, and
the Owner Trustee may rely upon the representations and warranties and
covenants of the Seller and the Servicer contained in this Agreement
with respect to the Receivables and the Receivable Files.
SECTION 15.05. Owner Trustee Not Liable for Certificate or Receivables.
The recitals contained herein and in the Certificate (other than the certificate
of authentication on the Certificate) shall be taken as the statements of the
Seller or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificate (other than the certificate of authentication on the Certificate),
or of any Receivable or related document. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity, and enforceability of any security interest in any Financed Vehicle or
any Receivable, or the perfection and priority of such a security interest or
the maintenance of any such perfection and priority, or for or with respect to
the efficacy of the Trust or its ability to generate the payments to be
distributed to the Certificateholder or the Noteholders under this Agreement or
the Indenture, including, without limitation: the existence, condition,
location, and ownership of any Financed Vehicle; the existence and
enforceability of any physical damage insurance, lender's single interest
insurance, or credit life or disability and hospitalization insurance with
respect to any Receivable; the existence and contents of any Receivable or any
computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller or the Servicer with any warranty or representation made under
this Agreement or in any related document and the accuracy of any such warranty
or representation prior to the Owner Trustee's receipt of notice or other
discovery of any noncompliance therewith or any breach thereof; any investment
of monies by the Servicer or any loss resulting therefrom (it being understood
that the Owner Trustee shall remain responsible for any Trust property that it
may hold); the acts or omissions of the Seller, the Servicer, or any Obligor; an
action of the Servicer taken in the name of the Owner Trustee; or any action by
the Owner Trustee taken at the instruction of the Servicer. Except with respect
to a claim based on the failure of the Owner Trustee to perform its duties under
this Agreement or based on the Owner Trustee's negligence or willful misconduct,
no recourse shall be had for any claim based on any provision of this Agreement,
the Certificateholder or the Noteholders, or any Receivable or assignment
thereof against the Owner Trustee in its individual capacity, the Owner Trustee
shall not have any personal obligation, liability, or duty whatsoever to any
Certificateholder or the Noteholders or any other Person with respect to any
such claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The Owner
Trustee shall not be deemed to owe any fiduciary duty to the Insurer. The Owner
Trustee shall not be accountable for the use or application by the Seller of any
of the Certificate or Notes or of the proceeds thereof, or for the use or
application of any funds paid to the Seller or the Servicer in respect of the
Receivables.
Notwithstanding the foregoing or any other provision in this Agreement
to the contrary, the Owner Trustee shall be liable in its commercial capacity
for losses attributable to its failure to make payments on Eligible Investments
issued by the Owner Trustee in its commercial capacity as principal obligor and
not as Owner Trustee hereunder, in accordance with the terms of the agreements
or instruments governing any such Eligible Investments.
SECTION 15.06. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes with
the same rights as it would have if it were not the Owner Trustee.
SECTION 15.07. Owner Trustee's and Indenture Trustee's Fees and
Expenses; Indemnification. (a) The Servicer shall pay to the Owner Trustee, and
the Owner Trustee shall be entitled to, such reasonable compensation as shall
have been separately agreed to in writing on or prior to the date hereof (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by this Agreement and in the exercise and performance of any
of the Owner Trustee's powers and duties under this Agreement and the Indenture,
and the Servicer shall pay or reimburse the Owner Trustee upon its request for
all reasonable expenses, disbursements, and advances (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by the Owner Trustee in
accordance with any provisions of this Agreement and the Indenture, except any
such expense, disbursement, or advance as may be attributable to its willful
misfeasance, negligence, or bad faith. The Servicer shall indemnify the Owner
Trustee (in its individual and trust capacities) (which, for purposes of this
section, shall include its directors, officers, employees, and agents) for and
hold it harmless against any loss, liability, claim, action, suit, cost,
disbursement, tax (other than taxes as or resulting from compensation received
for its services as Owner Trustee) or expense incurred without willful
misfeasance, negligence, or bad faith on its part, arising out of or in
connection with the acceptance or administration of the Trust, 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 the Indenture. The Servicer shall pay the fees and expenses
of the Administrator under the Administration Agreement; provided, however, that
the Servicer shall only be required to pay the reasonable fees and expenses of
any successor Administrator or such other fees agreed to in writing by the
Servicer. Additionally, the Seller, pursuant to Section 12.02 and subject to the
limitations set forth therein, and the Servicer, pursuant to Section 13.02,
respectively, shall indemnify the Owner Trustee with respect to certain matters.
This indemnity shall survive the termination of this Agreement and the Indenture
or the termination of the Trust and the resignation or removal of the Owner
Trustee.
(b) The Servicer hereby agrees to pay or reimburse the fees and
expenses of the Indenture Trustee as provided in Section 6.07 of the Indenture.
SECTION 15.08. Eligibility Requirements for Owner Trustee. The Owner
Trustee under this Agreement shall at all times be a corporation (i) having an
office in the same State as the location of the Corporate Trust Office as
specified in this Agreement; (ii) organized and doing business under the laws of
such State or the United States of America; (iii) authorized under such laws to
exercise corporate trust powers; (iv) having a net worth of at least
$50,000,000; (v) subject to supervision or examination by federal or State
authorities; and (vi) the long-term unsecured debt of which is rated at least
Baa3 or which is approved by the Insurer and each Rating Agency. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 15.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Owner Trustee shall cease to be eligible in accordance with the provisions
of this Section 15.08, the Owner Trustee shall resign immediately in the manner
and with the effect specified in Section 15.09.
SECTION 15.09. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer, with the prior written consent of the Insurer, shall
promptly appoint a successor Owner Trustee, by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 15.08 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then the Servicer may remove the Owner Trustee. If it shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Servicer shall promptly appoint a successor Owner Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the Owner
Trustee so removed and one copy to the successor Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 15.09
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 15.10.
SECTION 15.10. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 15.09 shall execute, acknowledge, and deliver to
the Servicer and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed, or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. Any
successor Owner Trustee appointed hereunder shall file an amendment to the
Certificate of Trust with the Delaware Secretary of State reflecting the name
and principal place of business of such successor Owner Trustee in the State of
Delaware. The predecessor Owner Trustee shall deliver to the successor Owner
Trustee all documents and statements held by it under this Agreement; and the
Servicer and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 15.10 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 15.08.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 15.10, the Servicer shall mail notice of the successor of such
Owner Trustee under this Agreement to the Indenture Trustee and to the Holder of
the Certificate at its address as shown in the Certificate Register. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Servicer.
SECTION 15.11. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
15.08, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 15.12. Appointment of Co-Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Owner Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Owner
Trustee to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person, in such capacity and for the benefit of the Certificateholder, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 15.12, such powers, duties, obligations, rights, and trusts as the
Servicer and the Owner Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case an Event of Servicer Default
shall have occurred and be continuing, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 15.08 and no notice to the Certificateholder
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 15.10.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations
conferred or imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee
or co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) No trustee under this Agreement shall be
personally liable by reason of any act or omission of any other
trustee under this Agreement; and
(iii) The Servicer and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XV. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign, or be removed, all of its
estates, properties, rights, remedies, and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor Owner Trustee.
SECTION 15.13. Representations and Warranties of Owner Trustee. The
Owner Trustee makes the following representations and warranties on which the
Seller, the Certificateholder and the Secured Parties may rely:
(i) Organization and Existence. The Owner Trustee is
a national banking corporation with a principal place of business in
the State of Delaware and is authorized to engage in a banking and
trust business under such laws.
(ii) Power and Authority. The Owner Trustee has full
power, authority, and legal right to execute, deliver, and perform this
Agreement, and shall have taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement.
(iii) Duly Executed. This Agreement has been duly
executed and delivered by the Owner Trustee and constitutes the legal,
valid, and binding agreement of the Owner Trustee, enforceable in
accordance with its terms, except as such enforceability may be limited
by (i) bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereinafter
in effect relating to the enforcement of creditors' rights in general,
as such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship, receivership
or similar occurrence affecting the Owner Trustee, and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as well as concepts of
reasonableness, good faith and fair dealing.
ARTICLE XVI
Termination
SECTION 16.01. Termination of the Trust. The respective obligations and
responsibilities of the Seller, the Servicer and the Owner Trustee created
hereby shall terminate and the Trust created by this Agreement shall dissolve
upon (i) written notice to the Owner Trustee from the Servicer at any time after
the disposition of the Trust corpus as of the last day of any Collection Period
at the direction of the Servicer, at its option, pursuant to Section 16.02, or
(ii) the payment to all Noteholders and the Insurer of all amounts required to
be paid to them pursuant to this Agreement, the Indenture and the Insurance
Agreement (as set forth in writing by the Insurer) and the disposition of all
property held as part of the Trust; provided, however, that the Trust shall
terminate one year and one day following the date of the occurrence of (i)
above, if on the date of such occurrence, UAC's Consolidated Tangible Net Worth
is less than $45,000,000, plus 50% of UAC's cumulative Consolidated Net Income
(with no reduction for losses) from and after August 31, 1995; provided,
further, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the date as of which this Agreement is
executed. The Servicer shall promptly notify the Owner Trustee and Indenture
Trustee in writing of any prospective termination pursuant to this Section
16.01. Notwithstanding the foregoing, the Trust shall continue and the Indenture
Trustee shall pursue recovery of any Preference Amounts under the Policy and the
distribution of the same to Noteholders until the Policy terminates by its own
terms.
SECTION 16.02. Optional Disposition of All Receivables. On any Payment
Date (after giving effect to any payments to be made on such Payment Date) on
which the Note Balances will be equal to or less than 10% of the Initial Note
Balances, the Servicer shall have the option to cause the Owner Trustee to sell
(to the Servicer or any other person designated by the Servicer) the corpus of
the Trust at a price (the "Optional Disposition Price") equal to the fair market
value of the Receivables, but not less than the sum of (x) 100% of the
outstanding Note Balances (including any overdue principal or interest thereon),
(y) accrued and unpaid interest on such amount computed at a rate equal to the
weighted average interest rate applicable to the Notes then outstanding, and (z)
all amounts due and owing to the Insurer under this Agreement, the Indenture and
the Insurance Agreement. Any such purchase will be effective as of the end of
the Collection Period which relates to the Payment Date on which the repurchase
occurs. The proceeds of such sale will be deposited into the Collection Account
for distribution to the Indenture Trustee (and, to the extent applicable, the
Insurer) on the next succeeding Payment Date. In connection with such
disposition, the Servicer is required to pay any unpaid fees and expenses of the
Owner Trustee and the Indenture Trustee that it would otherwise have been
entitled to pursuant to this Agreement. The Servicer shall notify the Owner
Trustee and the Indenture Trustee on or before the Determination Date if the
Note Balances as of the related Payment Date will be less than or equal to 10%
of the Initial Note Balances. The Servicer shall notify the Owner Trustee in
writing on or before the Determination Date if the Servicer intends to exercise
its option to purchase the corpus of the Trust pursuant to this Section 16.02.
Such price shall be deposited to the Collection Account in immediately available
funds by 11:00 a.m., New York City time, on the Payment Date and, upon notice to
the Owner Trustee of such deposit, the Owner Trustee shall transfer the
Receivables and the Receivable Files to the purchaser, whereupon the Certificate
shall no longer evidence any right or interest in the Receivables or any
proceeds thereof.
ARTICLE XVII
Miscellaneous Provisions
SECTION 17.01. Amendment. This Agreement may be amended by the Seller,
the Servicer, the Insurer (so long as an Insurer Default shall not have occurred
and be continuing and the Policy shall be in effect) and the Owner Trustee,
without the consent of the Certificateholder or the Noteholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, or to add
any other provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of the
Certificateholder or the Secured Parties.
Except as provided in the foregoing paragraph, (i) no amendment of this
Agreement shall be effective without the prior written consent of the Insurer
and the holders of 51% of the outstanding Note Balances, (ii) no amendment to
this Agreement shall be recognized or be effective without the written consent
of the Owner Trustee and receipt by the Owner Trustee of an Opinion of Counsel
to the effect that such amendment will not cause the Trust to be treated as an
association taxable as a corporation or as a publicly-traded partnership, (iii)
the Indenture Trustee shall receive a copy of all amendments to this Agreement
and (iv) no amendment which affects the Indenture Trustee shall be effective
without the consent of the Indenture Trustee.
So long as an Insurer Default shall not have occurred and be
continuing, the Insurer shall have the right to exercise all rights, including
voting rights, which the Noteholders are entitled to exercise pursuant to this
Agreement, without any consent of such Noteholders; provided, however, that
without the consent of each Noteholder affected thereby, the Insurer shall not
exercise such rights to amend this Agreement in any manner that would (i) reduce
the amount of, or delay the timing of, collections of payments on the
Receivables or distributions which are required to be made on any Note, (ii)
adversely affect in any material respect the interests of the Holders of any
Notes, or (iii) alter the rights of any such Holder to consent to such
amendment.
Notwithstanding any provision in this Agreement to the contrary, in the
event an Insurer Default shall have occurred and be continuing or the Policy
shall have terminated in accordance with its terms, the Insurer shall not have
the right to take any action under this Agreement or to control or direct the
actions of the Trust, the Seller, the Indenture Trustee or the Owner Trustee
pursuant to the terms of this Agreement, nor shall the consent of the Insurer be
required with respect to any action (or waiver of a right to take action) to be
taken by the Trust, the Seller, the Indenture Trustee, the Owner Trustee or the
Noteholders or the Certificateholders; provided, that the consent of the Insurer
shall be required at all times with respect to any amendment of this Agreement.
Promptly after the execution of any amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Certificateholder and the Indenture Trustee for notification to
each of the Noteholders.
It shall not be necessary for the consent of the Certificateholder or
the Noteholders pursuant to this Section 17.01 to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by the
Certificateholder shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State of the State of Delaware.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in Section 17.02(i)(1). The Owner Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Owner Trustee's own rights,
duties, or immunities under this Agreement.
SECTION 17.02. Protection of Title to Trust.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Trust under this Agreement in the Receivables and in
the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) of the UCC, unless it shall have given the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Owner Trustee and
Indenture Trustee at least 60 days' prior written notice of any relocation of
its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement (in which case the Servicer shall file or cause to be filed such
amendment or continuation statement or new financing statement). The Owner
Trustee and the Indenture Trustee shall be permitted to waive the 60 day notice
period to any shorter period; provided that such UCC financing statements or
amendments have been filed on or before the effective date of any such waiver.
The Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Owner
Trustee, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly with reference to the
particular trust that such Receivable is owned by the Owner Trustee. Indication
of the Owner Trustee's ownership of a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the Receivable
shall have been paid in full, purchased or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust.
(g) The Servicer shall permit the Owner Trustee and its agents at any
time during normal business hours to inspect, audit, and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to Schedule A to this Agreement, including
any supplements thereto, and to each of the Servicer's Certificates furnished
before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment hereto, and upon the delivery of
Subsequent Receivables, an Opinion of Counsel either (a) stating that,
in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee in the
Initial Receivables and the Subsequent Receivables and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (b) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect
such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of such 90th
day, either (a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of
the Owner Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details
are given, or (b) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest. Such
Opinion of Counsel shall also specify any financing statements or
continuation statements or other action necessary (based on the laws in
effect and the facts known as of the date of such opinion) to be
executed and filed on or before March 31 of the following year to
preserve and protect such interest.
SECTION 17.03. Limitation on Rights of Certificateholder. The death or
incapacity of the Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided
in Section 17.01, 17.03 or 17.07) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement except as expressly set forth herein, nor shall anything in this
Agreement set forth, or contained in the terms of the Certificate, be construed
so as to constitute the Certificateholder from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Certificateholder previously shall have given to the Owner Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Certificateholder requests in writing to the Owner
Trustee to institute such action, suit, or proceeding in its own name as Trustee
under this Agreement and shall have offered to the Owner Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Owner Trustee, for 30 days after its
receipt of such notice, request, and offer of indemnity, shall have neglected or
refused to institute any such action, suit, or proceeding and during such 30-day
period no direction inconsistent with such written request has been given to the
Owner Trustee.
SECTION 17.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed within the State of Delaware, and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 17.05. Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Seller to Xxxxxxx X. Xxxxxxxx, UAC Securitization
Corporation, 0000 Xxxxxx Xxxxx Xxxx, Xxxxx 0000-X, Xxxxxx Xxxxxxx, Xxxxxxx
00000, facsimile (000) 000-0000 or at such other address as shall be designated
by the Seller in a written notice to the Servicer or Trustee; (b) in the case of
the Servicer to Xxxxxxx X. Xxxx, Union Acceptance Corporation, 000 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, facsimile (000) 000-0000, (c) in
the case of the Owner Trustee, at the Corporate Trust Office, (d) in the case of
the Insurer, MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000, facsimile (000) 000-0000, Attention: Insured Portfolio Management,
Structured Finance and (e) in the case of the Indenture Trustee at the Indenture
Trustee Office. Unless otherwise provided herein, any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Certificateholder or Noteholders shall
receive such notice.
SECTION 17.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 17.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 12.03 and 13.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Seller or the Servicer
without the prior written consent of the Owner Trustee and the
Certificateholder.
SECTION 17.08. Certificate Nonassessable and Fully Paid. The
Certificateholder shall not be personally liable for obligations of the Trust.
The interests represented by the Certificate shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Owner Trustee pursuant to Section 11.02, the
Certificate shall be deemed fully paid and nonassessable.
SECTION 17.09. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer, UAC and the Owner Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Trust or the Seller, acquiesce, petition or
otherwise invoke or cause the Trust or the Seller to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Trust or the Seller under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or the
Seller or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust or the Seller.
SECTION 17.10. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 17.11. Third Party Beneficiary. This Agreement shall inure to
the benefit of the Insurer, the Indenture Trustee and their successors and
assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
UAC SECURITIZATION CORPORATION,
as Seller
By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
TITLE: President
UNION ACCEPTANCE CORPORATION,
as Servicer
By /s/ Xxxxxxx X. Xxxx
----------------------------------
TITLE: Vice President
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
as Owner Trustee
By /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------
TITLE: Vice President
Accepted and agreed to as of the day and year first above written.
BNY MIDWEST TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
By /s/ Xxxxxxx Xxxxx
----------------------------------
TITLE: Assistant Vice President
[SCHEDULES AND EXHIBITS OMITTED]
