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SECURITY AGREEMENT
among
UNION ACCEPTANCE FUNDING CORPORATION
as Seller
ENTERPRISE FUNDING CORPORATION,
as Company,
UAFC-1 CORPORATION,
as Debtor
UNION ACCEPTANCE CORPORATION,
Individually and as Collection Agent
and
BANK OF AMERICA, N.A.,
as Collateral Agent, Administrative Agent, Agent and Bank Investor
Dated as of May 25, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms.......................2
SECTION 1.2 Other Terms................................27
SECTION 1.3 Computation of Time Periods................27
ARTICLE II
GRANT OF SECURITY INTEREST AND SETTLEMENTS
SECTION 2.1 Grant of Security Interest.................27
SECTION 2.2 Carrying Costs, Fees and Other
Costs and Expenses....................28
SECTION 2.3 Allocations of Collections;
Reserve Account Advances;
Servicer Advances.....................28
SECTION 2.4 Liquidation Settlement Procedures..........31
SECTION 2.5 Fees.......................................32
SECTION 2.6 Protection of Interest of the
Collateral Agent......................32
SECTION 2.7 Payments on Receivables; Application of
Payments..............................33
SECTION 2.8 Payments and Computations, Etc.............34
SECTION 2.9 Reports....................................34
SECTION 2.10 Collection Account........................34
SECTION 2.11 Prefunding Account; Prefunding Interest
Reserve Account; Interest Reserve
Deposits; Interest Reserve Advances;
Reimbursements........................36
SECTION 2.12 Prefunding Account and Prefunding Interest
Reserve Account Withdrawals...........38
SECTION 2.13 Yield Supplement Account, Deposits;
Withdrawals...........................39
SECTION 2.14 Reserve Account; Withdrawals; Releases....42
SECTION 2.15 Optional Release..........................44
i
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties
of the Debtor.........................47
SECTION 3.2 Representations and Warranties of the
Collection Agent......................51
SECTION 3.3 Reaffirmation of Representations
and Warranties........................52
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Effectiveness................53
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the
Debtor, the Seller and UAC............56
SECTION 5.2 Negative Covenants of Debtor,
the Seller and UAC....................61
SECTION 5.3 Acceptable Hedging Arrangements............63
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent............64
SECTION 6.2 Duties of Collection Agent.................64
SECTION 6.3 Collection Agent Defaults..................66
SECTION 6.4 Rights After Designation of
New Collection Agent..................66
SECTION 6.5 Responsibilities of the Debtor.............67
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events.........................68
SECTION 7.2 Termination................................70
SECTION 7.3 Proceeds...................................71
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ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Duties of the Collateral Agent.............72
SECTION 8.2 Compensation and Indemnification of
Collateral Agent......................73
SECTION 8.3 Representations, Warranties and
Covenants of the Collateral Agent.....74
SECTION 8.4 Liability of the Collateral Agent..........75
SECTION 8.5 Merger or Consolidation of, or
Assumption of the
Obligations of, the Collateral Agent..77
SECTION 8.6 Limitation on Liability of the Collateral
Agent and Others......................78
SECTION 8.7 Indemnification of the Secured Parties.....78
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Term of Agreement..........................79
SECTION 9.2 Waivers; Amendments........................79
SECTION 9.3 Notices....................................80
SECTION 9.4 Governing Law; Submission to Jurisdiction;
Integration...........................82
SECTION 9.5 Severability; Counterparts.................83
SECTION 9.6 Successors and Assigns.....................83
SECTION 9.7 Waiver of Confidentiality..................84
SECTION 9.8 Confidentiality Agreement..................84
SECTION 9.9 No Bankruptcy Petition Against
the Company...........................84
SECTION 9.10 No Recourse Against Stockholders,
Officers or Directors.................85
SECTION 9.11 Further Assurances........................85
SECTION 9.12 Characterization of the Transactions
Contemplated by the Agreement;
Tax Treatment.........................85
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EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B List of Lock-Box Banks and Lock-Box Accounts
EXHIBIT C Financial Definitions
EXHIBIT D Form of Settlement Statement
EXHIBIT E Form of UAFC-1 Withdrawal Notice
EXHIBIT F List of Actions and Suits
EXHIBIT G Schedule of Locations of Records
EXHIBIT H List of Subsidiaries, Divisions and
Tradenames
EXHIBIT I Form of Opinion of Xxxxxx & Xxxxxxxxx
EXHIBIT J Form of Opinion of Xxxxxx & Xxxxxxxxx
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of May 25,
2000, by and among UNION ACCEPTANCE FUNDING CORPORATION, an Indiana Corporation,
as seller (in such capacity, the "Seller"), UAFC-1 CORPORA TION, a Delaware
corporation, as debtor (in such capacity, the "Debtor"), UNION ACCEPTANCE
CORPORATION, an Indiana corporation ("UAC"), individually and in its capacity as
collection agent (in such capacity, the "Collection Agent"), ENTERPRISE FUNDING
CORPORATION, a Delaware corporation (the "Com pany"), and BANK OF AMERICA, N.A.,
a national banking association ("Bank of America"), individually and as
collateral agent and agent for the Company and the Bank Investors and as
administrative agent (in such capacities, the "Collateral Agent", the "Agent"
and the "Administrative Agent", respectively).
PRELIMINARY STATEMENTS
WHEREAS, subject to the terms and conditions of this
Agreement, the Debtor desires to grant a security interest in and to the
Receivables and related property including the Debtor's interest in certain
retail automotive installment sales contracts;
WHEREAS, pursuant to the Note Purchase Agreement, the Debtor
has issued the Note to the Company and will be obligated to the holder of the
Note to pay the principal of and interest on the Note in accordance with the
terms thereof;
WHEREAS, the Debtor is granting a security interest in the
Collateral to the Collateral Agent, for the benefit of the Secured Parties, to
secure the payment and performance of the Debtor of its obligations under this
Agreement, the Note and the Note Purchase Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Acceptable Hedging Arrangement" means a hedging arrangement
entered into by the Collection Agent or the Debtor, between the Debtor and a
swap counterparty whose long-term debt obligations are rated investment grade by
Xxxxx'x and S&P, in compliance with Section 5.3 hereof, that locks in a fixed
spread of at least 600 basis points lower than the weighted average APR for the
Receivables based upon an amortization schedule determined using a 1.60% ABS
prepayment assumption or such other prepayment assumption as approved by the
Collateral Agent.
"Accrued Interest Component" shall mean, for any Settlement
Period, the Interest Component of all Related Commercial Paper outstanding at
any time during such Settlement Period which has accrued from the first day
through the last day of such Settlement Period, whether or not such Related
Commercial Paper matures during such Settlement Period. For purposes of the
immediately preceding sentence, the portion of the Interest Component of Related
Commercial Paper accrued in a Settlement Period in which Related Commercial
Paper has a stated maturity date that succeeds the last day of such Settlement
Period shall be computed based on the actual number of days that such Related
Commercial Paper was outstanding during such Settlement Period.
"Acquisition Subsidiary" shall mean PAC, UACFC, or any other
wholly-owned subsidiary of UAC which has entered into (i) agreements with
dealers in certain states for the origination or purchase of Receivables, and
(ii) an agreement with UAC pursuant to which UAC acquires all Receivables
originated or purchased by such Acquisition Subsidiary, provided that in the
case of any acquisition subsid iary other than PAC and UACFC, the Collateral
Agent shall have consented to such entity as an Acquisition Subsidiary, after
having had the opportunity to review such entity's agreement with UAC and other
related documentation, such consent not to be unreasonably withheld.
.
2
"Adjusted LIBOR Rate" means, with respect to any Settlement
Period, a rate per annum equal to (x) 0.65% plus (y) the sum (rounded upwards,
if necessary, to the next higher 1/100 of 1%) of (A) the rate obtained by
dividing (i) the applicable LIBOR Rate by (ii) a percentage equal to 100% minus
the reserve percentage used for determining the maximum reserve requirement as
specified in Regulation D (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is applicable to the
Agent during such Settlement Period in respect of eurocurrency or eurodollar
funding, lending or liabilities (or, if more than one percentage shall be so
applicable, the daily average of such percentage for those days in such
Settlement Period during which any such percentage shall be applicable) plus (B)
the then daily net annual assessment rate (rounded upwards, if necessary, to the
nearest 1/100 of 1%) as estimated by the Agent for determining the current
annual assessment payable by the Agent to the Federal Deposit Insurance
Corporation in respect of eurocurrency or eurodollar funding, lending or
liabilities.
"Administrative Agent" shall mean Bank of America, as
administra tive agent.
"Adverse Claim" shall mean a lien, security interest, charge
or encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of voting stock, by contract or
otherwise.
"Agent" shall mean Bank of America, as agent for the Company
and the Bank Investors, and its successors and assigns.
"Aggregate Unpaids" shall mean, at any time, an amount equal
to the sum of (i) the aggregate accrued and unpaid Carrying Costs at such time,
(ii) an amount equal to the Company's existing obligations which comprise
Carrying Costs thereafter, (iii) the Net Investment at such time, and (iv) all
other amounts owed (whether due or accrued) hereunder and under the other
Transaction Documents by the Debtor at such time.
3
"Amended and Restated Security Agreement" shall mean the
Amended and Restated Security Agreement, dated as of May 12, 2000 among UAC, as
Collection Agent, the Seller, UAFCC, the Collateral Agent, MBIA Insurance
Corporation and the Company, as amended and restated.
"Arrangement Fee" shall mean the fee payable by the Debtor to
the Administrative Agent pursuant to Section 2.5 hereof, the terms of which are
set forth in the Fee Letter.
"Available Funds" shall have the meaning specified in Section
2.3 hereof.
"Bank Investors" shall have the meaning specified in the Note
Purchase Agreement.
"Bank of America" shall have the meaning specified in the
preamble hereto.
"Base Rate" shall mean, a rate per annum equal to the greater
of (i) the prime rate of interest announced by the Liquidity Provider from time
to time, changing when and as said prime rate changes (such rate not necessarily
being the lowest or best rate charged by the Liquidity Provider) and (ii) the
rate equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by the
Liquidity Provider from three Federal funds brokers of recognized standing
selected by it plus 2.0%.
"Borrowing Base Percentage" shall mean the sum of (a) the
product of (i) the Prime Percentage and (ii) 98.25%, and (b) the product of (i)
the Non-Prime Percentage and (ii) 87%.
"Business Day" shall mean any day excluding Saturday, Sunday
and any day on which banks in New York, New York, Charlotte, North Carolina,
Little Rock, Arkansas, Indianapolis, Indiana, or Bonita Springs, Florida are
authorized or required by law to close.
4
"Carrying Costs" shall mean for any Settlement Period the sum
of:
(i) the sum of the dollar amount of the Company's obligations
for such Settlement Period determined on an accrual basis in accordance with
generally accepted accounting principles consistently applied
(a) to pay interest with respect to the Transferred Interest
pursuant to the provisions of the Liquidity Provider Agreement (such interest to
be calculated based on the Adjusted LIBOR Rate, if available, otherwise to be
calcu lated at the Base Rate), outstanding at any time during such Settlement
Period accrued from the day of the acquisition of the related Transferred
Interest through the last day of such Settlement Period whether or not such
interest is payable during such Settlement Period;
(b) without duplication of the amounts described in clause (a)
above, to pay interest, calculated at the Base Rate, with respect to amounts
disbursed by the Credit Support Provider in respect of Defaulted Receivables or
in respect of shortfalls between the Assignment Amount obtained by the Company
upon the assignment of the Transferred Interest to the Bank Investors and the
Net Investment, outstanding at any time during such Settlement Period accrued
from the first day through the last day of such Settlement Period whether or not
such interest is payable during such Settlement Period;
(c) to pay the Accrued Interest Component of Related
Commercial Paper with respect to any Settlement Period (it being understood that
to the extent the Company has obtained funding under the Liquidity Provider
Agree ment or a Credit Support Agreement, the Company will not obtain
duplicative funding in the commercial paper markets);
(d) to pay the Dealer Fee;
(e) to pay any servicing compensation payable to a successor
Collection Agent appointed pursuant to Section 6.1 of this Agreement;
(f) to reimburse any successor Collection Agent for any
Interest Reserve Advances made by such successor Collection Agent and not
previously reimbursed;
5
(g) to pay any past due amounts not paid in clauses (a), (b),
(c), (e) and (f) with respect to prior Settlement Periods;
(h) to pay the costs of the Company with respect to the Yield
Protection Provision; and
(ii) the Program Fee, the Administrative
Fee, and Liquidity Fee accrued from the first day through the last day
of such Settle ment Period whether or not such amount is payable during
such Settlement Period.
During any Settlement Period during which the Bank Investors
have (x) advanced funds with respect to a Funding or (y) acquired an interest in
the Note, in lieu of the amounts described in clauses (i)(c) and (i)(d) above,
Carrying Costs shall include interest on the daily average Net Investment for
the related Settlement Period at the Adjusted LIBOR Rate, or if such rate is
unavailable, at the Base Rate, or if a Termination Event shall have occurred and
be continuing, at the Base Rate plus 2.00%.
"Closing Date" shall mean May 25, 2000.
"Collateral" shall have the meaning specified in Section 2.1
hereof.
"Collateral Agent" shall mean Bank of America, as collateral
agent for the Secured Parties, and its successors and assigns.
"Collections" shall mean, with respect to any Receivable, all
cash collections and other cash proceeds of such Receivable, including, without
limita tion, all Finance Charges, if any, and any refunded portion of extended
warranty protection plan costs or of insurance costs (for example, physical
damage, credit life or disability) included in the original amount financed
under such Receivable, and cash proceeds of Related Security with respect to
such Receivable, provided that amounts received in respect of a Receivable which
constitute, in accordance with the Credit and Collection Policy, a payment of a
late payment charge, insufficient funds charge or a prepayment charge will not
be considered a Collection and shall be retained by the Collection Agent and not
deposited into the Collection Account.
"Collection Account" shall mean the account established by the
Collateral Agent, for the benefit of the Secured Parties, pursuant to Section
2.10.
6
"Collection Agent" shall mean at any time the Person then
authorized pursuant to Section 6.1 to service, administer and collect
Receivables.
"Collection Agent Default" shall have the meaning specified in
Section 6.3.
"Commercial Paper" shall mean the promissory notes of the
Company issued by the Company in the commercial paper market.
"Commitment" shall have the meaning specified in the Note
Purchase Agreement.
"Commitment Termination Date" shall mean March 1, 2001 or such
later date to which the Commitment Termination Date may be extended by the
Debtor, the Agent and the Bank Investors not later than 45 days prior to the
then current Commitment Termination Date.
"Company" shall have the meaning specified in the preamble
hereto.
"Conduit Assignee" shall have the meaning specified in the
Note Purchase Agreement.
"Contract" shall mean any and all retail installment sales
contracts or installment notes and security agreements relating to the sale of a
new or used automobile, light duty truck or van and other writings related
thereto now existing and hereafter created or acquired by UAC or an Acquisition
Subsidiary and assigned from time to time (i) to the Seller pursuant to the UAFC
Sale and Purchase Agree ment and subsequently assigned from the Seller to the
Debtor pursuant to the UAFC- 1 Sale and Purchase Agreement or (ii) to the Debtor
from a Warehouse pursuant to a Warehouse Transfer Agreement.
"Credit and Collection Policy" shall mean the Collection
Agent's credit and collection policy or policies and practices relating to
"prime" and "non- prime" automobile installment sales contracts, existing on the
date hereof and referred to in Exhibit A attached hereto, as amended,
supplemented or otherwise modified and in effect from time to time in compliance
with Section 5.2(d).
"Credit Support Agreement" shall mean the agreement between
the Company and the Credit Support Provider evidencing the obligation of the
Credit
7
Support Provider to provide credit support to the Company in connection with the
issuance by the Company of Commercial Paper.
"Credit Support Provider" shall mean the Person or Persons who
will provide credit support to the Company in connection with the issuance by
the Company of Commercial Paper.
"Cut-Off Date" shall mean May 25, 2000.
"Dealer Fee" shall mean the fee payable by the Debtor to the
Collat eral Agent, pursuant to Section 2.5 hereof, the terms of which are set
forth in the Fee Letter.
"Debtor" shall have the meaning specified in the preamble
hereto.
"Defaulted Receivable" shall mean, for any Settlement Period,
a Receivable: (i) as to which any payment or part thereof (in excess of $10.00),
remains unpaid for 120 days or more as of the last day of such Settlement
Period; (ii) which has been or should have been identified by the Collection
Agent as uncollectible in accordance with the Collection Agent's customary
practices on or before the last day of such Settlement Period; or (iii) as to
which the related Financed Vehicle has been repossessed from the Obligor.
"Delinquent Receivable" shall mean a Receivable: (i) as to
which any payment, or part thereof (provided that such part is in excess of
$10.00), remains unpaid for more than thirty (30) days from the due date for
such payment and (ii) which is not a Defaulted Receivable.
"Determination Date" shall mean, with respect to each
Remittance Date, the second Business Day preceding such Remittance Date.
"Eligible Institution" shall mean the Collateral Agent or any
other depository institution organized under the laws of the United States or
any one of the States thereof including the District of Columbia, the deposits
in which are insured by the FDIC and which at all times has a short-term
unsecured debt rating of at least "A-1+" and "P-1" from Standard & Poor's and
Xxxxx'x, respectively, and of at least "F-1+" from Fitch, if such institution is
rated by Fitch.
8
"Eligible Investments" shall mean (a) negotiable instruments
or securities represented by instruments in bearer or registered or in
book-entry form which evidence (i) obligations fully guaranteed by the United
States of America; (ii) time deposits in, or bankers acceptances issued by, any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch or agency
of any foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
certificates of deposit or short-term deposits, if any, or long-term unsecured
debt obligations (other than any such obligation whose rating is based on
collateral or on the credit of a Person other than such institution or trust
company) of such depository institution or trust company shall have a credit
rating from Xxxxx'x and Standard & Poor's of at least "P-1" and "A-1+", respec
tively, and from Fitch of at least "F-1+", if such investment is rated by Fitch,
in the case of the certificates of deposit or short-term deposits, or a rating
not lower than one of the two highest investment categories granted by Xxxxx'x
and Standard & Poor's and Fitch, if such investment is rated by Fitch; (iii)
certificates of deposit having, at the time of the investment or contractual
commitment to invest therein, a rating from Xxxxx'x and Standard & Poor's of at
least "P-1" and "A-1+", respec tively, and from Fitch of at least "F-1", if such
certificates of deposit are rated by Fitch; or (iv) investments in money market
funds rated in the highest investment category, (b) demand deposits in the name
of the Secured Parties or the Collateral Agent on behalf of the Secured Parties
in any depository institution or trust company referred to in (a)(ii) above, (c)
commercial paper (having original or remaining maturities of no more than 30
days) having, at the time of the investment or contrac tual commitment to invest
therein, a credit rating from Xxxxx'x and Standard & Poor's of at least "P-1"
and "A-1+", respectively, and from Fitch of at least "F-1", if such commercial
paper is rated by Fitch, (d) Eurodollar time deposits having a credit rating
from Xxxxx'x and Standard & Poor's of at least "P-1" and "A-1+", respec tively,
and from Fitch of at least "F-1", if such deposits are rated by Fitch, and (e)
repurchase agreements involving any of the Eligible Investments described in
clauses (a)(i), (a)(iii) and (d) hereof so long as the other party to the
repurchase agreement has at the time of the investment therein, a rating from
Xxxxx'x and Standard & Poor's of at least "P-1" and "A-1+", respectively, and
from Fitch of at least "F-1", if such party is rated by Fitch.
"Eligible Receivable" shall mean, at any time, any Receivable:
9
(i) (A) which shall have been either (x)
originated by or through a factory authorized dealer, a nationally
recognized rental car outlet, or a nationally recognized used car
superstore, in each case located in the United States and which,
together with the Contract related thereto, shall have been validly
assigned by such dealer to an Acquisition Subsidiary or to UAC pursuant
to the terms of such Contract, for the retail sale of the related
Financed Vehicle in the ordinary course of its business, shall have
been validly assigned to UAC if such Receivable had been assigned by
such a dealer to an Acquisition Subsidiary (other than PAC) or to PFC
if such Receivable had been assigned by such a dealer to PAC or UAC
d/b/a PAC, shall have been fully and properly executed by the parties
thereto, and shall have been advanced directly to or for the benefit of
the Obligor for the purchase of the related Financed Vehi cle, (y)
originated by an Acquisition Subsidiary or UAC for the retail sale of
the related Financed Vehicle in the ordinary course of its business,
shall have been validly assigned to UAC if such Receivable had been
originated by an Acquisition Subsidiary (other than PAC) or to PFC if
such Receivable had been assigned by such a dealer to PAC or UAC d/b/a
PAC, shall have been fully and properly executed by the parties
thereto, and shall have been advanced directly to or for the benefit of
the Obligor for the purchase of the related Financed Vehi cle, or (z)
repurchased by UAC from a trust pursuant to a ten percent call
provision in a Securitization (B) shall have been sold (x) by UAC to
the Seller pursuant to the UAFC Sale and Purchase Agreement and shall
have been sold by UAFC to the Debtor pursuant to the UAFC-1 Sale and
Purchase Agreement or (y) to the Debtor from another Warehouse pursuant
to a Warehouse Transfer Agreement, and, in either case, to which the
Debtor has good title thereto, free and clear of all Adverse Claims and
(C) the Contract related to which shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for the realization against the collateral of
the benefits of the security provided thereby;
(ii) the Obligor of which is recorded in the
Collection Agent's records as having a United States billing address,
is a natural person, and is not a government or a governmental subdi
vision or agency;
10
(iii) which is not a Defaulted Receivable at
the time of the initial creation of an interest of the Company therein;
(iv) which is not a Delinquent Receivable at
the time of the initial creation of an interest of the Company therein;
provided, however, that if a Receivable is a Delinquent Receivable at
the time of initial creation of an interest of the Company and at any
time subsequently is not a Delinquent Receivable, such Receivable may
become an Eligible Receivable from such time going forward;
(v) which, according to the Contract related
thereto, shall provide for level monthly payments (provided that the
payment in the first or last month in the life of the Receivable may be
minimally different from such level payment) that fully amortize the
amount financed over the original term;
(vi) the Contract related thereto shall pro
vide for the calculation of interest payable thereunder under either
the "simple interest" or "Rule of 78's" or the "sum of the periodic
time balances" method;
(vii) the Contract related to which provides
for no more than 84 monthly payments;
(viii) which is an "eligible asset" as
defined in Rule 3a-7 under the Investment Company Act of 1940, as
amended;
(ix) which is "chattel paper" within the
meaning of Article 9 of the Relevant UCC, and which is secured by a
first priority perfected lien on the related Financed Vehicle, free and
clear of any Adverse Claim or for which all necessary steps to result
in such a first priority perfected lien shall have been taken;
(x) which is denominated and payable only in
United States dollars in the United States;
(xi) which arises under a Contract that,
together with the Receivable related thereto, is in full force and
effect and constitutes the legal, valid and binding obligation of the
related
11
Obligor enforceable against such Obligor in accordance with its terms
and is not subject to any offset, counterclaim or other defense at such
time;
(xii) which, together with the Contract
related thereto, does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to usury laws, the Federal Truth-
in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act, Regula tions B
and Z of the Federal Reserve Board, various state adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws) and with respect to which no part of the Contract related thereto
is in violation of any such law, rule or regulation in any material
respect;
(xiii) which (A) satisfies all applicable
requirements of the Credit and Collection Policy and is a Prime Receiv able or a
Non-Prime Receivable, (B) arises under a Contract which does not require the
Obligor under such Contract to consent to the transfer of the rights and duties
of the Debtor and Seller under such Contract, and which does not contain a
confidentiality provision that purports to restrict the ability of the Company
to exercise its rights under this Agreement, including, without limitation, its
right to review the Contract, (C) arises under a Contract with respect to which
UAC, any Acquisition Subsidiary, the Seller and the Debtor have each performed
all obligations required to be performed by them thereun der, and delivery of
the Financed Vehicle to the related Obligor has occurred, and (D) complies with
such other criteria and requirements as the Company may from time to time
reasonably specify to the Debtor following sixty (60) days' notice;
(xiv) the Obligor of which has been directed
to make all payments to a specified account of the Collection Agent;
and
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(xv) with respect to any Receivable that is
an Undocumented Receivable, all documentation required to be received
after the origination of such Receivable pursuant to the Credit and
Collection Policy has been received and accepted by the Collection
Agent within twenty (20) days following the date of the initial draft
drawn by the originating dealer on UAC in connection with the
origination of such Receivable.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
thereunder.
"ERISA Affiliate" means, with respect to any Person, (i) any
corpora tion which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code of 1986 (as
in effect from time to time, the "Code")) as such Person; (ii) a trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person; or (iii) a member of the same
affiliated service group (within the meaning of Section 414(n) of the Code) as
such Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above.
"Event of Bankruptcy", with respect to any Person, shall mean
(i) that such Person shall generally not pay its debts as such debts become due
or shall admit in writing its inability to pay its debts generally or shall make
a general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Person seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composi tion of it or its debts under any law
relating to bankruptcy, insolvency or reorganiza tion or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or (ii) if such Person is a corporation, such Person or any Subsidiary shall
take any corporate action to authorize any of the actions set forth in the
preceding clause (i).
"Excess Delinquent Receivables Balance" shall mean an amount,
calculated on the day a Take-Out occurs and for each day until the next Take-Out
occurs, equal to the excess, if any, of (i) the Outstanding Balance of all
Delinquent Receivables which are also Eligible Receivables at any time of
determination over (ii) the product of 2.5% and the Net Receivables Balance
(calculated without giving effect to clause (iv) of the definition thereof) at
any time of determination; provided,
13
that if the Excess Delinquent Receivables Balance shall, at any time since the
most recent Take-Out, be less than or equal to zero, the Excess Delinquent
Receivables Balance shall be deemed to be zero from such time until the next
Take-Out shall occur.
"Face Amount" shall mean (i) with respect to Commercial Paper
issued on a discount basis, the face amount stated therein, and (ii) with
respect to Commercial Paper which is interest-bearing, the principal amount of
and interest accrued and to accrue on such Commercial Paper to its stated
maturity.
"Facility Limit" shall mean $200,000,000 provided, however,
that if on June 30, 2000, the facility limit referenced in the Amended and
Restated Security Agreement has not been reduced to $350,000,000 then Facility
Limit shall mean $50,000,000.
"Fee Letter" shall mean the letter agreement dated the date
hereof between the Debtor, the Collateral Agent and the Company, as amended,
modified or supplemented from time to time.
"Finance Charges" shall mean, with respect to a Contract, any
finance, interest or similar charges owing by an Obligor or another Person
pursuant to such Contract.
"Financed Vehicle" shall mean, with respect to a Receivable,
any new or used automobile, van or light-duty truck, together with all
accessories thereto, securing the related Obligor's indebtedness thereunder.
"Fitch" shall mean Fitch IBCA, Inc.
"Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Funding Date" shall have the meaning specified in the Note
Purchase Agreement.
"Initial Funding" shall have the meaning specified in the Note
Purchase Agreement.
14
"Interest Component" shall mean, with respect to Commercial
Paper issued (i) on a discount basis, the portion of the Face Amount of such
Commercial Paper representing the discount incurred in respect thereof and (ii)
on an interest- bearing basis, the interest payable on such Commercial Paper at
its maturity pro vided, however, that if any component of such rate is a
discount rate in calculating the Interest Component, the rate used to calculate
such component of such rate shall be a rate resulting from converting such
discount rate to an interest bearing equiva lent rate per annum.
"Interest Reserve Advance" shall mean, with respect to any
Remit tance Date, the amount, if any (which shall not be less than zero), equal
to (i) the product of (x) the daily weighted average amount on deposit in the
Prefunding Account during the preceding Settlement Period, (y) the Targeted
Interest Rate for such Settlement Period (on a per annum basis) and (z) a
fraction the numerator of which is the number of days in such Settlement Period
and the denominator of which is 360 minus (ii) the amount earned during the
preceding Settlement Period on amounts on deposit in the Prefunding Account.
"Interest Reserve Deposit" shall have the meaning specified in
Section 2.11(b).
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"LIBOR Rate" means, with respect to any Settlement Period, the
rate determined by Bank of America to be (i) the per annum rate for deposits in
U.S. Dollars for a term of one month which appears on the Telerate Page 3750
Screen on the day that is two London Business Days prior to the first day of
such Settlement Period except, that if such first day of the Settlement Period
is not a Business Day, then the first preceding day that is a Business Day
(rounded upwards, if necessary, to the nearest 1/100,000 of 1%), (ii) if such
rate does not appear on the Telerate Page 3750 Screen, the term "LIBOR Rate"
with respect to that Settlement Period shall be the arithmetic mean (rounded
upwards, if necessary, to the nearest 1/100,000 of 1%) of the offered quotations
obtained by Bank of America from four major banks in the London interbank market
selected by Bank of America (the "Reference Banks") for deposits in U.S. Dollars
to leading banks in the London interbank market as of approximately 11:00 a.m.
(London time) on the day that is two London Business Days prior to the first day
of such Settlement Period, unless such first day of the
15
Settlement Period is not a Business Day, in which case, the first preceding day
that is a Business Day or (iii) if fewer than two Reference Banks provide Bank
of America with such quotations, the LIBOR Rate shall be the rate per annum
which Bank of America determines to be the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/100,000 of 1%) of the offered quotations which
leading banks in New York City selected by Bank of America are quoting in the
New York interbank market on such date for deposits in U.S. dollars to the
Reference Banks or; if fewer than two such quotations are available, to leading
European and Canadian banks.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing.
"Liquidity Provider Agreement" shall mean the agreement
between the Company and the Liquidity Provider evidencing the obligation of the
Liquidity Provider to provide liquidity support to the Company in connection
with the issuance by the Company of Commercial Paper.
"Liquidity Provider" shall mean the Person or Persons who
provide liquidity support to the Company in connection with the issuance by the
Company of Commercial Paper.
"Lock-Box Account" shall mean an account or accounts
maintained by the Collection Agent at a Lock-Box Bank for the purpose of
receiving Collections from Receivables.
"Lock-Box Bank" shall mean each of the banks set forth in
Exhibit B hereto and such banks as may be added thereto or deleted therefrom
pursuant to Section 2.6.
"London Business Day" shall mean any day which is a Business
Day and also is a day on which commercial banks are open for international
business (including dealings in U.S. Dollar deposits) in London.
16
"Majority Investors" shall have the meaning specified in the
Note Purchase Agreement.
"Minimum Required APR" shall mean, as of any date of determina
tion, the greater of (i) the money market yield of the rate quoted on a discount
basis for commercial paper having a thirty (30) day maturity, as made available
and subsequently published by the Board of Governors of the Federal Reserve
System in H.15(519) under the heading "Commercial Paper" plus 1.40% per annum
and (ii) the current yield to maturity of the United States Treasury Security
having a maturity of two years (or if there is more than one such security, the
average of the yields to maturity thereof) plus 1.63% per annum.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
-------
"Negative Carry" shall mean, with respect to any Prefunding
Date, a percentage equal to (i) for the amount on deposit in the Prefunding
Account by the Company, (a) the money market yield of the rate quoted on a
discount basis for commercial paper having a thirty (30) day maturity, as made
available and subse quently published by the Board of Governors of the Federal
Reserve System in H.15(519) under the heading "Commercial Paper", plus (b)
1.40%, minus (c) the Targeted Interest Rate; (ii) for the amount on deposit in
the Prefunding Account funded by the Bank Investors, (a) the LIBOR Rate, plus
(b) 1.40%, minus (c) the Targeted Interest Rate.
"Net Asset Test" shall have the meaning specified in the Note
Purchase Agreement.
"Net Investment" shall mean the sum of (i) all amounts paid to
the Debtor for the Initial Funding plus (ii) the cumulative amount of Prefunding
Deposits minus (iii) the aggregate amount released from the Prefunding Account
and applied to reduce the Net Investment pursuant to Section 2.12, minus (iv)
the aggregate amount released from the Prefunding Interest Reserve Account and
applied to reduce the Net Investment pursuant to Section 2.12, minus (v) the sum
of (a) the aggregate amount of Receipts of Principal on deposit in the
Collection Account, plus (b) the aggregate amount of Receipts of Principal which
have been received by the Collec tion Agent on or prior to any date of
determination but have not yet been deposited in the Collection Account (if such
Receipts of Principal are not so deposited therein within 2 Business Days of the
receipt thereof by the Collection Agent the "Net Investment" shall thereupon be
recalculated, effective as of the original date of
17
determination, without giving effect to such Receipts of Principal) plus (c) the
aggregate amount of Collections received and applied by the Agent to reduce such
Net Investment pursuant to Section 2.3, minus (vi) the aggregate amount of funds
received and applied to reduce such Net Investment pursuant to Sections 2.7 and
2.15 ; provided that the Net Investment shall be restored in the amount of any
Collections so received and applied if at any time the distribution of such
Collections is re scinded or must otherwise be returned for any reason.
"Net Negative Hedging Amounts" shall mean, as of any
Remittance Date, an amount equal to the amount by which (i) the aggregate amount
of losses incurred by the Debtor on any Acceptable Hedging Arrangements during
the related Settlement Period and any prior Settlement Periods exceeds (ii) the
sum of (x) the aggregate amount of gains retained by the Collection Agent on any
Acceptable Hedging Arrangements during the related Settlement Period and any
prior Settlement Periods and (y) amounts distributed to the Collection Agent
pursuant to Section 2.3(a)(x) on any prior Remittance Date.
"Net Receivables Balance" means at any time the Outstanding
Balance of the Eligible Receivables at such time reduced by the sum of (i) the
amount by which the aggregate Outstanding Balance of Undocumented Receivables
exceeds $6,750,000, plus (ii) the aggregate Outstanding Balance of all Eligible
Receivables which are Defaulted Receivables, plus (iii) the amount, if any, by
which the aggregate outstanding Balance of all Eligible Receivables which are
Non-Prime Receivables exceeds the product of (x) 20% and (y) the Outstanding
Balance of all Eligible Receivables, plus (iv) the Excess Delinquent Receivables
Balance.
"Net Yield" shall mean, as calculated on each Determination
Date, the product of (i) 12 and (ii) a fraction, the numerator of which is (x)
the Available Funds less the aggregate amount of Carrying Costs accrued during
the related Settlement Period less the aggregate Outstanding Balance of all
Receivables which became Defaulted Receivables during the related Settlement
Period net of the aggregate amount of recoveries received during such Settlement
Period, and the denominator of which is (y) the average daily Net Investment for
such Settlement Period. The Net Yield shall be expressed as a percentage.
"Non-Prime Percentage" shall mean 100% less the Prime
Percentage.
"Non-Prime Receivable" shall mean an account which is
identified on the Collection Agent's master servicing record as a "type 15"
account.
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"Note" shall have the meaning specified in the Note Purchase
Agree ment.
"Noteholder's Percentage" shall mean an amount equal to the
Borrow ing Base Percentage less the product of (i) 2, and (ii) the amount, if
any, by which the Target Net Yield exceeds the Net Yield as of the most recent
Determination Date. The Noteholder's Percentage shall initially be equal to the
Borrowing Base Percent age.
"Note Purchase Agreement" shall mean that certain Note
Purchase Agreement, dated as of May 25, 2000, among the Debtor, the Company, the
Bank Investors and the Agent.
"Obligor" shall mean a Person obligated to make payments
pursuant to a Contract.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumen tality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Other Transferor" shall have the meaning specified in the
Note Purchase Agreement.
"Outstanding Balance" of a Receivable at any time shall mean
the amount advanced under the related Contract toward the purchase price of the
related Financed Vehicle and related costs minus all Receipts of Principal
received with respect to such Receivable.
"PAC" shall mean Performance Acceptance Corporation, an
Indiana corporation, and its successors and assigns, including UAC and UAC d/b/a
PAC.
"Person" shall mean any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization, enterprise,
government or any department or agency of any government.
"PFC" shall mean Performance Funding Corporation, a Delaware
corporation, and its successors and assigns.
19
"Potential Termination Event" shall mean an event which but
for the lapse of time or the giving of notice, or both, would constitute a
Termination Event.
"Prefunding Account" shall mean the account established by the
Collateral Agent, for the benefit of the Secured Parties, pursuant to Section
2.11.
"Prefunding Date" shall mean the 1st calendar day of each
month (or if such day is not a Business Day, the next succeeding Business Day)
and such other dates which are agreed upon by the Debtor and the Agent at least
one Business Day in advance; provided, that there shall in no event be more than
two additional Prefunding Dates in any period between any two Remittance Dates
(without Agent approval) and provided, further, that no Prefunding Date shall
occur on and after the Termination Date.
"Prefunding Deposit" shall have the meaning specified in the
Note Purchase Agreement.
"Prefunding Interest Reserve Account" shall mean the account
established by the Collateral Agent, for the benefit of the Secured Parties,
pursuant to Section 2.11.
"Prefunding Period" shall mean, with respect to any Prefunding
Date, the period from such date to the succeeding Prefunding Date.
"Prime Percentage" shall mean the Net Receivables Balance of
all Prime Receivables divided by the Net Receivables Balance.
"Prime Receivable" shall mean an account which is identified
on the Collection Agent's master servicing record as a "type 25" account.
"Proceeds" shall mean "proceeds" as defined in Section
9-306(1) of the Relevant UCC.
"Receipts of Interest" shall mean that portion of the
Collections with respect to the Receivables which are properly designated as
Finance Charges in accordance with the Credit and Collection Policy, together
with (i) any recoveries in respect of Defaulted Receivables and Related Security
with respect thereto, and (ii) amounts considered to be "Receipts of Interest"
pursuant to Sections 2.7, 2.10 and 2.15.
20
"Receipts of Principal" shall mean all Collections, other than
those designated as Receipts of Interest, together with all amounts considered
to be "Receipts of Principal" pursuant to Sections 2.7 and 2.15, provided, that
Collections constituting a refund of all or any portion of extended warranty
protection plan costs or of insurance costs (for example, physical damage,
credit life or disability) in cluded in the original amount financed under a
Receivable (other than a Defaulted Receivable) shall be considered a Receipt of
Principal.
"Receivable" shall mean indebtedness owed to the Debtor by an
Obligor (without giving effect to any transfer hereunder) under a Contract which
is a Prime Receivable or a Non-Prime Receivable, whether constituting an
account, chattel paper, instrument or general intangible, arising out of or in
connection with the sale of new or used automobiles, vans or light-duty trucks
or the rendering of services by the originating dealer in connection therewith,
and includes the right of payment of any Finance Charges and other obligations
of the Obligor with respect thereto. Notwithstanding the foregoing, once the
Collateral Agent has released its security interest in a Receivable and the
related Contract pursuant to Section 2.7 or Section 2.15 hereof, it shall no
longer constitute a Receivable hereunder.
"Records" shall mean all Contracts and other documents, books,
records and other information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be amended,
supplemented or otherwise modified and is effect from time to time.
"Related Commercial Paper" shall mean Commercial Paper issued
by the Company the proceeds of which were used to acquire, or refinance the
acquisi tion of, an interest in the Net Investment with respect to the Debtor.
"Related Security" shall mean with respect to any Receivable:
(i) all of the Debtor's interest in the Fi
nanced Vehicles (including repossessed vehicles) or in any document or
writing evidencing any security interest in any Financed Vehicle and
all of the Debtor's interest in all rights to payment under all
insurance contracts with respect to a Financed Vehicle, including,
21
without limitation, any monies collected from whatever source in
connection with any default of an Obligor with respect to a Financed
Vehicle and any proceeds from claims or refunds of premiums on any
physical damage, lender's single interest, credit life, disability and
hospitalization insurance policies covering Financed Vehicles or
Obligors;
(ii) all of the Debtor's interest in all
other security interests or liens and property subject thereto from
time to time, if any, purporting to secure payment of the Contract
related thereto, whether pursuant to such Contract or otherwise,
together with all financing statements signed by an Obligor and
security agreements describing any collateral securing such Contract;
(iii) all of the Debtor's interest in all
guaran ties, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable, whether pursuant to the Contract related to such Receiv
able or otherwise;
(iv) all of the Debtor's interest in all
rights to payment under all service contracts and other contracts and
agree ments associated with such Receivables and all of the Debtor's
interest in all recourse rights against the dealers (excluding any
rights in any dealer reserve);
(v) all of the Debtor's interest in all
Records, documents and writings evidencing or related to such
Receivables or the Contracts; and (vi) all Proceeds of the foregoing.
"Relevant UCC" shall mean the Uniform Commercial Code as from
time to time in effect in all applicable jurisdictions.
"Remittance Date" shall mean, for each Settlement Period, the
tenth (10th) day of the next succeeding calendar month; provided that if such
day is not a Business Day, then the Remittance Date shall be the next succeeding
Business Day.
22
"Required Reserve Account Amount" shall mean, at any time of
determination, an amount equal to the product of (a) 1.00% and (b) the Net
Invest ment divided by the Noteholder's Percentage.
"Required Yield Deposit Amounts" shall have the meaning
specified in Section 2.13(a).
"Reserve Account" shall have the meaning specified in Section
2.14 hereof.
"Reserve Account Advance" shall mean any advance made pursuant
to Section 2.3(c) from amounts on deposit in the Reserve Account.
"Reserve Account Guaranty" shall mean the amount available
pursuant to any guaranty of the amount required to be kept in the Reserve
Account pursuant to this Agreement and the other Transaction Documents. Any
Reserve Account Guaranty shall be approved by the Collateral Agent and the
Majority Investors.
"S&P" shall mean Standard & Poor's Ratings Services, a
Division of the McGraw Hill Companies.
"Secured Parties" shall mean the Company and the Bank
Investors.
"Securities Intermediary" shall mean Bank of America, and any
other entity acting in the capacity of a "securities intermediary" as defined in
Section 8- 102(14) of the UCC.
"Securitization" shall mean a structured finance transaction
estab lished by or on behalf of the Debtor or an affiliate, to which the
released Contracts and related Receivables will be subject.
"Seller" shall gave the meaning specified in the preamble
hereto.
"Servicer Advance" shall have the meaning specified in Section
2.3(c).
"Servicing Fee" shall mean, for any Settlement Period, the fee
payable pursuant to Section 2.3 on the related Remittance Date by the Company to
23
the Collection Agent, in an amount equal to 1.0% per annum on the amount of the
aggregate Outstanding Balance of the Receivables as of the first day of such
Settle ment Period.
"Settlement Period" shall mean any calendar month, provided
that the initial Settlement Period shall commence on the Cut-Off Date and end on
June 30, 2000.
"Settlement Statement" shall mean a report, in substantially
the form of Exhibit D or in such other form as is mutually agreed to by the
Debtor and the Company, furnished by the Collection Agent to the Collateral
Agent and the Agent on each Determination Date pursuant to Section 2.9.
"Subsidiary" of a Person shall mean any corporation more than
50% of the outstanding voting securities of which, and any partnership more than
50% of the partnership interests of which, shall at any time be owned or
controlled, directly or indirectly, by such Person or by one or more
Subsidiaries of such Person or any similar business organization which is so
owned or controlled.
"Take-Out" shall mean the release, pursuant to Section 2.15(a)
or 2.15(d), by the Collateral Agent of Receivables and the Contracts related
thereto. In order to qualify as a "Take-Out", the Take-Out Percentage shall be
no greater than 10%.
"Take-Out Percentage" shall mean, with respect to any
Securitization, the percentage equal to (A) 100% minus (B) a fraction (expressed
as a percentage) equal to (i) the aggregate Outstanding Balance of the
Receivables being released pursuant to such Securitization divided by (ii) the
Net Receivables Balance as of the cut-off date applicable to such
Securitization.
"Targeted Interest Rate" for any Settlement Period shall mean
2.5% or such lower rate set forth in a written notice by the Agent to the Debtor
and the Collection Agent, such other rate to be effective three (3) Business
Days after the date of such notice.
"Target Net Yield" shall mean 5.0%
"Termination Date" shall mean the earliest of (i) that
Business Day designated by the Debtor to the Agent as the Termination Date at
any time following
24
60 days' written notice to the Agent, (ii) the date of termination of the
liquidity commitment of the Liquidity Provider under the Liquidity Provider
Agreement, (iii) the date of termination of the commitment of the Credit Support
Provider under the Credit Support Agreement, (iv) the day on which a Termination
Event occurs pursuant to Section 7.1, (v) two business days prior to the
Commitment Termination Date, or (vi) March 1, 2001, unless extended prior to
such date by an agreement between the Company, the Agent and the Bank Investors.
"Termination Event" shall mean an event described in Section
7.1.
"Transaction Documents" shall mean this Agreement, the Note
Purchase Agreement, the Note, the UAFC Sale and Purchase Agreement, UAFC-1 Sale
and Purchase Agreement, the Fee Letter and all other agreements, documents and
instruments delivered pursuant thereto or in connection therewith.
"Transferred Interest" shall mean, at any time of
determination, an undivided interest in the Note.
"UAC" shall mean Union Acceptance Corporation, an Indiana
corporation, and its successors and assigns.
"UACFC" shall mean UAC Finance Corporation, an Indiana corpora
tion, and its successors and assigns.
"UAFC Sale and Purchase Agreement" shall mean the sale and
purchase agreement dated as of May 25, 2000, between the Seller, as purchaser,
and UAC, as seller, as amended, modified or supplemented from time to time
hereafter.
"UAFC-1 Corporation" shall have the meaning specified in the
preamble hereto.
"UAFC-1 Sale and Purchase Agreement" shall mean the sale and
purchase agreement dated as of May 25, 2000 between the Seller, as seller, and
Debtor, as purchaser, as amended, modified or supplemented from time to time
thereafter.
"UAFCC" shall mean UAFC Corporation, a Delaware corporation
formerly known as Union Acceptance Funding Corporation, a Delaware corporation.
25
"UARC" shall mean Union Acceptance Receivables Corporation, a
Delaware corporation, and its successors and assigns, or any other special
purpose company agreed to by UAC and the Agent.
"Undocumented Receivable" shall mean any Receivable as to
which, at the time of the assignment of such Receivable and the Contract related
thereto to UAC or an Acquisition Subsidiary by the dealer which originated such
Receivable or at the time of the origination of such Receivable by UAC or such
Acquisition Subsidiary, the Collection Agent shall not have received from the
dealer and the related Obligor all documentation required to be received by the
Collection Agent pursuant to the Credit and Collection Policy.
"Warehouse" shall mean the Debtor, UAFCC or UAFC-2 Corpora
tion.
"Warehouse Transfer" shall mean the transfer of Receivables
pursuant to a Warehouse Transfer Agreement.
"Warehouse Transfer Agreement" shall mean any agreement
pursuant to which the Debtor purchases Receivables from or sells Receivables to
a Xxxx house, which agreement shall be acceptable to the Agent.
"Withdrawal Notice" shall have the meaning specified in
Section 2.12(a).
"Year-end Receivable Transfer" shall mean the transfer of
Receiv xxxxx from the Debtor to UARC or to the Debtor from UARC solely for the
purpose of minimizing the Florida intangible tax.
"Yield Protection Provision" shall mean the compensation of
the Company and the Bank Investors by the Debtor of the Company's and the Bank
Investors' costs due to increased taxes, reserve and funding costs as described
in Section 4.2 of the Note Purchase Agreement.
"Yield Supplement Account" shall mean the account established
by the Collateral Agent, for the benefit of the Company, pursuant to Section
2.13.
26
SECTION 1.2 Other Terms. Unless the context otherwise
requires, all capitalized terms used herein and not otherwise defined herein
shall have the meanings specified in the Note Purchase Agreement, and shall
include in the singular number the plural and in the plural number the singular.
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles. All terms used in
Article 9 of the Relevant UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9.
SECTION 1.3 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" shall mean "from and
including" and the words "to" and "until" each shall mean "to but excluding."
ARTICLE II
GRANT OF SECURITY INTEREST AND SETTLEMENTS
SECTION 2.1 Grant of Security Interest. As security for the
prompt and complete payment of the Note and the performance of all of the
Debtor's obligations under the Note, the Note Purchase Agreement, this Agreement
and the other Transaction Documents, the Debtor hereby grants to the Collateral
Agent, for the benefit of the Secured Parties, without recourse except as
provided herein, a security interest in and continuing Lien on all of the
Debtor's property, in existence on the Cut-Off Date or thereafter acquired and
wherever located, including, without limitation, all of its right, title and
interest in, to and under all accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, cash, deposit accounts,
certificates of deposit, goods, letters of credit, securities, invest ment
property, financial assets or security entitlements (all of the foregoing,
collec tively, the "Collateral"); provided, that once the Collateral Agent has
released its interest in a Receivable and the related Contract pursuant to
Section 2.7 or 2.15 hereof, such Receivable and related Contract shall no longer
be part of the Collateral.
In connection with such grant, the Debtor agrees to record and
file, at its own expense, financing statements with respect to the Collateral
now existing and hereafter created meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
first priority security interest of the Collateral Agent in the Collateral, and
to deliver a file-stamped copy of such
27
financing statements or other evidence of such filing (which may, for purposes
of this Section 2.1, consist of telephone confirmation of such filing) to the
Collateral Agent on or prior to the Closing Date. In addition, the Debtor and
the Collection Agent agree to clearly and unambiguously xxxx their respective
general ledgers and all accounting records and documents and all computer tapes
and records to show that the Collateral, including that portion of the
Collateral consisting of the Receiv xxxxx and the related Contracts, have been
pledged to the Collateral Agent hereunder.
SECTION 2.2 Carrying Costs, Fees and Other Costs and Expenses.
Notwithstanding the limitation on recourse under Section 2.1, the Debtor shall
pay, as and when due in accordance with this Agreement, all fees hereunder,
Carrying Costs, all amounts payable pursuant to Article VIII hereof, if any, all
fees specified in the Fee Letter, and the Servicing Fee. On each Remittance
Date, the Debtor shall pay to the Company and the Bank Investors, as applicable,
an amount equal to the accrued and unpaid Carrying Costs for the related
Settlement Period together with, in respect of the Company, an amount equal to
the discount accrued on the Company's Commercial Paper notes to the extent such
notes were issued in order to fund the Net Investment in an amount in excess of
the amount of the Initial Funding or in excess of any deposit made by the
Company to the Prefunding Account. The Debtor shall pay to the Agent, for the
account of the Company, on each day on which Commercial Paper is issued by the
Company, the Dealer Fee. Nothing in this Agreement shall limit in any way the
obligations of the Debtor to pay the amounts set forth in this Section 2.2.
SECTION 2.3 Allocations of Collections; Reserve Account
Advances; Servicer Advances.
(a) On each Determination Date, the Collection Agent shall
allocate all Collections received during the preceding Settlement Period as
Receipts of Interest or Receipts of Principal. On each Remittance Date, Receipts
of Interest plus all earnings during the related Settlement Period on amounts on
deposit in the Prefunding Account plus all amounts deposited in the Prefunding
Interest Reserve Account with respect to the related Settlement Period (together
with any earnings thereon during such Settlement Period) to the extent not
required pursuant to Section 2.11 to be distributed to the Collection Agent in
reimbursement for previously advanced Interest Reserve Advances plus any
Interest Reserve Advance made by the Collection Agent on such Remittance Date
pursuant to Section 2.11 plus any payments to the Debtor under an Acceptable
Hedging Arrangement (it being understood that prior to a Termination Event and
provided that Acceptable Hedging
28
Arrangements are in place, proceeds from the termination of any Acceptable Hedg
ing Arrangements in connection with a Securitization will be released to the
Debtor and not constitute "Available Funds") plus all amounts to be applied
pursuant to Section 2.14(c)(ii)(y) (the aggregate of such amounts in respect of
any remittance date, the "Available Funds") shall be applied, without
duplication, by the Collection Agent as follows:
(i) first, (A) to pay any amounts due under
any Acceptable Hedging Arrangement, pro rata, in accordance with the
amounts due thereunder, and (B) to the Reserve Account, in the amount
of Reserve Account Advances related to such Settlement Period;
(ii) second, to the extent of any remaining
Available Funds, to the retention by the Collection Agent of any
Servicer Advances related to such Settlement Period;
(iii) third, to the extent of any remaining
Available Funds, to pay to the Collateral Agent all fees and expenses
due pursuant to Section 8.2 hereof;
(iv) fourth, to the extent of any remaining
Available Funds, to the Agent, for the account of the Company and the
Bank Investors, as applicable, an amount equal to all accrued and
unpaid Carrying Costs in respect of such Settlement Period and with
respect to any previous Settlement Period to the extent not previously
paid;
(v) fifth, to the extent of any remaining
Available Funds, to the payment of the Agent, for the account of the
Company and the Bank Investors, as applicable, to be applied in
reduction of the Net Investment, of the amount by which to satisfy the
Net Asset Test;
(vi) sixth, to the extent of any remaining
Available Funds, to the Reserve Account, to the extent necessary to
cause the amount on deposit therein to equal the Required Reserve
Account Amount;
29
(vii) seventh, to the extent of any
remaining Available Funds, to the Yield Supplement Account to
the extent of any amounts previously withdrawn therefrom
pursuant to Section 2.3(c) and not previously reimbursed to
the credit of the Yield Supple ment Account; provided that
there shall be no requirement to xxxx xxxxx such account for
amounts withdrawn therefrom related to any Receivables and the
related Contracts with respect to which the Collateral Agent
shall have released its interest therein pursuant to Section
2.7 or Section 2.15;
(viii) eighth, to the extent of any
remaining Available Funds, to the payment of the Collection
Agent (if the Collection Agent is UAC), of the Servicing Fee
for such Settlement Period and any unreimbursed Interest
Reserve Advances made by the Collection Agent and not
previously reimbursed;
(ix) ninth, to the extent of any remaining
Available Funds, on or after the Termination Date, such
remaining Available Funds shall be paid to the Agent, for the
account of the Company and the Bank Investors, as applicable,
in reduction of the Net Investment;
(x) tenth, to the extent of any remaining
Available Funds, to the Collection Agent, in reimbursement for
any Net Negative Hedging Amounts incurred by the Collection
Agent and not previously reimbursed;
(xi) eleventh, to the extent of any
remaining funds, to the Agent, for the account of the Persons
entitled thereto, an amount equal to all other amounts owed
under the Note Purchase Agreement; and
(xii) twelfth, any remaining Available Funds
shall be paid to the Debtor.
(b) On any Business Day on which Commercial Paper
issued in connection herewith matures, the Collection Agent may apply and remit
to the Agent, in reduction of the Net Investment, any Receipts of Principal
received on or prior to such day and not previously remitted to the Agent in any
such case in an
30
amount not to exceed the principal component of such maturing Commercial Paper.
On each Remittance Date, the Collection Agent shall apply and remit to the
Agent, in reduction of the Net Investment, all Receipts of Principal received
with respect to the prior Settlement Period and not previously remitted to the
Agent pursuant to the preceding sentence.
(c) In the event that, at any time, the Company does not have
sufficient funds at such time to pay Carrying Costs when due, then, in such
event, there shall be made a Reserve Account Advance equal to the amount of such
deficiency, which amount shall be applied to pay such costs and expenses of the
Company; provided, that such Reserve Account Advance shall be made only to the
extent of funds then on deposit in the Reserve Account and shall not include any
amount pursuant to a Reserve Account Guaranty. In the event that any such
Reserve Account Advance is not made by 11:00 a.m. (New York City time) on the
day requested the Collection Agent shall, at the request of the Agent, advance
to the Company an amount equal to such deficiency (each, a "Servicer Advance");
pro vided, that the Collection Agent shall not be required to make any such
Servicer Advance to the extent that the Collection Agent reasonably believes
that it will not be reimbursed for such Servicer Advance pursuant to Section
2.3(a)(ii) on any subsequent Remittance Date. In the event that any such
Servicer Advance is not made by 11:00 a.m. (New York City time) on the day
requested, there shall be withdrawn from the Yield Supplement Account an amount
equal to the amount of such deficiency, which amount shall be applied to pay
such costs and expenses of the Company. In the event that any such payment from
the Yield Supplement Account is not made by 11:00 a.m. (New York City time)
there shall be made a Reserve Account Advance and/or an advance pursuant to any
Reserve Account Guaranty equal to the amount of such deficiency, which amount
shall be applied to pay such costs and expenses of the Company.
SECTION 2.4 Liquidation Settlement Procedures. Following any
date after the Termination Date on which all Aggregate Unpaids have been paid in
full, (i) the Collateral Agent shall be considered to have released its security
interest in and continuing Lien on the Collateral, including all of the
Receivables and Related Security, (ii) the Collection Agent shall pay to the
Debtor any remaining Collections set aside and held by the Collection Agent, and
(iii) the Collateral Agent shall execute and deliver to the Debtor, at the
Debtor's expense, such documents or instruments as are necessary to terminate
the Collateral Agent's security interest in the Collateral, including all of the
Receivables and Related Security and Collections
31
with respect thereto. Any such documents shall be prepared by or on behalf of
the Debtor at the expense of the Debtor.
SECTION 2.5 Fees. Notwithstanding any limitation on recourse
contained in this Agreement, the Debtor shall pay, in the manner and at the time
specified in the Fee Letter, the fees specified in the Fee Letter.
SECTION 2.6 Protection of Interest of the Collateral Agent.
(a) The Debtor agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents and take all actions as may be
necessary or as the Collateral Agent may reasonably request in order to perfect
or protect the Collateral or to enable the Collateral Agent to exercise or
enforce any of its rights hereunder. Without limiting the foregoing, the Debtor
will, upon the request of the Collateral Agent, in order to accurately reflect
the security interest of the Collateral Agent in the Collateral, execute and
file such financing or continuation statements or amendments thereto or
assignments thereof (as permitted pursuant to Section 9.6 hereof) as may be
requested by the Collateral Agent and xxxx its master data processing records
(or to cause such records to be marked) so as to indicate the Collateral Agent's
security interest in the portion of the Collateral consisting of Receivables,
the related Contracts, the Collections and the Related Security with respect
thereto. The Debtor agrees that it shall take all actions necessary to cause UAC
and the Seller to similarly xxxx its records to reflect the sale of the
Receivables and the Contracts to the Seller and the Debtor, as applicable, and
the Collateral Agent's security interest in the Receivables, the related
Contracts, the Collections and the Related Security with respect thereto. The
Debtor shall, at its own expense, upon request of the Collateral Agent, obtain
such additional search reports as the Collateral Agent shall request. To the
fullest extent permitted by applicable law, the Collateral Agent shall be
permitted to sign and file continuation statements and amendments thereto and
assignments thereof without the Debtor's signature. Carbon, photo graphic or
other reproduction of this Agreement or any financing statement shall be
sufficient as a financing statement. The Debtor shall neither change its name,
identity or corporate structure (within the meaning of Section 9-402(7) of the
Relevant UCC as in effect in the State of Florida) nor relocate its chief
executive office or any office where Records are kept unless it shall have: (i)
given the Collateral Agent at least thirty (30) days prior notice thereof and
(ii) prepared at the Debtor's expense and delivered to the Collateral Agent all
financing statements, instruments and other documents necessary to preserve and
protect the Collateral or requested by the Collateral Agent in connection with
such change or relocation. Any filings under the Relevant UCC or otherwise that
are occasioned by such change in
32
name or location shall be made at the expense of the Debtor. On the Closing
Date, the Debtor shall deliver to the Collateral Agent a listing by account
number of the Contracts as of the Cut-Off Date, which listing shall constitute
Schedule A hereto and is hereby incorporated herein by reference. On the second
Business Day after the end of each Settlement Period, the Debtor shall deliver
to the Collateral Agent an updated listing by account number of the Contracts as
of the last day of such Settle ment Period (giving effect to any releases by the
Company pursuant to Section 2.7 or Section 2.15) and such updated list shall
thereupon constitute Schedule A hereto and is hereby incorporated by reference
herein.
(b) The Collection Agent shall instruct all Obligors to cause
all Collections to be deposited directly with a Lock-Box Bank. The Collection
Agent shall not add any bank as a Lock-Box Bank to those listed on Exhibit B
without the consent of the Collateral Agent pursuant to Section 5.2(f). If the
Debtor or the Collection Agent receives any Collections, the Debtor or the
Collection Agent, as applicable, shall immediately, but in any event within two
(2) Business Days of receipt, remit such Collections to a Lock-Box Account.
SECTION 2.7 Payments on Receivables; Application of Payments.
If, on any day,
(a) the Outstanding Balance of a Receivable is either (x)
reduced as a result of any defective, rejected or returned goods or services,
any cash discount, credit, rebate, allowance or other dilution factor, any
billing adjustment or other adjustment, or (y) reduced or canceled as a result
of a setoff or offset in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction); or
(b) any of the representations or warranties in Article III is
no longer true with respect to a Receivable;
then, in either such event, the Collateral Agent shall release its security
interest in and Lien on such Receivable and the related Contract; provided, that
it shall be a condition precedent to any such release that, after giving effect
to such release, the amount on deposit in the Reserve Account is at least equal
to the Required Reserve Account Amount; provided further, that if such release
would result in the Net Asset Test not being satisfied, then as a condition
precedent to such release the Debtor shall deposit into the Collection Account
all Finance Charges accrued with respect to such Receivable as of such time and
an amount equal to the amount which, if applied to
33
the reduction of the Net Investment, would cause the Net Asset Test to be
satisfied. Such amount, excluding any accrued Finance Charges, shall be applied
as a Receipt of Principal pursuant to Section 2.3. All collections of Finance
Charges received with respect to any such released Receivable through the last
day of the Settlement Period in which such Receivable is released shall continue
to constitute Receipts of Interest hereunder.
SECTION 2.8 Payments and Computations, Etc. All amounts to be
paid or deposited by the Debtor or the Collection Agent hereunder shall be paid
or deposited in accordance with the terms hereof no later than 12:00 noon. (New
York City time) on the day when due in immediately available funds; if such
amounts are payable to the Company or the Bank Investors, they shall be paid or
deposited in the Agent's account indicated in Section 9.3, until otherwise
notified by the Agent, the Company or any Bank Investor. The Debtor shall, to
the extent permitted by law, pay to the applicable Secured Parties upon demand,
interest on all amounts not paid or deposited when due to the Secured Parties
hereunder at a rate equal to 2% per annum plus the Base Rate. All computations
of Carrying Costs, interest and all per annum fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days elapsed. Any
computations of amounts payable by the Debtor hereunder to any of the Secured
Parties, the Liquidity Provider or the Credit Support Provider shall be binding
absent manifest error.
SECTION 2.9 Reports. On or before each Determination Date, the
Collection Agent shall prepare and forward to the Collateral Agent and the
Adminis trative Agent, (i) a Settlement Statement as of the end of the preceding
Settlement Period, (ii) if requested by the Collateral Agent or the
Administrative Agent, a computer tape listing by Obligor all Receivables,
together with an aging of such Receivables, and (iii) such other information as
the Collateral Agent or the Adminis trative Agent may reasonably request. The
Agent shall provide to the Debtor, on the day prior to each Determination Date,
a monthly settlement statement containing information relating to the amount of
each obligation of the Company which com prises Carrying Costs for the most
recent Collection Period and the amount of interest earnings on all related
accounts for such Collection Period.
SECTION 2.10 Collection Account. (a) There shall be
established on the Closing Date and maintained, for the benefit of the Secured
Parties, with the Collateral Agent, a segregated account (the "Collection
Account"), bearing a desig nation clearly indicating that the funds deposited
therein are held for the benefit of the Secured Parties. Subject to the terms
hereof, the Collateral Agent shall possess
34
all right, title and interest in and to all funds deposited from time to time in
the Collection Account. The Collateral Agent will maintain the Collection
Account at an Eligible Institution. If the Eligible Institution holding the
Collection Account shall cease to be an Eligible Institution, the Collateral
Agent shall have the right to direct the transfer of the Collection Account to
an Eligible Institution. The Collec tion Agent shall remit daily from the
Lock-Box Account, within two (2) Business Days of receipt, to the Collection
Account all Collections received with respect to any Receivables. On each
Remittance Date, all interest and earnings (net of losses and investment
expenses) on funds on deposit in the Collection Account shall be considered to
be Receipts of Interest and shall be distributed hereunder as such. On the date
on which the Net Investment is zero and all amounts payable hereunder by the
Debtor have been paid in full, any funds remaining on deposit in the Collection
Account shall be paid to the Debtor.
(b) Funds on deposit in the Collection Account shall be
invested in "overnight" Eligible Investments by or at the written direction of
the Debtor, provided that if a Termination Event shall have occurred, such
investments shall be made as directed by the Collateral Agent. Any such written
directions shall specify the particular investment to be made and shall certify
that such investment is an "overnight" Eligible Investment and is permitted to
be made under this Agree ment.
(c) The Collateral Agent agrees that it shall not accept for
credit to the Collection Account any investment as to which it has knowledge of
any adverse claim thereto. Bank of America hereby agrees (and any other
Securities Intermediary holding the Collection Account shall so agree) to comply
with all Entitlement Orders (as defined in Section 8-102 of the 1994 Official
Text of the Uniform Commercial Code) received by it with respect to the
Collection Account from the Collateral Agent.
(d) Funds on deposit in the Collection Account (other than
investment earnings) shall be invested by the Collateral Agent in "overnight"
Eligible Investments that will mature so that such funds will be available, if
needed, on the next day. No Eligible Investment may be liquidated or disposed of
prior to its maturity. All proceeds of any such Eligible Investment shall be
deposited in the Collection Account. Investments may be made in the Collection
Account on any date (provided such investments mature in accordance herewith),
only after giving effect to deposits to and withdrawals from the Collection
Account on such date. Realized losses, if any, on amounts invested in such
Eligible Investments shall be
35
charged against investment earnings on amounts on deposit in the Collection
Account.
(e) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Collection Ac count.
(f) Eligible Investments shall be maintained by the Collateral
Agent in the Collection Account in such manner as may be necessary to maintain
the first priority perfected security interest in favor of the Collateral Agent
on behalf of the Secured Parties. Bank of America, agrees (and any other
Securities Intermediary holding the Collection Account shall so agree) that it
shall not agree to comply with Entitlement Orders (as defined in Section 8-102
of the 1994 version of the Official Text of Article 8 of the Uniform Commercial
Code) with respect to the Collection Account given to it by any Person other
than the Collateral Agent.
SECTION 2.11 Prefunding Account; Prefunding Interest Reserve
Account; Interest Reserve Deposits; Interest Reserve Advances; Reimbursements.
(a) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent,
two segregated accounts (the "Prefunding Account" and the "Prefunding Interest
Reserve Account"), each bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Secured Parties. Subject to
the terms hereof, the Collateral Agent shall possess all right, title and
interest in and to all funds deposited from time to time in the Prefunding
Account and the Prefunding Interest Reserve Account. The Collateral Agent will
maintain the Prefunding Account and the Prefunding Interest Reserve Account at
an Eligible Institution. If the Eligible Institution holding the Prefunding
Account or the Prefunding Interest Reserve Account shall cease to be an Eligible
Institution, the Collateral Agent shall have the right to direct the transfer of
the Prefunding Account or the Prefunding Interest Reserve Account to an Eligible
Institution.
(2) Funds on deposit in the Prefunding Account and the
Prefunding Interest Reserve Account shall be invested by the Collateral Agent in
Eligible Investments by or at the written direction of the Debtor, provided that
if a Termination Event shall have occurred, such investments shall be made as
36
directed by the Collateral Agent. Any such written directions shall specify the
particular investment to be made and shall certify that such investment is an
Eligible Investment and is permitted to be made under this Agreement.
(3) The Collateral Agent agrees that it shall not accept for
credit to the Prefunding Account and the Prefunding Interest Reserve Account any
investment as to which it has knowledge of any adverse claim thereto. Bank of
America, hereby agrees (and any other Securities Intermediary holding the
Prefunding Account or the Prefunding Interest Reserve Account shall so agree) to
comply with all Entitlement Orders (as defined in Section 8-102 of the 1994
Official Text of the Uniform Commercial Code) received by it with respect to the
Prefunding Account or the Prefunding Interest Reserve Account from the
Collateral Agent.
(4) Funds on deposit in the Prefunding Account shall be
invested in "overnight" Eligible Investments and funds on deposit in the
Prefunding Interest Reserve Account shall be invested in Eligible Investments
that mature prior to the Remittance Date. No such Eligible Investment may be
liquidated or disposed of prior to its maturity. All proceeds of any such
Eligible Investment shall be deposited in the Prefunding Account or the
Prefunding Interest Reserve Account, as applicable. Investments may be made in
either account on any date (provided such investments mature in accordance
herewith), only after giving effect to deposits to and withdrawals from such
account on such date. Realized losses, if any, on amounts invested in Eligible
Investments in the Prefunding Account or the Prefunding Interest Reserve Account
shall be charged against investment earnings on amounts on deposit in the
Prefunding Account or the Prefunding Interest Reserve Account, as applicable.
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Prefunding Account and the Prefunding Interest Reserve Account.
(6) Eligible Investments shall be maintained in the Prefunding
Account and the Prefunding Interest Reserve Account by the Collateral Agent in
such manner as may be necessary to maintain the first priority perfected
security interest in favor of the Collateral Agent on behalf of the Secured
Parties. Bank of America, agrees (and any other Securities Intermediary holding
the Prefunding Account or the Prefunding Interest Reserve Account shall so
agree) that
37
it shall not agree to comply with Entitlement Orders (as defined in Section
8-102 of the 1994 version of the Official Text of Article 8 of the Uniform
Commercial Code) with respect to the Prefunding Account or the Prefunding
Interest Reserve Account given to it by any Person other than the Collateral
Agent.
(b) On the Business Day preceding each Prefunding Date, the
Debtor shall deposit in the Prefunding Interest Reserve Account an amount equal
to the product of (i) the Negative Carry for such Prefunding Date, (ii) the
principal component of the amount of Commercial Paper which would be required on
such date to fund the Prefunding Deposit, or if such deposit is to be made by
the Bank Investors, the amount to be advanced by the Bank Investors, and (iii) a
fraction, the numerator of which is the number of days from the Prefunding Date
through the end of the Settlement Period during which such Prefunding Date
occurs and the denomi nator of which is 360 (such amount with respect to a
Prefunding Date, the "Interest Reserve Deposit").
(c) On each Remittance Date, the Collection Agent shall
deposit to the Collection Account an amount equal to the Interest Reserve
Advance, if any, for such Remittance Date. In the event that, on any Remittance
Date, the amount earned over the preceding Settlement Period on amounts on
deposit in the Prefunding Account shall exceed an amount equal to the product of
(i) the daily weighted average amount on deposit in the Prefunding Account
during the preceding Settlement Period, (y) the Targeted Interest Rate (on a per
annum basis) and (z) a fraction, the numerator of which is the number of days in
the related Settlement Period and the denominator of which is 360, the
Collateral Agent shall release such excess amount from the Prefunding Interest
Reserve Account to the Collection Agent in reimbursement for previously advanced
Interest Reserve Advances or, to the extent no such unreimbursed advances exist,
the Collection Agent shall apply such excess amount as part of Available Funds
under Section 2.3(a).
SECTION 2.12 Prefunding Account and Prefunding Interest
Reserve Account Withdrawals.
(a) On any Business Day, upon receipt by the Agent and the
Collateral Agent not later than 11:00 a.m. New York City time of written
certification in substantially the form of Exhibit E (a "Withdrawal Notice")
from the Debtor setting forth, among other things, the amount requested to be
released from the Prefunding Account and certifying that (i) after giving effect
to the amount to be funded with respect to such additional Receivables, the Net
Asset Test shall be
38
satisfied, (ii) the amount on deposit in the Reserve Account shall not be less
than the Required Reserve Account Amount (calculated (x) immediately prior to
the related Prefunding Date and (y) as if such Prefunding Deposit shall have
occurred), (iii) the Debtor shall have made any deposit into the Yield
Supplement Account required pursuant to Section 2.13 in connection with such
Receivables, if any, and (iv) the Collection Agent shall be in compliance with
the requirements of Section 5.3 in respect of such Prefunding Date, the
Collateral Agent shall release to the Debtor the amount requested by the
Collection Agent.
(b) On the last day of each Prefunding Period, all amounts on
deposit in the Prefunding Account (exclusive of earnings thereon) shall be, at
the Debtor's option, either (i) released to the Agent to be applied in reduction
of the Net Investment, or (ii) retained in the Prefunding Account and applied to
reduce the amount of the Prefunding Deposit otherwise required to be made by the
Company or the Bank Investors, as applicable, on the succeeding Prefunding Date.
Notwithstand ing the foregoing however, on the first Remittance Date to occur on
or after the Termination Date, all amounts on deposit, exclusive of earnings
thereon, in the Prefunding Account shall be released to the Agent, for the
account of the Company and the Bank Investors, as applicable, and applied in
reduction of the Net Investment and earnings thereon shall be deposited in the
Collection Account for application as Available Funds.
(c) On each Remittance Date all amounts deposited in the
Prefunding Interest Reserve Account with respect to the related Settlement
Period (together with any earnings on the Prefunding Interest Reserve Account
during such Settlement Period) shall be deposited in the Collection Account for
application as Available Funds.
SECTION 2.13 Yield Supplement Account, Deposits; Withdrawals.
(a) On the day of the Initial Funding with respect to all
Receivables recorded on the Collection Agent's master servicing records as of
such day and on any Business Day thereafter on which a Receivable is recorded on
the Collection Agent's master servicing records, the Debtor shall deposit into
the Yield Supplement Account for each such Receivable with respect to which the
related Contract provides for interest to accrue thereunder at a rate less than
the Minimum Required APR (determined as of the date of such recordation on the
Collection Agent's master servicing records) an amount (each such amount, a
"Required Yield Deposit Amount") equal to the product of (i) the number of
monthly payments
39
originally required under such Contract and (ii) an amount equal to (x) the
scheduled monthly payment on such Contract which would be required to be made by
the Obligor thereunder if such Contract had a rate per annum equal to the
Minimum Required APR minus (y) the scheduled monthly payment on such Contract
which would be required to be made by the Obligor thereunder if such Contract
had a rate per annum equal to the rate set forth in such Contract.
Notwithstanding the forego ing, no Required Yield Deposit Amount need be
deposited to the Yield Supplement Account until the total amount of all
undeposited Required Yield Deposit Amounts equals or exceeds $10,000.
(b) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Company and the Bank Investors, with the
Collat eral Agent, a segregated account (the "Yield Supplement Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Secured Parties. Subject to the terms hereof, the
Collateral Agent shall possess all right, title and interest in and to all funds
deposited from time to time in the Yield Supplement Account. The Collateral
Agent will maintain the Yield Supplement Account at an Eligible Institution. If
the Eligible Institution holding the Yield Supplement Account shall cease to be
an Eligible Institution, the Collateral Agent shall have the right to direct the
transfer of the Yield Supplement Account to an Eligible Institution.
(2) Funds on deposit in the Yield Supplement Account shall be
invested in "overnight" Eligible Investments by or at the written direction of
the Debtor, provided that if a Termination Event shall have occurred, such
investments shall be made as directed by the Collateral Agent. Any such written
directions shall specify the particular investment to be made and shall certify
that such investment is an Eligible Investment and is permitted to be made under
this Agreement.
(3) The Collateral Agent agrees that it shall not accept for
credit to the Yield Supplement Account any investment as to which it has
knowledge of any adverse claim thereto. Bank of America hereby agrees (and any
other Securities Intermediary holding the Yield Supplement Account shall so
agree) to comply with all Entitlement Orders (as defined in Section 8-102 of the
1994 Official Text of the Uniform Commercial Code) received by it with respect
to the Yield Supplement Account from the Collateral Agent.
40
(4) No Eligible Investment in the Yield Supplement Account may
be liquidated or disposed of prior to its maturity. All proceeds of any such
Eligible Investment shall be deposited in the Yield Supplement Account.
Investments may be made in the Yield Supplement Account on any date (provided
such investments mature in accordance herewith), only after giving effect to
deposits to and withdrawals from such account on such date. Realized losses, if
any, on amounts invested in such Eligible Investments shall be charged against
investment earnings on amounts on deposit in the Yield Supplement Account.
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Yield Supplement Account.
(6) Eligible Investments in the Yield Supplement Account shall
be maintained by the Collateral Agent in such manner as may be necessary to
maintain the first priority perfected security interest in the Yield Supplement
Account in favor of the Collateral Agent on behalf of the Secured Parties. Bank
of America agrees (and any other Securities Intermediary holding the Yield
Supplement Account shall so agree) that it shall not agree to comply with
Entitlement Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform Commercial Code) with respect to the
Yield Supplement Account given to it by any Person other than the Collateral
Agent.
(c) In the event that Available Funds with respect to any
Remittance Date are insufficient to provide for the payment of the amounts
described in Sections 2.3(a)(ii), (iv) and (v), the Collateral Agent shall make
a withdrawal from the Yield Supplement Account in the amount of such deficiency
and the proceeds from such withdrawal shall be applied by the Collateral Agent
to the required distributions and payments. Funds may also be released from the
Yield Supplement Account each month in accordance with Section 2.3(c). On any
day on which the Collateral Agent, pursuant to Section 2.7 or Section 2.15,
releases to the Debtor its security interest in a Contract and related
Receivable with respect to which the Debtor deposited funds in the Yield
Supplement Account pursuant to Section 2.13(a), the amount of such deposit
(together with any earnings thereon) less any amounts released from the Yield
Supplement Account in accordance with Section 2.3(c) shall be released to the
Debtor. Upon the occurrence of a Termination Event, all amounts on deposit in
the Yield Supplement Account shall be released to the
41
Agent, for the account of the Company and the Bank Investors, as applicable, and
applied in reduction of the Net Investment.
SECTION 2.14 Reserve Account; Withdrawals; Releases.
(a) (1) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segregated account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess
all right, title and interest in and to all funds deposited from time to time in
the Reserve Account. The Collateral Agent will maintain the Reserve Account at
an Eligible Institution. If the Eligible Institution holding the Reserve Account
shall cease to be an Eligible Institution, the Collateral Agent shall have the
right to direct the transfer of the Reserve Account to an Eligible Institution.
On each Funding Date and each Prefunding Date, the Debtor shall deposit (or
cause to be withheld from proceeds from the issuance of Related Commercial
Paper) to the credit of the Reserve Account an amount equal to an amount
necessary to fund the Reserve Account to the Re quired Reserve Account Amount.
The amount of any Reserve Account Guaranty shall be counted toward the amount of
funds available in the Reserve Account.
(2) Funds on deposit in the Reserve Account shall be invested
in "overnight" Eligible Investments by or at the written direction of the
Debtor, provided that if a Termination Event shall have occurred, such
investments shall be made as directed by the Collateral Agent. Any such written
directions shall specify the particular investment to be made and shall certify
that such investment is an "overnight" Eligible Investment and is permitted to
be made under this Agree ment.
(3) The Collateral Agent agrees that it shall not accept for
credit to the Reserve Account any investment as to which it has knowl edge of
any adverse claim thereto. Bank of America hereby agrees (and any other
Securities Intermediary holding the Reserve Account shall so agree) to comply
with all Entitlement Orders (as defined in Section 8-102 of the 1994 Official
Text of the Uniform Commercial Code) received by it with respect to the Reserve
Account from the Collateral Agent.
(4) No Eligible Investment in the Reserve Account may be
liquidated or disposed of prior to its maturity. All proceeds of any such
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Eligible Investment shall be deposited in the Reserve Account. Investments may
be made in the Reserve Account on any date (provided such investments mature in
accordance herewith), only after giving effect to deposits to and withdrawals
from such account on such date. Realized losses, if any, on amounts invested in
such Eligible Investments shall be charged against investment earnings on
amounts on deposit in the Reserve Account, as applicable.
(5) The Debtor shall provide the Collateral Agent on the date
hereof and from time to time an incumbency certificate or the substantial
equivalent with respect to each officer of the Debtor that is authorized to
provide instructions relating to investments in Eligible Investments in the
Reserve Account.
(6) Eligible Investments shall be maintained by the Collateral
Agent in such manner as may be necessary to maintain the first priority
perfected security interest in favor of the Collateral Agent on behalf of the
Secured Parties. Bank of America agrees (and any other Securities Intermediary
holding the Reserve Account shall so agree) that it shall not agree to comply
with Entitlement Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform Commercial Code) with respect to the
Reserve Account given to it by any Person other than the Collateral Agent.
(b) Funds on deposit in the Reserve Account shall be invested
by the Collateral Agent in "overnight" Eligible Investments that will mature so
that such funds will be available, if needed, on the next day. The Collateral
Agent shall maintain possession of the negotiable instruments or securities, if
any, evidenc ing the Eligible Investments from the time of purchase thereof
until the time of sale or maturity. Such investments shall be held in the name
of the Collateral Agent, for the benefit of the Secured Parties.
(c) (i) In the event that Available Funds with respect to any
Remittance Date and any withdrawals from the Yield Supplement Account are
insufficient to provide for the payment of the amounts described in Sections
2.3(a)(ii), (iv) and (v), the Collateral Agent shall make a withdrawal from the
Reserve Account in the amount of such deficiency and the proceeds from such
withdrawal shall be applied by the Collateral Agent to the required
distributions and payments. Funds may also be released from the Reserve Account
each month in accordance with Section 2.3(c).
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(ii) In the event that on any Remittance Date or day on which
a Securitization occurs after giving effect to clause (c)(i) above, the amount
on deposit in the Reserve Account (calculated as of the related Determination
Date or the date of the Securitization, as applicable) exceeds the Required
Reserve Account Amount, the Collateral Agent shall (x) if no Termination Event
shall have occurred, release to the Debtor an amount equal to the excess of the
amount on deposit in the Reserve Account over the Required Reserve Account
Amount and (y) if a Termina tion Event shall have occurred, apply as part of
Available Funds pursuant to Section 2.3 an amount equal to the excess of the
amount on deposit in the Reserve Account over the Required Reserve Account
Amount.
(iii) After the occurrence of the Termination Date, the day on
which the Net Investment is zero and the Secured Parties shall have received all
Aggregate Unpaids the Collateral Agent shall release to the Debtor all amounts
on deposit in the Reserve Account
SECTION 2.15 Optional Release.
(a) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
the Contracts and the related Receivables (excluding any Contracts and related
Receiv xxxxx booked after the cut-off date applicable to a Securitization or
Warehouse Transfer, on the terms and conditions set forth herein. It shall be a
condition precedent to any such release that (i) the Debtor shall pay to the
Company and the Bank Investors, as applicable, an amount equal to the amount
necessary to cause the Net Asset Test to be satisfied after giving effect to the
proposed release, (ii) the amount to be paid pursuant to clause (i) above shall
(x) not be greater than the principal component of the Company's maturing
Commercial Paper which was issued to fund the Net Investment or the principal
component subject to the funding period utilized by the Bank Investors and the
Liquidity Provider to fund the Net Investment, as applicable and (y) be at least
$5,000,000, (iii) the Debtor shall deposit to the Collection Account an amount
equal to the sum of (x) all unreimbursed Servicer Advances and (y) all interest
costs associated with the Company's Commer cial Paper issued to fund its
interest in the Contracts and related Receivables pro posed to be reassigned or
all interest costs associated with any funding periods utilized by the Bank
Investors or the Liquidity Provider with respect to their respec tive interests
in such Contracts and related Receivables, as applicable, as well as all
Carrying Costs accrued through the date of the maturity of such Commercial Paper
or funding period, (iv) the Debtor shall have given the Agent and the Collateral
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Agent at least ten (10) days prior written notice of its intention to request
release with respect to such Contracts and Receivables, and (v) after giving
effect to such release the amount on deposit in the Reserve Account shall be at
least equal to the Required Reserve Account Amount. It is the intention of the
parties that the Debtor shall pay to the Agent, for the benefit of the Company
and the Bank Investors, as applicable, and the Collection Account, as
applicable, such amounts as are required under this Section on the closing date
of such Securitization or Warehouse Transfer.
The amount described in clause (i) above upon receipt by the
Agent, for the benefit of the Company and the Bank Investors, as applicable,
shall be applied in reduction of the Net Investment. From the amount described
in clause (iii) above an amount equal to unreimbursed Servicer Advances shall be
distributed to the Collection Agent and the remainder of such amounts shall be
remitted to the Agent, for the benefit of the Company and the Bank Investors, as
applicable.
The Debtor shall also be obligated to pay to the Collateral
Agent (i) an amount equal to $5,000 as an administrative fee in connection with
any such assignment and (ii) the reasonable legal fees and expenses of the
Collateral Agent and the Secured Parties arising in connection with any such
assignment.
Upon the deposit to the Collection Account and the payment by
the Debtor of the amounts described in this Section, the Collateral Agent shall
execute and deliver to the Debtor, at the Debtor's expense, such documents or
instruments as are necessary to terminate the Collateral Agent's security
interest in the Receivables and the Contracts related thereto. Any such
documents shall be prepared by or on behalf of the Debtor.
(b) In connection with a Securitization or Warehouse Transfer,
the Debtor shall have the right, from time to time thereafter (but not more
frequently than once per calendar week), on the maturity date of any Commercial
Paper note issued by the Company to fund the Net Investment or upon the termina
tion of any funding period utilized by the Liquidity Provider or the Bank
Investors, as applicable, to require the Collateral Agent to release its
security interest in and Lien on specified Contracts and the related
Receivables, provided that (x) such Contracts and related Receivables are to be
assigned or sold by the Debtor, directly or indirectly, to a structured finance
vehicle established by or on behalf of the Debtor or an affiliate, in connection
with an asset-securitization or other structured financing having a prefunding
(or similar) feature, (y) the aggregate Outstanding Balance of such Receivables
shall be (i) not greater than the principal component of such
45
maturing Commercial Paper or the principal component subject to such funding
period, as applicable and (ii) at least $5,000,000 and (z) the Debtor shall have
given the Agent and the Collateral Agent at least seven (7) days prior written
notice of its intention to effect a release with respect to such Contracts and
Receivables. Any such release shall be in consideration for the deposit by the
Debtor into the Collec tion Account of an amount equal to the sum of (i) the
Outstanding Balance of such Receivables on the day of such assignment plus (ii)
an amount equal to the sum of (x) all unreimbursed Servicer Advances and (y) all
interest costs associated with the Company's Commercial Paper issued to fund its
interest in the Contracts and related Receivables proposed to be reassigned or
all interest costs associated with any funding periods utilized by the Bank
Investors or the Liquidity Provider with respect to their respective interests
in such Contracts and related Receivables, as applicable, as well as all
Carrying Costs accrued through the date of the maturity of such Commercial Paper
or funding period. The amount described in clause (i) above shall be allocated
and applied on such day (whether or not a Remittance Date) as described in
Section 2.3(b) as a Receipt of Principal, and the amount described in clause
(ii) above shall be applied on such day (whether or not a Remittance Date) in
the order of priorities set forth in Section 2.3(a) as a Receipt of Interest (in
which case "Settle ment Period" as used in said Section 2.3(a) shall be
considered to be the period from the last date of the previous Settlement Period
to the date on which the amounts required to be paid under this Section 2.15(b)
are paid). The Debtor shall also be obligated to pay to the Agent (i) an amount
equal to $2,500 as an administrative fee in connection with any such assignment
and (ii) the reasonable legal fees and expenses of the Company, the Collateral
Agent, the Bank Investors and the Adminis trative Agent incurred in connection
with any such release. Upon the deposit to the Collection Account and the
payment by the Debtor of the amounts described in this Section, the Collateral
Agent shall execute and deliver to the Debtor, at the Debtor's expense, such
documents or instruments as are necessary to terminate the Collateral Agent's
interest in the Receivables and the Contracts related thereto. Any such
documents shall be prepared by or on behalf of the Debtor.
(c) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
specified Contracts and the related Receivables on the terms and conditions set
forth herein. It shall be a condition precedent to any such release that,
immediately after such release, (i) the Debtor shall pay to the Company and the
Bank Investors, as applicable, an amount equal to the amount necessary to cause
the Net Asset Test to be satisfied calculated after giving effect to the
proposed release plus all Finance Charges accrued with respect to such
Receivables as of such time and (ii) after giving
46
effect to such release, the amount on deposit in the Reserve Account shall be at
least equal to the Required Reserve Account Amount.
(d) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and Lien on all
of the Contracts and the related Receivables on the terms and conditions set
forth herein. It shall be condition precedent to any such release that (i) the
Debtor shall pay to the Agent, for the benefit of the Company and the Bank
Investors, as applicable, an amount equal to the Net Investment at the time of
such release, (ii) the Debtor shall pay to the Agent, for the benefit of the
Company and the Bank Investors, as applica ble, an amount equal to all interest
costs associated with the Company's Commercial Paper issued to fund the Net
Investment through the date of maturity or all interest costs associated with
all funding periods utilized by the Bank Investors for the Liquidity Provider
with respect to its interest in the Contracts, related Receivables and
Transferred Interest, as applicable, as well as all Carrying Costs accrued
through the date of such release and all other costs which constitute Carrying
Costs which will accrue after such date and (iii) the Debtor shall have given
the Collateral Agent and the Administrative Agent at least thirty (30) days
prior written notice of its intention to effect such a release of the Contracts
and Receivables.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Debtor. The
Debtor represents and warrants to the Collateral Agent and the Secured Parties
that:
(a) Corporate Existence and Power. The Debtor is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate power and all material
govern mental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is now conducted.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Debtor of this Agreement and the
other Transaction Documents are within the Debtor's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (except as
47
contemplated by Section 2.6), and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the Certificate of
Incorporation or Bylaws of the Debtor or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Debtor or result in the
creation or imposition of any lien on assets of the Debtor (except as
contemplated by Section 2.6), or require the consent or approval of, or the
filing of any notice or other documentation with, any governmental authority or
other Person (except as contemplated by Section 2.6).
(c) Binding Effect. Each of this Agreement and the other
Transaction Documents constitutes the legal, valid and binding obligation of the
Debtor, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors.
(d) Perfection. Immediately preceding each Funding, the Debtor
shall be the owner of all of the Receivables, free and clear of all liens,
encumbrances, security interests, preferences or other security arrangement of
any kind or nature whatsoever, except as permitted by this Agreement and the
other Transaction Documents. On or prior to each Funding and each day on which a
Receivable is sold to the Seller by UAC pursuant to the UAFC Sale and Purchase
Agreement or to the Debtor by UAFC pursuant to the UAFC-1 Sale and Purchase
Agreement or pursuant to the Debtor by a Warehouse pursuant to a Warehouse
Transfer Agreement, all financing statements and other documents required to be
recorded or filed in order to perfect and protect (i) the Debtor's interest in
the Receivables, the Contracts related thereto, the Related Security with
respect thereto and all Proceeds thereof against all creditors of and purchasers
from UAC, the Seller, PFC, UAFC, any Warehouse or any Acquisition Subsidiary and
(ii) the Collateral Agent's interest in the Collateral against all creditors of
and purchasers from the Debtor, and all filing fees and taxes, if any, payable
in connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore
furnished by the Debtor (including without limitation, the Settlement
Statements, any reports delivered pursuant to Section 2.9 and UAC's financial
statements) to the Collateral Agent, the Secured Parties, the Administrative
Agent or any of the other Persons party hereto for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Debtor to any such Person will be, true
and accurate in every material respect, on the date such information is stated
or certified.
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(f) Tax Status. All tax returns (federal, state and local)
required to be filed with respect to the Debtor have been filed (which filings
may be made by an Affiliate of the Debtor on a consolidated basis covering the
Debtor and other Persons) and there has been paid or adequate provision made for
the payment of all taxes, assessments and other governmental charges in respect
of the Debtor (or in the event consolidated returns have been filed, with
respect to the Persons subject to such returns).
(g) Action, Suits. Except as set forth in Exhibit F, there are
no actions, suits or proceedings pending, or to the knowledge of the Debtor
threatened, against or affecting the Debtor or any Affiliate of the Debtor or
their respective properties, in or before any court, arbitrator or other body,
which may have a material adverse effect on the Debtor's ability to perform its
obligations hereunder or under the UAFC Sale and Purchase Agreement or the
UAFC-1 Sale and Purchase Agreement.
(h) Use of Proceeds. The proceeds of any Funding will be used
by the Debtor to (a) acquire the Receivables, the Contracts related thereto and
the Related Security with respect thereto from the Seller pursuant to the UAFC-1
Sale and Purchase Agreement or from a Warehouse, (b) to pay down debt in connec
tion with the purchase of the Receivables and Contracts pursuant to the UAFC-1
Sale and Purchase Agreement or pursuant to a Warehouse Transfer Agreement or (c)
to make distributions constituting a return of capital.
(i) Place of Business. The chief place of business and chief
executive office of the Debtor are located at the address of the Debtor
indicated in Section 9.3 hereof and the offices where the Debtor keeps all its
Records, are located at the address(es) described on Exhibit G or such other
locations notified to the Company in accordance with Section 2.6 in
jurisdictions where all action required by Section 2.6 has been taken and
completed.
(j) Good Title. Upon each Funding and on each day on which a
Receivable and related Contract is sold to the Debtor by the Seller pursuant to
the UAFC-1 Sale and Purchase Agreement or by another Warehouse pursuant to a
Warehouse Transfer Agreement, the Collateral Agent shall acquire a valid and
perfected first priority security interest in each Receivable and related
Contract that exists on the date of such Funding and sale and in the Related
Security and Collec tions with respect thereto free and clear of any Adverse
Claim.
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(k) Tradenames, Etc. As of the date hereof: (i) the Debtor has
only the subsidiaries and divisions listed on Exhibit H hereto; and (ii) the
Debtor has, within the last five (5) years, operated only under the tradenames
identified in Exhibit H hereto, and, within the last five (5) years, has not
changed its name, merged with or into or consolidated with any other corporation
or been the subject of any proceeding under Xxxxx 00, Xxxxxx Xxxxxx Code
(Bankruptcy), except as disclosed in Exhibit H hereto.
(l) Nature of Receivables. Each Receivable represented by the
Debtor as an Eligible Receivable hereunder or in any report, document or
instrument delivered hereunder or in connection with the other Transaction Docu
ments is an Eligible Receivable at the time of such representation.
(m) Coverage; Amount of Receivables. The Net Asset Test is
currently satisfied. As of May 25, 2000, the aggregate Outstanding Balance of
the Receivables in existence was $0 and the aggregate Outstanding Balance of all
Eligible Receivables was $0.
(n) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or a
Potential Termination Event.
(o) Not an Investment Company. The Debtor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or is exempt from all provisions of such Act.
(p) ERISA. The Debtor is in compliance in all material
respects with ERISA and no lien in favor of the Pension Benefit Guaranty Corpora
tion on any of the Receivables shall exist.
(q) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at
such Lock-Box Banks, are specified in Exhibit B hereto (or at such other Lock-
Box Banks and/or with such other Lock-Box Accounts as have been notified to the
Administrative Agent). All Obligors have been instructed to make payment to a
Lock-Box Account.
(r) Insurance Policies. At the time of the sale of each
Receivable and related Contract by the Seller to the Debtor pursuant to the
UAFC-1
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Sale and Purchase Agreement or by another Warehouse to the Debtor pursuant to a
Warehouse Transfer Agreement, each Financed Vehicle is required to be covered by
physical damage and liability insurance obtained by the related Obligor at least
in the amount required by the related Contract, and each such required insurance
policy is required to name UAC as loss payee and is required to be in full force
and effect.
Any document, instrument, certificate or notice delivered to
the Company by the Debtor hereunder shall be deemed a representation and
warranty by the Debtor.
SECTION 3.2 Representations and Warranties of the Collection
Agent. The Collection Agent represents and warrants to the Collateral Agent and
the Secured Parties that:
(a) Corporate Existence and Power. The Collection Agent is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation and has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is now conducted.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Collection Agent of this
Agreement and the other Transaction Documents are within the Collection Agent's
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official (except as contemplated by Section 2.6), and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the Certificate of Incorporation or Bylaws of the Collection
Agent or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Collection Agent or result in the creation or
imposition of any lien on assets of the Collection Agent or any of its
Subsidiaries (except as contemplated by Section 2.6), or require the consent or
approval of, or the filing of any notice or other documentation with, any
governmental authority or other Person (except as contemplated by Section 2.6).
(c) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of the Collection Agent, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors.
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(d) Accuracy of Information. All information heretofore
furnished by the Collection Agent to the Collateral Agent, the Secured Parties
or the Administrative Agent for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such information hereafter
furnished by the Collection Agent to the Collateral Agent, the Secured Parties
or the Administra tive Agent will be, true and accurate in every material
respect, on the date such information is stated or certified.
(e) Credit and Collection Policy. Since the Closing Date,
(except for any changes as received by the Administrative Agent in writing),
there have been no material changes in the Credit and Collection Policy; since
such date, no material adverse change has occurred in the overall rate of
collection of the Receivables.
(f) Collections and Servicing. Since the Closing Date, there
has been no material adverse change in the ability of UAC, as Collection Agent
hereunder, to service and collect the Receivables.
Any document, instrument, certificate or notice delivered by
the Collection Agent to the Collateral Agent, the Secured Parties hereunder
shall be deemed a representation and warranty by the Collection Agent.
SECTION 3.3 Reaffirmation of Representations and Warranties.
On each Determination Date, Remittance Date and day on which a Funding is made,
each of the Debtor and the Collection Agent, shall be deemed to have certified
that all of its respective representations and warranties described in Sections
3.1 and 3.2 are correct on and as of such day as though made on and as of such
day.
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Effectiveness. This Agreement shall
become effective on the first day on which all of the following conditions have
been satisfied:
(a) A Certificate of the Secretary of the Debtor certifying
(i) the names and signatures of the officers and other agents authorized on its
behalf to execute this Agreement and the other Transaction Documents and any
other documents to be delivered by it hereunder or thereunder (on which
Certificate the Collateral Agent and the Secured Parties may conclusively rely
until such time as the Collateral Agent and the Secured Parties shall receive
from the Debtor a revised Certificate meeting the requirements of this clause
(a)(i)), (ii) a copy of the Debtor's Certificate of Incorporation, as amended to
the date hereof, certified by the Secretary of State of the State of Delaware,
(iii) a copy of the Debtor's By-laws, as amended to the date hereof, (iv) a copy
of resolutions of the Debtor's Board of Directors approv ing the transactions
contemplated hereby and (v) a certificate of the Secretary of State of the State
of Delaware certifying the Debtor's good standing.
(b) A Certificate of the Secretary of the Collection Agent
certifying (i) the names and signatures of the officers authorized on its behalf
to execute this Agreement and any other documents to be delivered by it
hereunder (on which Certificate the Collateral Agent and the Secured Parties may
conclusively rely until such time as the Collateral Agent and Secured Parties
shall receive from the Collection Agent a revised Certificate meeting the
requirements of this clause (b)(i)), (ii) a copy of the Collection Agent's
Articles of Incorporation, as amended to the date hereof, certified by the
Secretary of State of the State of Indiana, (iii) a copy of the Collection
Agent's By-laws, as amended to the date hereof, (iv) a copy of resolutions of
the Collection Agent's Board of Directors approving the transactions
contemplated hereby and (v) a certificate of the Secretary of State of the State
of Indiana certifying the Collection Agent's existence.
(c) A Certificate of the Secretary of the Seller certifying
(i) the names and signatures of the officers and other agents authorized on its
behalf to execute this Agreement and the other Transaction Documents and any
other docu ments to be delivered by it hereunder or thereunder (on which
Certificate the Collateral Agent and the Secured Parties may conclusively rely
until such time as the
53
Collateral Agent and the Secured Parties shall receive from the Seller a revised
Certificate meeting the requirements of this clause (c)(i)), (ii) a copy of the
Seller's Certificate of Incorporation, as amended to the date hereof, certified
by the Secretary of State of the State of Delaware, (iii) a copy of the Seller's
By-laws, as amended to the date hereof, (iv) a copy of resolutions of the
Seller's Board of Directors approving the transactions contemplated hereby and
(v) a certificate of the Secretary of State of the State of Delaware certifying
the Seller's good standing.
(d) Copies of proper financing statements (Form UCC-1), naming
UAC as the debtor in favor of the Seller as secured party and the Debtor as
assignee of the secured party or other similar instruments or documents as may
be necessary or in the reasonable opinion of the Seller desirable under the
Relevant UCC to perfect the Seller's security interest in the Receivables,
Related Security and Collections, free and clear of any Adverse Claim.
(e) Copies of proper financing statements (Form UCC-1), naming
the Seller as the debtor in favor of the Debtor as secured party and the
Collateral Agent, for the benefit of the Secured Parties, as assignee of the
secured party or other similar instruments or documents as may be necessary or
in the reasonable opinion of the Collateral Agent desirable under the Relevant
UCC to perfect the Debtor's security interest in the Receivables, Related
Security and Collections, free and clear of any Adverse Claim.
(f) Copies of proper financing statements (Form UCC-3), naming
the Collateral Agent, for the benefit of the Secured Parties, as assignee of the
UCC-1 financing statement reference in Section 4.1(d).
(g) Copies of proper financing statements (Form UCC-1), naming
the Debtor as the debtor in favor of the Collateral Agent, for the benefit of
the Secured Parties, or other similar instruments or documents as may be
necessary or in the reasonable opinion of the Collateral Agent desirable under
the Relevant UCC to perfect the Collateral Agent's security interest in the
Collateral, including all Receivables, Related Security and Collections, free
and clear of any Adverse Claim.
(h) Copies of proper financing statements (Form UCC-3)
necessary under the Relevant UCC to terminate all security interests and other
rights of any person in the Collateral, including the Receivables, Related
Security and Collections, previously granted by the Debtor.
54
(i) Certified copies of request for information or copies
(Form UCC-11) (or a similar search report certified by parties acceptable to the
Collateral Agent) dated a date reasonably near the date of the Closing listing
all effective financing statements which name the Debtor the Seller or UAC as
debtor and which are filed in jurisdictions in which the filings were made
pursuant to item (e) above together with copies of such financing statements
(none of which shall cover any Receivables or Contracts).
(j) Opinions of Xxxxxx & Xxxxxxxxx, special counsel to the
Seller, the Debtor and the Collection Agent, covering the matters set forth in
(i) Exhibit I hereto, and (ii) Exhibit J hereto.
(k) An opinion of Xxxxxxx & McNagny, special counsel to the
Seller, the Debtor and the Collection Agent, covering matters relating to
Florida law.
(l) An executed copy of the Fee Letter and payment of the
arrangement fee specified therein.
(m) The Note, duly executed by the Debtor and appropri ately
completed.
(n) Unless waived by the Agent or no Receivables are
transferred, a Release Agreement, dated as of May 25, 2000, between the Company,
Union Acceptance Corporation, MBIA Insurance Corporation and Bank of America,
releasing the security interest in the Receivables granted pursuant to the
Security Agreement, dated as of September 18, 1998, between the Company, Union
Accep tance Corporation, MBIA Insurance Corporation and Bank of America.
(o) Such other documents as the Collateral Agent or the
Secured Parties shall reasonably request.
SECTION 4.2 Further Conditions.
(a) The Collateral Agent shall receive, within thirty days of
the Closing Date, certificates of qualification as a foreign corporation issued
by the Secretaries of State or other similar officials of each jurisdiction
where such qualification is material to the transactions contemplated by this
Agreement and the
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other Transaction Documents, in each case, dated as of a recent date for the
Debtor, the Seller and the Collection Agent.
(b) The Collateral Agent shall receive by June 6, 2000 an
opinion of Xxxxxx & Xxxxxxxxx, special counsel to the Seller, the Debtor and the
Collection Agent covering bankruptcy matters regarding the sale of certain
Receiv xxxxx from UACFC to UAC, as agreed upon by the Agent and UAC.
(c) It is a condition subsequent to the Closing Date and a
condition precedent to the initial Funding that the Agent and the Collection
Agent shall agree to the terms of financial covenants applicable to the
Collection Agent and such agreed upon terms (and related definitions) shall be
attached hereto as Exhibit C.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Debtor, the Seller
and UAC. At all times from the date hereof to the later to occur of (i) the
Termination Date or (ii) the date on which the Net Investment is zero, unless
the Secured Parties shall otherwise consent in writing:
(a) Financial Reporting. The Debtor, the Seller, and UAC each
will maintain, for itself and each Subsidiary, a system of accounting
established and administered in accordance with generally accepted accounting
principles, and UAC (and/or, as applicable, in the case of clauses (iv), (viii)
and (ix) and the first sentence of clause (iii), the Debtor) will furnish to the
Administrative Agent and the Collateral Agent.
(i) Annual Reporting. Within ninety (90)
days after the close of each of its fiscal years, audited
financial state ments, prepared in accordance with generally
accepted accounting principles on a consolidated basis for
itself and its Subsidiaries, including balance sheets as of
the end of such period, related state ments of operations,
shareholder's equity and cash flows, accompa xxxx by an audit
report of a nationally recognized firm of independent
certified public accountants (or such other firm of
independent certi fied public accountants acceptable to the
Administrative Agent and
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the Collateral Agent) which report shall be unqualified as to going
concern and scope of audit and shall state that such consolidated
financial statements present fairly the financial position of UAC and
its Subsidiaries at the dates indicated and the results of their opera
tions and their cash flow for the periods indicated is in conformity
with GAAP and that the examination had been made in accordance with
generally accepted auditing standards.
(ii) Quarterly Reporting. Within forty-five
(45) days after the close of the first three quarterly periods
of each of its fiscal years, for itself and its Subsidiaries,
consolidated unaudited balance sheets as at the close of each
such period and consolidated related statements of operations,
shareholder's equity and cash flows for the period from the
beginning of such fiscal year to the end of such quarter, all
certified by its chief financial officer.
(iii) Compliance Certificate. Concurrently
with the delivery by UAC of the financial statements required
hereun der, a compliance certificate signed by its and the
Debtor's treasurer, president or vice president stating that
no Termination Event or Potential Termination Event exists, or
if any Termination Event or Potential Termination Event
exists, stating the nature and status thereof. On and after
the date of any change in ownership of UAC or the Seller
contemplated by Section 5.2(i), together with the financial
statements hereunder, a compliance certificate signed by the
chief financial officer, the president or the vice president
of UAC or the Seller showing the computation of, and showing
compliance with, each of the quarterly financial tests or
conditions set forth in Section 5.2(h).
(iv) Notice of Termination Events or
Potential Termination Events. As soon as possible and in any
event within two (2) days after the occurrence of each
Termination Event or each Potential Termination Event, a
statement of the treasurer or vice president of the Debtor
setting forth details of such Termination Event or Potential
Termination Event and the action which the Debtor proposes to
take with respect thereto.
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(v) Change in Credit and Collection Policy.
Within ten (10) days after the date any material change in or
amend ment to the Credit and Collection Policy is made, a copy
of the Credit and Collection Policy then in effect indicating
such change or amend ment.
(vi) Credit and Collection Policy. Upon
request by the Collateral Agent or any Secured Party, a
complete copy of the Credit and Collection Policy then in
effect.
(vii) Blue Book. Within forty-five (45) days
after the close of the quarterly period of each of its fiscal
years, a copy of the UAC Quarterly Statistical Update (a/k/a/
UAC's "blue book").
(viii) ERISA. Promptly after the filing or
receiving thereof, copies of all reports and notices with
respect to any Reportable Event (as defined in Article IV of
ERISA) which the Debtor, UAC or any ERISA Affiliate of the
Debtor, the Seller or UAC files under ERISA with the Internal
Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or which the Debtor, the Seller,
UAC or any ERISA Affiliates of the Debtor or UAC receives from
the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor.
(ix) Other Information. Such other informa
tion (including non-financial information) as the
Administrative Agent, the Collateral Agent or any Secured
Party may from time to time reasonably request.
(b) Conduct of Business. Each of the Debtor, the Seller and
UAC will (x) carry on and conduct its business in substantially the same manner
and in substantially the same or related fields of enterprise (including, in the
case of UAC, consumer finance activities) as it is presently conducted and do
all things necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of incorporation and (y)
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is con ducted.
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(c) Compliance with Laws. Each of the Debtor, the Seller and
UAC will comply in all material respects with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject.
(d) Furnishing of Information and Inspection of Records. The
Debtor will furnish to the Collateral Agent and the Secured Parties from time to
time such information with respect to the Receivables as the Collateral Agent or
any Secured Party may reasonably request, including, without limitation,
listings identifying the Obligor and the Outstanding Balance for each
Receivable. Upon at least two (2) Business Days prior notice, the Debtor, the
Seller and UAC will during regular business hours permit the Collateral Agent or
any Secured Party, or their agents or representatives, (i) to examine and make
copies of and abstracts from all Records and (ii) to visit the offices and
properties of the Debtor, the Seller and UAC for the purpose of examining such
Records, and to discuss matters relating to Receivables or the Debtor's, the
Seller's or UAC's performance hereunder or under the UAFC Sale and Purchase
Agreement and the UAFC-1 Sale and Purchase Agreement with any of the officers,
employees or independent public accountants of the Debtor, the Seller or UAC
having knowledge of such matters.
(e) Keeping of Records and Books of Account. The Debtor, the
Seller and UAC (consistent with its role as Collection Agent) will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). The Debtor, the
Seller and UAC will give the Collateral Agent notice of any material change in
the administrative and operating procedures referred to in the previous
sentence.
(f) Performance and Compliance with Receivables and Contracts.
The Debtor, the Seller and UAC will at their expense timely and fully perform
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts related to the Receivables.
(g) Credit and Collection Policies. UAC will comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
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(h) Collections. The Debtor and UAC shall instruct all
Obligors to cause all Collections to be deposited directly to a Lock-Box
Account.
(i) Collections Received. The Debtor and UAC shall hold in
trust, and deposit, immediately, but in any event not later than two (2)
Business Days of its receipt thereof, to a Lock-Box Account all Collections
received from time to time by them.
(j) Separate Business. The Debtor shall at all times (a) to
the extent the Debtor's office is located in the offices of UAC or any Affiliate
of UAC, pay fair market rent for its executive office space located in the
offices of UAC or any Affiliate of UAC, (b) maintain the Debtor's books,
financial statements, accounting records and other corporate documents and
records separate from those of UAC or any other entity, (c) not commingle the
Debtor's assets with those of UAC or any other entity (it being understood that
certain Collections on Receivables owned by the Debtor may be temporarily
commingled with collections on other receivables serviced by UAC); (d) act
solely in its corporate name and through its own autho rized officers and
agents, (e) make investments directly or by brokers engaged and paid by the
Debtor or its agents (provided that if any such Agent is an Affiliate of the
Debtor it shall be compensated at a fair market rate for its services), (f)
separately manage the Debtor's liabilities from those of UAC or any Affiliates
of UAC and pay its own liabilities, including all administrative expenses, from
its own separate assets, and (g) pay from the Debtor's assets all obligations
and indebtedness of any kind incurred by the Debtor. The Debtor shall abide by
all corporate formalities, includ ing the maintenance of current minute books,
and the Debtor shall cause its financial statements to be prepared in accordance
with generally accepted accounting princi ples in a manner that indicates the
separate existence of the Debtor and its assets and liabilities. The Debtor
shall (i) pay all its liabilities, (ii) not assume the liabilities of UAC or any
Affiliate of UAC, and (iii) not guarantee the liabilities of UAC or any
Affiliate of UAC. The officers and directors of the Debtor (as appropriate)
shall make decisions with respect to the business and daily operations of the
Debtor independent of and not dictated by any controlling entity.
(k) Corporate Documents. The Debtor shall only amend, alter,
change or repeal Articles III, IV, V, VI, and XI of its Certificate of Incorpora
tion as in effect on the date hereof with the prior written consent of the
Administra tive Agent.
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SECTION 5.2 Negative Covenants of Debtor, the Seller and UAC.
During the term of this Agreement, unless the Secured Parties shall otherwise
consent in writing:
(a) No Sales, Liens, Etc. Except as otherwise provided herein,
including a Year-end Receivable Transfer, neither the Debtor, the Seller nor UAC
will sell, assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon (or the filing of any financing
statement) or with respect to, any Receivable or related Contract, or upon or
with respect to any account which concentrates in a Lock-Box Bank to which any
Collec tions of any Receivable are sent, or assign any right to receive income
in respect thereof.
(b) No Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.2, neither the Debtor, the Seller nor UAC will
extend, amend or otherwise modify the terms of any Receivable, or amend, modify
or waive any term or condition of any Contract related thereto.
(c) No Amendment of UAFC-1 Sale and Purchase Agreement or the
UAFC Sale and Purchase Agreement. The Debtor or the Seller, as applicable, shall
not amend or otherwise modify the UAFC-1 Sale and Purchase Agreement or the UAFC
Sale and Purchase Agreement without the prior written consent of the Secured
Parties.
(d) No Change in Business or Credit and Collection Policy.
Neither the Debtor, the Seller nor UAC shall, without the prior written consent
of the Agent, make any change in the character of its business or in the Credit
and Collection Policy, which change would, in either case (i) impair the
collectibility of any Receivable or (ii) change the write-off policy in effect
as of the Closing Date, with respect to the Receivables and the Contracts.
(e) Sale of Assets, Etc. Neither the Debtor, the Seller nor
UAC will sell, lease or transfer all or substantially all of its assets to any
other person, provided, however, that no such sale shall be deemed to occur
solely as a result of a Securitization, Year-end Receivable Transfer, Warehouse
Transfer or solely as a result of the sale of Contracts and related Receivables
which are released to the Debtor pursuant to Section 2.15(c) and 2.15(d).
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(f) Change in Payment Instructions to Obligors.
Neither the Debtor, the Seller nor UAC nor the Collection Agent will add or
terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account to or
from those listed in Exhibit B hereto or make any change in its instructions to
Obligors regard ing payments to be made to any Lock-Box Account, unless (i) such
instructions are to deposit such payments to another existing Lock-Box Account
or (ii) the Collateral Agent and the Administrative Agent shall have received
written notice of such addition, termination or change at least 15 days prior
thereto.
(g) Change of Name, Etc. The Debtor will not change its name,
identity or structure or its chief executive office, unless at least 30 days
prior to the effective date of any such change the Debtor delivers to the
Collateral Agent UCC financing statements, executed by the Debtor necessary to
reflect such change and to continue the perfection of the Collateral Agent's
security interest in the Receivables.
(h) No Mergers, Etc. Neither the Debtor, the Seller nor UAC
will (i) consolidate or merge with or into any other Person, or (ii) sell, lease
or transfer all or substantially all of its assets to any other person, unless
the Debtor or UAC, respectively, is the surviving entity.
(i) Sale Treatment.
(i) Neither the Seller nor UAC will account
for (including for accounting and tax purposes), or otherwise
treat, the transactions contemplated by the UAFC Sale and
Purchase Agree ment in any manner other than as a sale of
Receivables by UAC to the Seller;
(ii) Neither the Debtor nor the Seller will
account for (including for accounting and tax purposes), or
otherwise treat, the transactions contemplated by the UAFC-1
Sale and Purchase Agreement in any manner other than as a sale
of Receivables by the Seller to the Debtor.
(j) No Change in Account Type. Once the Debtor, the Seller or
UAC has granted a security interest in a Receivable to any party, the Debtor,
the Seller or UAC, as applicable, shall (i) maintain the separate field desig
nation containing the account type of such Receivable as it is identified on the
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Debtor's, the Seller's or UAC's, as applicable, computer records and (ii) not
change or cause to be changed the account type of such Receivable as it is
identified on the Debtor's, the Seller's or UAC's, as applicable, computer
records or the computer records of any servicer of the Receivables, in either
case without obtaining a release of the security interest or the consent of the
Agent to such change in account type.
(k) Other Debt. Except as provided for herein, the Debtor will
not create, incur, assume or suffer to exist any indebtedness whether current or
funded, or any other liability other than (i) indebtedness of the Debtor
representing fees, expenses and indemnities arising hereunder or under the UAFC
Sale and Purchase Agreement or the UAFC-1 Sale and Purchase Agreement for the
purchase price of the Receivables under the UAFC Sale and Purchase Agreement or
the UAFC-1 Sale and Purchase Agreement, as applicable, and (ii) other
indebtedness incurred in the ordinary course of its business in an amount not to
exceed $9,500 (except for indebtedness incurred in connection with the
repurchase of Receivables from UARC) at any time outstanding.
SECTION 5.3 Acceptable Hedging Arrangements. The Collection
Agent shall (i) at or prior to the time of any Funding, provide to the
Administrative Agent and the Collateral Agent an officer's certificate stating
that the Collection Agent has Acceptable Hedging Arrangements in place
satisfying the conditions of this Section 5.3 as set forth below and qualifies
as an Acceptable Hedging Arrange ment and (ii) in connection with any Settlement
Statement provided hereunder, provide an executed copy of all existing
Acceptable Hedging Arrangements, which Acceptable Hedging Arrangements shall be
satisfactory to the Administrative Agent and the Collateral Agent, and with
respect to which the Debtor shall be the benefi ciary, in respect of an
aggregate notional amount at least equal to the Net Investment. After a
Termination Event (i) such a hedge shall be under the complete control of the
Agent and (ii) if such a hedge is a swap, the notional balance shall be
maintained at no greater than the Net Receivables Balance. The form and
structure and counterparty to each Acceptable Hedging Arrangement shall be
acceptable to the Administrative Agent and the Collateral Agent and must be in
full force and effect at all times during which the Net Investment is greater
than zero (however such required amount may be reduced for the period of time
between the pricing and the funding of a structured financing utilizing
Receivables released to the Debtor pursuant to Section 2.15 by the aggregate
Outstanding Balance of such Receivables).
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ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent. The servicing,
administering and collection of the Receivables shall be conducted by such
Person (the "Collection Agent") so designated from time to time in accordance
with this Section 6.1. Until the Collateral Agent gives notice to UAC of the
designation of a new Collection Agent, UAC is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Collection Agent pursuant
to the terms hereof. The Collateral Agent shall upon the occurrence of a
Collection Agent Default or any other Termination Event, designate as Collection
Agent any Person (including itself) to succeed UAC or any successor Collection
Agent, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Collection Agent pursuant to
the terms hereof. The Company may notify any Obligor of its security interest in
the Contracts and the related Receivables.
SECTION 6.2 Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be taken all
such action as may be necessary or advisable to collect each Receivable from
time to time, all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the Credit and
Collection Policy. Each of the Debtor, the Company and each Bank Investor hereby
appoints as its agent the Collection Agent, from time to time designated
pursuant to Section 6.1, to enforce its respective rights and interests in and
under the Receivables, the Related Security and the Contracts. The Collection
Agent shall remit daily, within two (2) Business Days of receipt, to the
Collection Account all Collections received with respect to any Receivables. The
Collection Agent shall segregate and deposit to the Agent's, the Company's or
the Bank Investor's account, as applicable, such Person's allocable share of
Collections of Receivables when required pursuant to Article II hereof. So long
as no Termination Event shall have occurred and be continuing, the Collection
Agent may, unless otherwise required by law, in accordance with the Credit and
Collection Policy, extend the maturity of Receivables as the Collection Agent
may determine to be appropriate to maximize Collections thereof. The Debtor
shall hold in trust for the Secured Parties in accordance with their security
interest, all Records which evidence or relate to Receivables or Related
Security. In the event that a successor Collection Agent is appointed by the
Company, the Debtor shall deliver to the Collection Agent and the Collection
Agent shall hold in trust for the Debtor and
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the Secured Parties in accordance with their respective interests, all Records
which evidence or relate to Receivables or Related Security. Notwithstanding
anything to the contrary contained herein, the Collateral Agent shall have the
absolute and unlimited right to direct the Collection Agent (whether the
Collection Agent is the Debtor or any other Person) to commence or settle any
legal action to enforce collection of any Receivable or to foreclose upon or
repossess any Related Security.
(b) The Collection Agent shall, as soon as practicable
following receipt thereof, turn over to the Debtor any collections of any
indebtedness of any Obligor which is not a Receivable. If UAC or any affiliate
thereof is not the Collection Agent, the Collection Agent, by giving three (3)
Business Days' prior written notice to the Collateral Agent and the Agent may
revise the percentage used to calculate the Servicing Fee so long as the revised
percentage will not result in a Servicing Fee that exceeds 135% of the
reasonable and appropriate out-of-pocket costs and expenses of such Collection
Agent incurred in connection with the perfor xxxxx of its obligations hereunder
as documented to the reasonable satisfaction of the Collateral Agent and the
Agent. The Collection Agent, if other than the Debtor, shall as soon as
practicable upon demand, deliver to the Debtor all Records in its possession
which evidence or relate to indebtedness of an Obligor which is not a
Receivable.
(c) On or before ninety (90) days after the end of each fiscal
year of the Collection Agent, beginning with the fiscal year ending June 30,
2001, the Collection Agent shall cause a firm of independent public accountants
(who may also render other services to the Collection Agent or the Debtor) to
furnish a report on applying agreed upon procedures to the Collateral Agent to
the effect that they have (i) compared the information contained in the
Settlement Statements and Withdrawal Notices delivered during such fiscal year,
based on a sample size provided by the Agent, with the information contained in
the Contracts and the Collection Agent's records and computer systems for such
period, (ii) verified the Net Receivables Balance as of the end of each
Settlement Period during such fiscal year, and (iii) verified that a sample of
Receivables treated by the Collection Agent as Eligible Receivables in fact
satisfied the requirements of the definition thereof contained herein, and (iv)
conducted a 'negative confirmation' of a sample of the Receivables and verified
that the Collection Agent's records and computer system used in servicing the
Receivables contained correct information with regard to due dates and
outstanding balances, except, in each case for (a) such exceptions as such firm
shall believe to be immaterial (which exceptions need not be enumerated) and (b)
such other exceptions as shall be set forth in such report.
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(d) Notwithstanding anything to the contrary contained in this
Article VI, the Collection Agent, if not the Debtor, shall have no obligation to
collect, enforce or take any other action described in this Article VI with
respect to any Receivable that is not included in the Collateral other than to
deliver to the Debtor the Collections and documents with respect to any such
Receivable as described in Section 6.2(b).
(e) In the event that a Take-Out does not occur at least once
in any period of sixteen (16) consecutive calendar weeks, the Collateral Agent
or the Company shall have the right to conduct (or to cause its accountants or
other third parties to conduct) an audit of the Collection Agent's records
(including all Records and Contracts) and servicing, reporting and collection
procedures.
SECTION 6.3 Collection Agent Defaults. The occurrence of any
one or more of the following events shall constitute a Collection Agent Default:
(a) any representation, warranty, certification or statement
made by the Collection Agent (including UAC, if it is the Collection Agent) in
this Agreement or in any other document delivered pursuant hereto shall prove to
have been incorrect in any material respect when made or deemed made; or
(b) the Collection Agent shall default in the performance of
any payment, covenant or undertaking hereunder; or
(c) any Event of Bankruptcy shall occur with respect to the
Collection Agent or any Subsidiary of Collection Agent; or
(d) the Collection Agent shall breach any covenant set forth
in Exhibit C.
SECTION 6.4 Rights After Designation of New Collection Agent.
At any time following the designation of a Collection Agent (other than UAC)
pursuant to Section 6.1:
(i) The Agent may direct that payment of all
amounts payable under any Receivable be made directly to the
Collateral Agent or any designee.
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(ii) The Debtor shall, at the Agent's
request and at the Debtor's expense, give notice of the
Collateral Agent's interest in the Receivables to each Obligor
and direct that payments be made directly to the Collateral
Agent or its designee.
(iii) The Debtor shall, at the Agent's
request, (A) assemble all of the Records, and shall make the
same available to the Collateral Agent at a place selected by
the Collateral Agent or any designee, and (B) segregate all
cash, checks and other instruments received by it from time to
time constituting Collections of Receiv xxxxx in a manner
acceptable to the Collateral Agent and shall, promptly upon
receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the
Collateral Agent or its designee.
(iv) The Debtor hereby authorizes the
Collateral Agent to take any and all steps in the Debtor's
name and on behalf of the Debtor necessary or desirable, in
the determination of the Collateral Agent, to collect all
amounts due under any and all Receivables and Related Security
with respect thereto, including, without limitation, endorsing
the Debtor's name on checks and other instruments representing
Collections and enforcing such Receivables and the related
Contracts.
SECTION 6.5 Responsibilities of the Debtor. Anything herein to
the contrary notwithstanding, the Debtor shall (i) perform all of its
obligations under the Contracts related to the Receivables to the same extent as
if interests in such Receiv xxxxx had not been pledged hereunder and the
exercise by the Collateral Agent of its rights hereunder shall not relieve the
Debtor from such obligations and (ii) pay when due any taxes, including without
limitation, any sales taxes payable in connection with the Receivables and their
creation and satisfaction. Neither the Collateral Agent nor any Secured Party
shall have any obligation or liability with respect to any Receivable or related
Contracts, nor shall any of them be obligated to perform any of the obligations
of the Debtor thereunder.
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ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events. The occurrence of any one or
more of the following events shall constitute a Termination Event:
(a) any representation, warranty, certification or statement
made by the Debtor, the Seller or UAC in this Agreement, the UAFC Sale and
Purchase Agreement, the UAFC-1 Sale and Purchase Agreement or in any other
Transaction Document shall prove to have been incorrect in any material respect
when made or deemed made; or
(b) the Debtor, the Seller or UAC shall default in the
performance of (i) any payment obligation hereunder or under the UAFC Sale and
Purchase Agreement, the UAFC-1 Sale and Purchase Agreement or (ii) any other
covenant or undertaking hereunder or under the UAFC Sale and Purchase Agree
ment, the UAFC-1 Sale and Purchase Agreement which in the case of this clause
(ii) shall remain unremedied for five (5) days; or
(c) any Event of Bankruptcy shall occur with respect to the
Debtor, the Seller or the Collection Agent or any Subsidiary of either of them;
or
(d) a Collection Agent Default shall have occurred or for any
reason UAC is not the Collection Agent; or
(e) the Collection Agent shall at any time not be in
compliance with the requirements of Section 5.3; or
(f) the Collateral Agent shall, for any reason, fail to have a
valid and perfected first priority security interest in Receivables and Related
Security and Collections with respect thereto, free and clear of any Adverse
Claim; or
(g) either of the Debtor, the Seller or the Collection Agent
shall consolidate or merge with or into any other Person whereby it is not the
surviving entity; or
(h) there shall have occurred any material adverse change in
the operations of the Debtor, the Seller or the Collection Agent since the
Closing
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Date, or any other event shall have occurred which materially affects the
Debtor's, the Seller's or the Collection Agent's ability to either collect the
Receivables or to perform under this Agreement, the UAFC Sale and Purchase
Agreement the UAFC-1 Sale and Purchase Agreement or any other Transaction
Document; or
(i) the Liquidity Provider or the Credit Support Provider
shall have given notice that an event of default has occurred and is continuing
under its agreements with the Company; or
(j) the Commercial Paper issued by the Company shall not be
rated at least "A-2" by S&P and at least "P-2" by Xxxxx'x; or
(k) (i) the Net Investment minus amounts on deposit in the
Prefunding Account shall at any time exceed the Net Receivables Balance, or (ii)
the Net Asset Test is not satisfied; or
(l) a Take-Out shall not occur at least once in any period of
six consecutive calendar months; or
(m) the Net Investment is greater than the Facility Limit;
(n) the Net Yield as of any Determination Date is less than
2.00% during a Settlement Period in which the Net Investment is greater than
zero each day of such Settlement Period;
(o) the sum of the (i) amount on deposit in the Reserve
Account and (ii) the amount available pursuant to any Reserve Account Guaranty
is less than the Required Reserve Account Amount for two (2) consecutive
Business Days.
Notwithstanding the foregoing, with respect to an event occurring described in
paragraph (a) or (f), to the extent such event is related to a particular
Receivable or Receivables, such event shall not constitute a Termination Event
if the Debtor timely fulfills its obligations with respect to such Receivable or
Receivables pursuant to Section 2.7 hereof.
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SECTION 7.2 Termination. If a Termination Event occurs
hereunder and is continuing, the Collateral Agent may, by notice to the Debtor,
(i) if UAC is the Collection Agent at the time, terminate UAC as Collection
Agent hereunder, or (ii) declare any date as the date upon which the Note shall
become due and payable, and, subject to the limitations on recourse set forth in
Section 2.1 hereof and Section 6.8 of the Note Purchase Agreement, the
Collateral Agent shall have all of the rights and remedies provided to a secured
creditor or a purchaser of chattel paper under the Relevant UCC by applicable
law in respect thereto (including, but not limited to, initiating foreclosure
and/or liquidation proceedings with respect to all of the Receivables and
Contracts or any portion thereof). In addition, the Agent shall have the right
to designate the Base Rate plus 2% to be applicable to the Net Investment
(except in the case of a Termination Event described under clauses (i) or (j)
above, in which case the Adjusted LIBOR Rate or the Base Rate, as applicable,
shall be applicable), and the Company shall have the right to cease issuing
Commercial Paper in order to maintain the Net Investment and may assign to the
Bank Investors all of its right, title and interest hereunder.
If the Note is declared due and payable in accordance with
this Section 7.2, the Collateral Agent may do any one or more of the following:
(i) take all necessary action to foreclose
upon the Collateral;
(ii) retain in satisfaction of any amounts
owing from the Debtor all amounts otherwise payable to the
Debtor pursuant to this Agreement to the extent necessary to
pay in full all amounts (including principal and interest) (i)
due and payable under the Note and (ii) due and payable by the
Debtor under the Note Purchase Agreement;
(iii) subject to the limitations on recourse
set forth in Section 2.1 hereof and Section 6.8 of the Note
Purchase Agreement, pursue any available remedy by proceeding
at law or in equity including complete or partial foreclosure
of the lien upon the Collateral and sale of the Collateral or
any portion thereof or rights or interest therein as may
appear necessary or desirable (i) to collect amounts owed
pursuant to the Note and any other payments then due and
thereafter to become due under the Note or (ii) to enforce the
performance and observance of any obligation, covenant,
agreement
70
or provision contained in this Agreement to be observed or performed
by the Debtor; or
(iv) subject to the limitations on recourse
set forth in Section 2.1 hereof and Section 6.8 of the Note
Purchase Agreement, exercise any remedies of a secured party
under the Uni form Commercial Code and take any other
appropriate action to protect and enforce the rights and
remedies of the Collateral Agent on behalf of the Secured
Parties.
The Debtor and the Collection Agent agree that they shall take
all actions (including reliening of the certificates of title or other title
documents in the name of the Collateral Agent on behalf of the Secured Parties)
and execute all documents as may be necessary or requested by the Collateral
Agent to perfect its interest in the Collateral, including, without limitation,
to perfect the Collateral Agent's security interest in the Financed Vehicles.
The Debtor, the Seller and UAC hereby grant to the Collateral Agent, on behalf
of the Secured Parties, a power of attorney to act in their place and stead to
take all actions as may be necessary to perfect the Collateral Agent's security
interest in the Financed Vehicles. Each of UAC, the Seller and the Debtor
acknowledge that such power of attorney is irrevoca ble and is coupled with an
interest. In connection with any sale of the Receivables by the Collateral Agent
after the occurrence of a Termination Event, the Debtor shall have, for a period
of five (5) Business Days after notice of such proposed sale from or on behalf
of the Secured Parties, the right to repurchase the Receivables and related
Contracts for a price, payable in immediately available funds, in an amount
equal to the Aggregate Unpaids.
SECTION 7.3 Proceeds. The proceeds from the sale, disposition
or liquidation of the Receivables pursuant to Section 7.2 above shall be treated
as Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions governing allocations set forth herein.
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ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Duties of the Collateral Agent. The Secured
Parties hereby appoint Bank of America to act solely on their behalf as
Collateral Agent hereunder, and Bank of America hereby accepts such appointment.
The Collateral Agent, both prior to the occurrence of a Termination Event
hereunder and after a Termination Event shall have been cured or waived, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. The Collateral Agent shall at all times after the
occurrence of a Termination Event which has not been cured or waived exercise
such of the rights and powers vested in it pursuant to this Agreement using the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs.
All Collections received by the Collateral Agent from the
Collection Agent or otherwise will, pending remittance to the Secured Party
entitled thereto, be held in trust by the Collateral Agent for the benefit of
the Secured Parties and together with all other payment obligations of the
Debtor hereunder owing to the Secured Parties shall be payable to the Secured
Parties in accordance with the provisions of Article II hereof.
The Collateral Agent shall only resign if it shall (i) become
incapable of acting as Collateral Agent in accordance with the terms of this
Agreement, (ii) be adjudicated insolvent or bankrupt or otherwise become subject
to any bankruptcy, insolvency, reorganization or liquidation proceeding, (iii)
be no longer qualified as the Collateral Agent as such term is defined in the
agreement governing its responsi bility as Collateral Agent or otherwise be
subject to replacement pursuant to or such agreement governing its
responsibility as Collateral Agent or (iv) materially breach any of the
provisions of this Agreement or provided, further, that, without the consent of
the Agent, such resignation shall not be effective until a successor Collateral
Agent acceptable to the Agent shall have accepted appointment as Collat eral
Agent hereunder and shall have agreed to be bound by the terms of this Agree
ment.
Except as otherwise provided herein, the Collateral Agent
shall not resign from the obligations and duties hereby imposed on it except
upon determina tion that (i) the performance of its duties hereunder is no
longer permissible under applicable law and (ii) there is no reasonable action
which the Collateral Agent could
72
take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Collateral Agent shall be evidenced as to clause (i) above by an opinion of
counsel to such effect delivered to the Collateral Agent and the Secured
Parties. Notwithstanding the foregoing, the Collateral Agent may resign if,
after demand therefor, it does not receive payment of any compensation due from
the Debtor pursuant to the letter agreement described in Section 8.2. No
resignation of the Collateral Agent shall become effective until a successor
Collateral Agent approved by the Agent and the successor Collateral Agent shall
have assumed the responsibilities and obligations of the Collateral Agent
hereunder.
SECTION 8.2 Compensation and Indemnification of Collateral
Agent. The Collateral Agent shall be compensated for its activities hereunder
and reimbursed for reasonable out-of-pocket expenses (including (i) securities
transaction charges not waived due to the Collateral Agent's receipt of a
payment from a financial institution with respect to certain Eligible
Investments, as specified by the Debtor and (ii) the compensation and expenses
of its counsel and agents) pursuant to a separate letter agreement between the
Collateral Agent and the Debtor. All such amounts shall be payable from funds
available therefor in accordance with Section 2.3(a)(iii). Subject to the terms
of such letter agreement, the Collateral Agent shall be required to pay the
expenses incurred by it in connection with its activities hereunder from its own
account. Notwithstanding any other provisions in this Agreement, the Collateral
Agent shall not be liable for any liabilities, costs or expenses of the Debtor
arising under any tax law, including without limitation any Federal, state or
local income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or from a failure to
comply therewith).
The Debtor shall indemnify the Collateral Agent, its officers,
direc tors, employees and agents for, and hold it harmless against any loss,
liability or expense incurred without willful misconduct, gross negligence or
bad faith on its part, arising out of or in connection with (i) the acceptance
or administration of this Agreement, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under this Agreement and (ii) the
negligence, willful misconduct or bad faith of the Debtor in the performance of
its duties hereunder. All such amounts shall be payable in accordance with
Section 2.3(a)(iii) hereof. The provisions of this Section 8.2 shall survive the
termination of this Agreement.
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SECTION 8.3 Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent agrees to make the following
representations, warranties and covenants, and further agrees that the Secured
Parties shall be deemed to have relied upon such representations, warranties and
covenants in accepting their interest in the Receivables.
(a) Organization and Good Standing. The Collateral Agent is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States of America, and has full corporate
power, authority and legal right to own its properties and conduct its business
as such properties are presently owned and such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement.
(b) Due Authorization. The execution, delivery, and
performance of this Agreement and any other Transaction Document to which the
Collateral Agent is a party have been duly authorized by the Collateral Agent by
all necessary corporate action on the part of the Collateral Agent.
(c) Binding Obligation. This Agreement and the other
Transaction Documents to which the Collateral Agent is a party each constitutes
a legal, valid and binding obligation of the Collateral Agent, enforceable in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereinafter in effect, affecting the enforcement of creditors'
rights in general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity).
(d) No Conflict. The execution and delivery by the Collateral
Agent of this Agreement and the other Transaction Documents to which the
Collateral Agent is a party, and the performance of the transactions
contemplated by this Agreement and the other Transaction Documents and the
fulfillment of the terms hereof and thereof applicable to the Collateral Agent,
will not conflict with, violate, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any Requirement of Law applicable to the Collateral Agent or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Collateral Agent is a party or by which it is bound.
74
SECTION 8.4 Liability of the Collateral Agent.
(a) The Collateral Agent shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Collat eral Agent in such capacity herein. No implied covenants or obligations
shall be read into this Agreement against the Collateral Agent and, in the
absence of bad faith on the part of the Collateral Agent, the Collateral Agent
may conclusively rely on the truth of the statements and the correctness of the
opinions expressed in any certifi xxxxx or opinions furnished to the Collateral
Agent and conforming to the require ments of this Agreement.
(b) The Collateral Agent shall not be liable for an error of
judgment made in good faith by a Trust Officer, unless it shall be proved that
the Collateral Agent shall have been negligent in ascertaining the pertinent
facts.
(c) The Collateral Agent shall not be liable with respect to
any action taken, suffered or omitted to be taken in good faith in accordance
with this Agreement or at the direction of a Secured Party relating to the
exercise of any power conferred upon the Collateral Agent under this Agreement.
(d) The Collateral Agent shall not be charged with knowledge
of any Termination Event unless a Trust Officer assigned to the Collat eral
Agent's Corporate Trust Office obtains actual knowledge of such event or the
Collateral Agent receives written notice of such event from the Debtor, the
Seller, the Company, any Bank Investor or the Agent, as the case may be.
(e) Without limiting the generality of this Section 8.4, the
Collateral Agent shall have no duty (i) to see to any recording, filing or
depositing of this Agreement or any other Transaction Document or any financing
statement or continuation statement evidencing a security interest in the
Receivables or the Financed Vehicles, or to see to the maintenance of any such
recording or filing or depositing or to any recording, refiling or redepositing
of any thereof, (ii) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
Lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Receivables, (iv) to confirm or verify the contents of
any reports or certificates of the Collection Agent or the Debtor delivered to
the Collateral Agent pursuant to this Agreement believed by the Collateral Agent
to be genuine and to have been signed or presented by the proper party or
parties or
75
(v) to inspect the Financed Vehicles at any time or ascertain or inquire as to
the performance or observance of any of the Debtor's, the Seller's or the
Collection Agent's representations, warranties or covenants or the Collection
Agent's duties and obligations as Collection Agent and as custodian of books,
records, files and com puter records relating to the Receivables.
(f) The Collateral Agent shall not be required to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if there shall be reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability shall not be
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Collat eral Agent to perform, or be responsible
for the manner of performance of, any of the obligations of the Collection Agent
under this Agreement.
(g) The Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, officer's certificate, any
Settlement Statement, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(h) The Collateral Agent may consult with counsel and any
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this Agreement
in good faith and in accordance with such opinion of counsel.
(i) The Collateral Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement or to
institute, conduct or defend any litigation under this Agreement or in relation
to this Agree ment, at the request, order or direction of the Agent pursuant to
the provisions of this Agreement, unless the Agent shall have offered to the
Collateral Agent reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; nothing contained in
this Agreement, however, shall relieve the Collateral Agent of its obligations,
upon the occurrence of a Termination Event (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
76
(j) The Collateral Agent shall not be liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement.
(k) Prior to the occurrence of a Termination Event and before
the Collateral Agent has received notice of such Termination Event and after the
waiver of any Termination Event that may have occurred, the Collateral Agent
shall not be bound to make any investigation into the facts of matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by a Secured Party; provided, however, that if the
payment within a reasonable time to the Collateral Agent of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
shall be, in the opinion of the Collateral Agent, not reasonably assured by the
Debtor, the Collateral Agent may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Debtor or, if paid by the Collateral
Agent, shall be reimbursed by the Debtor upon demand.
(l) The Collateral Agent may execute any of the trusts or
powers hereunder or perform any duties under this Agreement either directly or
by or through agents or attorneys or a custodian. The Collateral Agent shall not
be respon sible for any misconduct or negligence of any such Agent or custodian
appointed with due care by it hereunder.
SECTION 8.5 Merger or Consolidation of, or Assumption of the
Obligations of, the Collateral Agent. The Collateral Agent shall not consolidate
with or merge into any other corporation or convey or transfer its properties
and assets substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or
into which the Collateral Agent is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Collateral Agent
substantially as an entirety shall be a corporation organized and existing under
the laws of the United States of America or any State or the District of
Columbia and, if the Collateral Agent is not the surviving entity, shall
expressly assume, by an agreement supplemental hereto, executed and delivered to
the Secured Parties in
77
form satisfactory to the Secured Parties, the performance of every
covenant and obligation of the Collateral Agent hereunder; and
(ii) the Collateral Agent has delivered to
the Secured Parties an officer's certificate and an opinion of
counsel each stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply
with this Section 8.5 and that all conditions precedent herein
provided for relating to such transac tion have been complied
with.
SECTION 8.6 Limitation on Liability of the Collateral Agent
and Others. The directors, officers, employees or agents of the Collateral Agent
shall not be under any liability to the Agent, any Secured Party or any other
Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consider ation for, the execution of this Agreement;
provided, however, that this provision shall not protect the directors,
officers, employees and agents of the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfea sance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. Except as provided in Section 8.4, the
Collateral Agent shall not be under any liability to any Secured Party or any
other Person for any action taken or for refraining from the taking of any
action in its capacity as Collateral Agent pursuant to this Agreement whether
arising from express or implied duties under this Agreement; provided, however,
that this provision shall not protect the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Collateral Agent may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Collateral Agent shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to administer the Collections and the Collection
Account in accordance with this Agreement which in its reasonable opinion may
involve it in any expense or liability.
SECTION 8.7 Indemnification of the Secured Parties. The
Collateral Agent shall indemnify and hold harmless the Agent and the Secured
Parties from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of willful misfeasance, bad faith, or gross negligence in
the performance of the duties of the Collateral Agent or by reason of reckless
disregard of obligations and duties of
78
the Collateral Agent hereunder or by reason of the acts, omissions or alleged
acts or omissions of the Collateral Agent pursuant to this Agreement. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Term of Agreement. This Agreement shall terminate
following the Termination Date when the Net Investment has been reduced to zero,
all accrued Carrying Costs have been paid in full and all other Aggregate
Unpaids have been paid in full; provided, however, that (i) the rights and
remedies of the Collateral Agent and the Secured Parties with respect to any
representation and warranty made or deemed to be made by the Debtor, the Seller
or UAC pursuant to this Agreement, (ii) the indemnification and payment
provisions of Article VIII, and (iii) the agreement set forth in Section 9.9,
shall be continuing and shall survive any termination of this Agreement.
SECTION 9.2 Waivers; Amendments. (a) No failure or delay on
the part of the Collateral Agent or any of the Secured Parties in exercising any
power, right or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or remedy
preclude any other further exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement may be amended or waived
if, but only if, such amendment is in writing and is signed by the Debtor, the
Collection Agent and the Majority Investors (and, if Article VI or the rights or
duties of the Collateral Agent are affected thereby, by the Collateral Agent),
except as provided in this Agreement; provided, that no such amendment or waiver
shall, unless signed by each Bank Investor directly affected thereby, (i)
increase the Commitment of a Bank Investor, (ii) reduce the Net Investment or
rate of interest to accrue thereon or any fees or other amounts payable
hereunder, (iii) postpone any date fixed for the payment of any scheduled
distribution in respect of the Net Investment or interest with respect thereto
or any fees or other amounts payable hereunder or for termina tion of any
Commitment, (iv) change the percentage of the Commitments or the
79
number of Bank Investors, which shall be required for the Bank Investors or any
of them to take any action under this Section or any other provision of this
Agreement, (v) extend or permit the extension of the Commitment Termination
Date, (vi) reduce or impair Collections or the payment of fees payable hereunder
to the Bank Investors or delay the scheduled dates for payment of such amounts,
(vii) increase the Servic ing Fee to a percentage greater than 1.0% per annum of
the aggregate Outstanding Balance of the Receivables as of the first day of the
related Settlement Period, (viii) modify any provisions of this Agreement, the
UAFC-1 Sale and Purchase Agree ment, the UAFC Sale and Purchase Agreement
relating to the timing of payments required to be made by the Debtor, the Seller
or UAC or the application of the proceeds of such payments, or (ix) provide for
the appointment of any Person (other than the Agent) as a successor Collection
Agent. In the event the Collateral Agent requests the Company's or a Bank
Investor's consent pursuant to the foregoing provisions and the Collateral Agent
does not receive a consent (either positive or negative) from the Company or
such Bank Investor within 10 Business Days of the Company's or Bank Investor's
receipt of such request, then the Company or such Bank Investor (and its
percentage interest hereunder) shall be disregarded in deter mining whether the
Collateral Agent shall have obtained sufficient consent hereun der.
SECTION 9.3 Notices. Except as provided below, all communica
tions and notices provided for hereunder shall be in writing (including bank
wire, telex, telecopy or electronic facsimile transmission or similar writing)
and shall be given to the other party at its address or telecopy number set
forth below or at such other address or telecopy number as such party may
hereafter specify for the pur poses of notice to such party. Each such notice or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and
confirmation is received, (ii) if given by mail 3 Business Days following such
posting, or (iii) if given by any other shall mean, when received at the address
specified in this Section. Each of the Debtor and the Collec tion Agent agrees
to deliver promptly to the Collateral Agent, for distribution to each of the
Secured Parties, a written confirmation of each telephonic notice signed by an
authorized officer of Debtor or the Collection Agent, as applicable. However,
the absence of such confirmation shall not affect the validity of such notice.
If the written confirmation differs in any material respect from the action
taken by the Company, the records of the Company shall govern absent manifest
error.
If to the Company:
-----------------
80
ENTERPRISE FUNDING CORPORATION
c/o Global Securitization Services, LLC
000 X. 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
Bankers Trust Company
ABA#000000000
Account#00000000
Reference Enterprise Funding - UAFC-1
(with a copy to the Administrative Agent)
If to the Debtor:
----------------
UAFC-1 CORPORATION
0000 Xxxxxx Xxxxx Xxxx, Xxxxx 0000-X
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxx, President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
Union Federal Savings Bank
of Indianapolis
ABA #:000000000
Account #: 590085484
Reference: UAFC-1 Corporation
If to UAC:
---------
UNION ACCEPTANCE CORPORATION
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, Finance Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
81
If to the Collateral Agent:
--------------------------
BANK OF AMERICA, N.A.
Bank of America Corporate Xxxxxx--00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx--
Investment Banking
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Administrative Agent:
------------------------------
BANK OF AMERICA, N.A.
Bank of America Corporate Xxxxxx--00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx--
Investment Banking
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Agent:
---------------
BANK OF AMERICA, N.A.
Bank of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
NC1-007-10-07
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information: Bank of America, N.A.
ABA #: 000000000
Account #: 109360 0000000
Reference: UAC
SECTION 9.4 Governing Law; Submission to Jurisdiction;
Integration.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Each of the Debtor, the
Seller
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UAC and the Collection Agent hereby submits to the nonexclusive jurisdiction of
the United States District Court for the Southern District of New York and of
any New York State court sitting in The City of New York for purposes of all
legal proceed ings arising out of or relating to this agreement or the
transactions contemplated hereby. Each of the Debtor, UAC and the Collection
Agent hereby irrevocably waives, to the fullest extent it may effectively do so,
any objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Nothing in this Section 9.4 shall affect the right of the Company to bring any
action or proceeding against the Debtor, the Seller, UAC or the Collection Agent
or their respective properties in the courts of other jurisdictions.
(b) This Agreement contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire Agreement between the parties
hereto with respect to the subject matter hereof superseding all prior oral or
written under standings.
SECTION 9.5 Severability; Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdic tion shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.6 Successors and Assigns.
(a) This Agreement shall be binding on the parties hereto and
their respective successors and assigns; provided, however, that neither the
Debtor, the Seller, UAC nor the Collection Agent may assign any of its rights or
delegate any of its duties hereunder without the prior written consent of the
Collat eral Agent. No provision of this Agreement shall in any manner restrict
the ability of the Collateral Agent to assign, participate, grant security
interests in, or otherwise transfer any portion of the Collateral.
83
(b) Each of the Debtor, the Seller and UAC hereby agrees and
consents to the assignment by the Company from time to time of all or any part
of its rights under, interest in and title to this Agreement and the Note to any
Liquid ity Provider.
(c) The parties hereto agree that the counterparties to
Acceptable Hedging Arrangements shall be third party beneficiaries of this
Agreement and that the provisions of Section 2.3(a) may not be amended without
the prior consent of such counterparties.
SECTION 9.7 Waiver of Confidentiality. Each of the Debtor, the
Seller and UAC hereby consents to the disclosure of any non-public information
with respect to it received by the Company or the Administrative Agent to any of
the Company, any nationally recognized rating agency rating the Company's
commercial paper, the Administrative Agent, the Liquidity Provider or the Credit
Support Provider in relation to this Agreement.
SECTION 9.8 Confidentiality Agreement. Each of the Debtor, the
Seller and UAC hereby agrees that it will not disclose the contents of this
Agreement or any other proprietary or confidential information of any of the
Secured Parties, the Collateral Agent, the Administrative Agent, the Liquidity
Provider or the Credit Support Provider to any other Person except (i) its
auditors and attorneys, employees or financial advisors (other than any
commercial bank) and any nationally recognized rating agency, provided such
auditors, attorneys, employees, financial advisors or rating agencies are
informed of the highly confidential nature of such information or (ii) as
otherwise required by applicable law, under the Securities Exchange Act of 1934,
as amended, in connection with an offering of securities issued by the Debtor or
an Affiliate thereof, or order of a court of competent jurisdiction (provided,
however, that no such disclosure shall occur without the prior review by the
Admin istrative Agent of the material to be disclosed).
SECTION 9.9 No Bankruptcy Petition Against the Company. Each
of the Debtor, the Seller, UAC and the Collection Agent hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of all outstanding Commercial Paper or other indebtedness of the Company
(or, if the Net Investment (or any portion thereof) has been assigned to a
Conduit Assignee, one year and one day after the payment in full of all
Commercial Paper issued by such Conduit Assignee), it will not institute
against, or join any other Person in instituting against, the Company or any
Conduit Assignee, any bankruptcy, reorganization,
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arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
SECTION 9.10 No Recourse Against Stockholders, Officers or
Directors. Notwithstanding anything to the contrary contained in this Agreement,
the obligations of the Company under this Agreement and all other Transaction
Documents are solely the corporate obligations of the Company and shall be
payable solely from the assets of the Company in excess of funds necessary to
pay matured and maturing Commercial Paper.
SECTION 9.11 Further Assurances. The Debtor agrees to do such
further acts and things and to execute and deliver to the Secured Parties, the
Admin istrative Agent or the Collateral Agent such additional assignments,
agreements, powers and instruments as are required by the Collateral Agent to
carry into effect the purposes of this Agreement or to better assure and confirm
unto the Collateral Agent its rights, powers and remedies hereunder..
SECTION 9.12 Characterization of the Transactions Contemplated
by the Agreement; Tax Treatment. (a) The parties hereto agree that this
Agreement shall constitute a security agreement under applicable law. The Seller
hereby assigns to the Debtor all of its rights to payment under the UAFC Sale
and Purchase Agree ment with respect to the Receivables and with respect to any
obligations thereunder of UAC with respect to the Receivables; and the Debtor
hereby assigns to the Collateral Agent, for the benefit of the Secured Parties,
all of its rights to payment (i) under the UAFC Sale and Purchase Agreement and
the UAFC-1 Sale and Purchase Agreement and pursuant to each Warehouse Transfer
Agreement with respect to the Receivables and with respect to any obligations
thereunder of UAC, the Seller or UAFC, as applicable, with respect to the
Receivables (ii) under or in connection with any Acceptable Hedging Arrangement
and (iii) the rights assigned to the Debtor under this Section 9.12. The
Collateral Agent agrees that upon any release of a Receivable or Contract to the
Debtor, the Collateral Agent shall be deemed to have released its security
interest therein and reassigned to the Debtor all of the Collateral Agent's
rights under the UAFC Sale and Purchase Agreement, the UAFC-1 Sale and Purchase
Agreement or pursuant to each Warehouse Transfer Agreement, as applica ble, with
respect to such Receivable or Contract. The Debtor agrees that neither it nor
the Collection Agent shall give any consent or waiver required or permitted to
be given under the UAFC-1 Sale and Purchase Agreement, the UAFC Sale and Pur
chase Agreement or any Warehouse Transfer Agreement, as applicable, with respect
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to the Receivables or the Contracts without the prior consent of either the
Collateral Agent or the Administrative Agent.
(b) Each of the parties hereto agrees to treat the transac
tions contemplated by this Agreement as a financing for federal income tax
purposes and further agree to file on a timely basis all federal and other
income tax returns consistent with such treatment.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Security Agreement as of the date first written above.
UAFC-1 CORPORATION,
as Debtor
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title:
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title:
UNION ACCEPTANCE FUNDING
CORPORATION, as Seller
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title:
UNION ACCEPTANCE CORPORATION,
individually and as Collection Agent
By: /s/ Xxxxxxx X. Xxxx
Name:
Title:
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BANK OF AMERICA, N.A.,
as Collateral Agent and Bank Investor
BY:/s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title:
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