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SECURITY AGREEMENT
among
ENTERPRISE FUNDING CORPORATION,
as Company,
UNION ACCEPTANCE FUNDING CORPORATION,
as Debtor
UNION ACCEPTANCE CORPORATION,
Individually and as Collection Agent
MBIA INSURANCE CORPORATION
as Insurer
and
NATIONSBANK, N.A.,
as Collateral Agent and Bank Investor
Dated as of September 18, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms.........................................2
SECTION 1.2 Other Terms..................................................21
SECTION 1.3 Computation of Time Periods..................................22
ARTICLE II
GRANT OF SECURITY INTEREST AND SETTLEMENTS
SECTION 2.1 Grant of Security Interest...................................22
SECTION 2.2 Carrying Costs, Fees and Other Costs and Expenses............23
SECTION 2.3 Allocations of Collections; Servicer Advances................23
SECTION 2.4 Liquidation Settlement Procedures............................26
SECTION 2.5 Fees.........................................................26
SECTION 2.6 Protection of Interest of the Collateral Agent...............26
SECTION 2.7 Payments on Receivables; Application of Payments.............28
SECTION 2.8 Payments and Computations, Etc...............................28
SECTION 2.9 Reports......................................................29
SECTION 2.10 Collection Account...........................................29
SECTION 2.11 Prefunding Account; Prefunding Interest Reserve Account;
Interest Reserve Deposits; Interest Reserve Advances;
Reimbursements...............................................31
SECTION 2.12 Prefunding Account and Prefunding Interest Reserve Account
Withdrawals..................................................34
SECTION 2.13 Yield Supplement Account, Deposits; Withdrawals..............35
SECTION 2.14 Reserve Account; Withdrawals; Releases; Draws on Policy......37
SECTION 2.15 Optional Release.............................................39
SECTION 2.16 Hedging Amounts..............................................42
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Debtor.................44
SECTION 3.2 Representations and Warranties of the Collection Agent.......47
SECTION 3.3 Reaffirmation of Representations and Warranties..............49
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Effectiveness..................................50
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Debtor and UAC..................52
SECTION 5.2 Negative Covenants of Debtor and UAC.........................56
SECTION 5.3 Hedging Arrangements.........................................58
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent..............................58
SECTION 6.2 Duties of Collection Agent...................................59
SECTION 6.3 Collection Agent Defaults....................................61
SECTION 6.4 Rights After Designation of New Collection Agent.............61
SECTION 6.5 Responsibilities of the Debtor...............................62
[SECTION 6.6 Suspension of Previous Servicing Agreement...................63
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events...........................................63
SECTION 7.2 Termination..................................................65
SECTION 7.3 Proceeds.....................................................66
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Duties of the Collateral Agent...............................67
SECTION 8.2 Compensation and Indemnification of Collateral Agent.........68
SECTION 8.3 Representations, Warranties and Covenants
of the Collateral Agent......................................69
SECTION 8.4 Liability of the Collateral Agent............................70
SECTION 8.5 Merger or Consolidation of, or Assumption of the
Obligations of, the Collateral Agent.........................72
SECTION 8.6 Limitation on Liability of the Collateral Agent and Others...73
SECTION 8.7 Indemnification of the Secured Parties.......................74
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Term of Agreement..............................................74
SECTION 9.2 Waivers; Amendments............................................74
SECTION 9.3 Notices........................................................75
SECTION 9.4 Governing Law; Submission to Jurisdiction; Integration.........78
SECTION 9.5 Severability; Counterparts.....................................79
SECTION 9.6 Successors and Assigns.........................................79
SECTION 9.7 Waiver of Confidentiality......................................79
SECTION 9.8 Confidentiality Agreement......................................79
SECTION 9.9 No Bankruptcy Petition Against the Company.....................80
SECTION 9.10 No Recourse Against Stockholders, Officers or Directors........80
SECTION 9.11 Further Assurances.............................................81
SECTION 9.12 Exercise of Rights by Insurer..................................81
SECTION 9.13 Characterization of the Transactions Contemplated by the
Agreement; Tax Treatment.......................................81
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EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B List of Lock-Box Banks and Lock-Box Accounts
EXHIBIT C Form of Policy
EXHIBIT D Form of Settlement Statement
EXHIBIT E Form of UAFC Withdrawal Notice
EXHIBIT F List of Actions and Suits
EXHIBIT G Schedule of Locations of Records
EXHIBIT H List of Subsidiaries, Divisions and
Tradenames
EXHIBIT I Form of Opinion of Xxxxxx & Xxxxxxxxx
EXHIBIT J Form of Opinon of Xxxxxx & Xxxxxxxxx
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of Septem ber
18, 1998, by and among UNION ACCEPTANCE FUNDING CORPORATION, a Delaware
corporation, as debtor (in such capacity, the "Debtor"), UNION ACCEP TANCE
CORPORATION, an Indiana corporation ("UAC"), individually and in its capacity as
collection agent (in such capacity, the "Collection Agent"), ENTER PRISE FUNDING
CORPORATION, a Delaware corporation (the "Company"), MBIA INSURANCE CORPORATION,
a New York stock insurance company, as financial guaranty insurer (the
"Insurer") and NATIONSBANK, N.A., a national banking association
("NationsBank"), individually and as collateral agent for the Company, the Bank
Investors, and the Insurer (in such capacity, the "Collateral Agent").
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 Insurance Agreement, the Insurer has
issued its Policy to provide for the full and timely payment of all amounts of
interest due on and principal of the Note;
WHEREAS, pursuant to the Note Purchase Agreement, the Debtor
has issued the Note to the Company and will be obligated to the holder of the
Note to pay the principal of and interest on the Note in accordance with the
terms thereof;
WHEREAS, the Debtor is granting a security interest in the
Collateral to the Collateral Agent, for the benefit of the Secured Parties, to
secure the payment and performance of the Debtor of its obligations under this
Agreement, the Note, the Note Purchase Agreement and the Insurance Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
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" shall have the meaning
specified in the Insurance Agreement.
"Accrued Interest Component" shall mean, for any Settlement
Period, the Interest Component of all Related Commercial Paper outstanding at
any time during such Settlement Period which has accrued from the first day
through the last day of such Settlement Period, whether or not such Related
Commercial Paper matures during such Settlement Period. For purposes of the
immediately preceding sentence, the portion of the Interest Component of Related
Commercial Paper accrued in a Settlement Period in which Related Commercial
Paper has a stated maturity date that succeeds the last day of such Settlement
Period shall be computed based on the actual number of days that such Related
Commercial Paper was out standing during such Settlement Period.
"Acquisition Subsidiary" shall mean PAC, or any wholly-owned
sub sidiary of UAC which has entered into (i) agreements with dealers in certain
states for the origination or purchase of Receivables, and (ii) an agreement
with UAC pursuant to which UAC acquires all Receivables originated or purchased
by such Acquisition Subsidiary.
"Adjusted LIBOR Rate" means, with respect to any Settlement
Period, a rate per annum equal to the sum (rounded upwards, if necessary, to the
next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve percentage used
for determining the maximum reserve requirement as specified in Regulation D
(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
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by the Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.
"Administrative Agent" shall mean NationsBank, as
administrative agent.
"Adverse Claim" shall mean a lien, security interest, charge
or encum brance, 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 di rectly 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 NationsBank, as agent for the Company and
the Bank Investors, and its successors and assigns.
"Aggregate Unpaids" shall mean, at any time, an amount equal
to the sum of (i) the aggregate accrued and unpaid Carrying Costs at such time,
(ii) an amount equal to the Company's existing obligations which comprise
Carrying Costs thereafter, (iii) the Net Investment at such time, and (iv) all
other amounts owed (whether due or accrued) hereunder and under the other
Transaction Documents by the Debtor at such time.
"Arrangement Fee" shall mean the fee payable by the Debtor to
the Administrative Agent pursuant to Section 2.5 hereof, the terms of which are
set forth in the Fee Letter.
"Available Funds" shall have the meaning specified in Section
2.3 hereof.
"Bank Investors" shall have the meaning specified in the Note
Pur chase Agreement.
"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, xxxxx ing when and as said prime rate changes (such rate not
necessarily being the lowest or
3
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 transac tions received by the Liquidity
Provider from three Federal funds brokers of recog nized standing selected by it
plus 2.0%.
"Business Day" shall mean any day excluding Saturday, Sunday
and any day on which banks in New York, New York, Charlotte, North Carolina,
Little Rock, Arkansas, Indianapolis, Indiana, or Bonita Springs, Florida are
authorized or required by law to close.
"Carrying Costs" shall mean for any Settlement Period the sum
of:
(i) the sum of the dollar amount of the Company's
obligations for such Settlement Period determined on an
accrual basis in accordance with generally accepted
accounting principles consistently applied
(a) to pay interest with respect to the Transferred Interest
pursuant to the provisions of the Liquidity Provider Agreement (such interest to
be calculated based on the Adjusted LIBOR Rate, if available, otherwise to be
calculated 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 Invest ment, 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
Agreement
4
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 previ
ously reimbursed;
(g) any past due amounts not paid in clause (a), (b) and (c)
with respect to prior Settlement Periods;
(h) to pay the costs of the Company with respect to the Yield
Protection Provision, which amounts paid pursuant to this clause (h) shall not
exceed 1.00% per annum of the Net Investment; and
(ii) the Program Fee, the Administrative Fee, and
Liquidity Fee accrued from the first day through the
last day of such Settle ment Period whether or not such
amount is payable during such Settlement Period the sum
of which amounts shall not exceed 0.17% per annum of the
Net Investment plus 0.11% per annum of the Facility
Limit.
During any Settlement Period during which the Bank Investors
have (x) advanced funds with respect to a Funding or (y) acquired an interest in
the Note, in lieu of the amounts described in clauses (i)(c) and (i)(d) above,
Carrying Costs shall include interest on the daily average Net Investment for
the related Settlement Period at the Adjusted LIBOR Rate, or if such rate is
unavailable, at the Base Rate, or if an Insurer Default and a Termination Event
shall have occurred and be continuing, at the Base Rate plus 2.00%.
"Closing Date" shall mean September 18, 1998.
"Collateral" shall have the meaning specified in Section 2.1
hereof; provided, that the term "Collateral" specifically excludes Modified
Receivables.
"Collateral Agent" shall mean NationsBank, as collateral agent
for the Secured Parties, and its successors and assigns.
5
"Collections" shall mean, with respect to any Receivable, all
cash collections and other cash proceeds of such Receivable, including, without
limitation, 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 disabil ity) included in the original amount financed
under such Receivable, and cash pro ceeds of Related Security with respect to
such Receivable, provided that amounts re ceived in respect of a Receivable
which constitute, in accordance with the Credit and Collection Policy, a payment
of a late payment charge, insufficient funds charge or a prepayment charge will
not be considered a Collection and shall be retained by the Collection Agent and
not deposited into the Collection Account.
"Collection Account" shall mean the account established by the
Collateral Agent, for the benefit of the Secured Parties, pursuant to Section
2.10.
"Collection Agent" shall mean at any time the Person then
authorized pursuant to Section 6.1 to service, administer and collect
Receivables.
"Collection Agent Default" shall have the meaning specified in
Section 6.3.
"Commercial Paper" shall mean the promissory notes of the
Company issued by the Company in the commercial paper market.
"Commitment Termination Date" shall mean September 17, 1999,
or such later date to which the Commitment Termination Date may be extended by
the Debtor, the Agent and the Bank Investors not later than 30 days prior to the
then current Commitment Termination Date.
"Company" shall have the meaning specified in the preamble
hereto.
"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 auto mobile, light duty truck or van and other writings related
thereto now existing and hereafter created or acquired by UAC (or in the case of
certain Receivables existing on the Cut-Off Date, created or acquired by PAC or
UAC d/b/a PAC) and assigned from time to time to the Debtor pursuant to the Sale
and Purchase Agreement or the PFC Sale and Purchase Agreement, as applicable.
"Credit and Collection Policy" shall mean the Collection
Agent's credit and collection policy or policies and practices relating to
"prime" and "non-prime"
6
automobile installment sales contracts, existing on the date hereof and referred
to in Exhibit A attached hereto, as amended, supplemented or otherwise modified
and in effect from time to time in compliance with Section 5.2(d).
"Credit Support Agreement" shall mean the agreement between
the Company and the Credit Support Provider evidencing the obligation of the
Credit Support Provider to provide credit support to the Company in connection
with the issuance by the Company of Commercial Paper.
"Credit Support Provider" shall mean the Person or Persons who
will provide credit support to the Company in connection with the issuance by
the Company of Commercial Paper.
"Cut-Off Date" shall mean September 17, 1998.
"Dealer Fee" shall mean the fee payable by the Debtor to the
Collateral Agent, pursuant to Section 2.5 hereof, the terms of which are set
forth in the Fee Letter.
"Debtor" shall mean Union Acceptance Funding Corporation, a
Delaware corporation.
"Defaulted Receivable" shall mean, for any Settlement Period,
a Receivable: (i) as to which any payment (in excess of $10.00), or part thereof
(in excess of $10.00), remains unpaid for 120 days or more as of the last day of
such Settlement Period; (ii) which has been or should have been identified by
the Collec tion Agent as uncollectible in accordance with the Collection Agent's
customary practices on or before the last day of such Settlement Period; or
(iii) as to which the related Financed Vehicle has been repossessed from the
Obligor.
"Delinquent Receivable" shall mean a Receivable: (i) as to
which any payment, or part thereof (provided that such part is in excess of
$10.00), remains unpaid for more than thirty (30) days from the due date for
such payment and (ii) which is not a Defaulted Receivable.
"Determination Date" shall mean, with respect to each
Remittance Date, the second Business Day preceding such Remittance Date.
"Duff & Xxxxxx" shall mean Duff & Xxxxxx Credit Rating
Company.
7
"Eligible Institution" shall mean the Collateral Agent or any
other depository institution organized under the laws of the United States or
any one of the States thereof including the District of Columbia, the deposits
in which are insured by the FDIC and which at all times has a short-term
unsecured debt rating of at least "A-1+" and "P-1" from Standard & Poor's and
Moody's, respectively, and of at least "D-1+" from Duff & Xxxxxx, if such
institution is rated by Duff & Xxxxxx, and of at least "F-1+" from Fitch, if
such institution is rated by Fitch.
"Eligible Investments" shall mean (a) negotiable instruments
or securities represented by instruments in bearer or registered or in
book-entry form which evidence (i) obligations fully guaranteed by the United
States of America; (ii) time deposits in, or bankers acceptances issued by, any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch or agency
of any foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
certificates of deposit or short-term deposits, if any, or long-term unsecured
debt obligations (other than any such obligation whose rating is based on
collateral or on the credit of a Person other than such institution or trust
company) of such depository institution or trust company shall have a credit
rating from Moody's and Standard & Poor's of at least "P-1" and "A-1+",
respectively, and from Duff & Xxxxxx of at least "D-1+", if such investment is
rated by Duff & Xxxxxx, and from Fitch of at least "F-1+", if such investment is
rated by Fitch, in the case of the certificates of deposit or short-term
deposits, or a rating not lower than one of the two highest investment
categories granted by Moody's and Standard & Poor's and Duff & Xxxxxx, if such
investment is rated by Duff & Xxxxxx, and Fitch, if such investment is rated by
Fitch; (iii) certificates of deposit having, at the time of the investment or
contractual commitment to invest therein, a rating from Moody's and Standard &
Poor's of at least "P-1" and "A-1+", respectively, and from Duff & Xxxxxx of at
least "D-1+", if such certificates of deposit are rated by Duff & Xxxxxx, and
from Fitch of at least "F-1", if such certificates of deposit are rated by
Fitch; or (iv) investments in money market funds rated in the highest investment
category, (b) demand deposits in the name of the Secured Parties or the
Collateral Agent on behalf of the Secured Parties in any depository institution
or trust company referred to in (a)(ii) above, (c) commercial paper (having
original or remaining maturities of no more than 30 days) having, at the time of
the investment or contractual commitment to invest therein, a credit rating from
Moody's and Standard & Poor's of at least "P-1" and "A-1+", respectively, and
from Duff & Xxxxxx of at least "D-1+", if such commer cial paper is rated by
Duff & Xxxxxx, and from Fitch of at least "F-1", if such commer cial paper is
rated by Fitch, (d) Eurodollar time deposits having a credit rating from
8
Moody's and Standard & Poor's of at least "P-1" and "A-1+", respectively, and
from Duff & Xxxxxx of at least "D-1+", if such deposits are rated by Duff &
Xxxxxx, and from Fitch of at least "F-1", if such deposits are rated by Fitch,
and (e) repurchase agreements involving any of the Eligible Investments
described in clauses (a)(i), (a)(iii) and (d) hereof so long as the other party
to the repurchase agreement has at the time of the investment therein, a rating
from Moody's and Standard & Poor's of at least "P-1" and "A-1+", respectively,
and from Duff & Xxxxxx of at least "D-1+", if such party is rated by Duff &
Xxxxxx, and from Fitch of at least "F-1", if such party is rated by Fitch.
"Eligible Receivable" shall mean, at any time, any Receivable:
(i) (A) which shall have been either (x)
originated by or through a factory authorized dealer, a nationally
recognized rental car outlet, or a nationally recognized used car
superstore, in each case located in the United States and which, to
gether with the Contract related thereto, shall have been validly as
signed by such dealer to an Acquisition Subsidiary or UAC or pursuant
to the terms of such Contract, for the retail sale of the related
Financed Vehicle in the ordinary course of its business, shall have
been validly assigned to UAC if such Receivable had been assigned by
such a dealer to an Acquisition Subsidiary (other than PAC) or to PFC
if such Receivable had been assigned by such a dealer to PAC or UAC
d/b/a PAC, shall have been fully and properly executed by the parties
thereto, and shall have been advanced directly to or for the benefit of
the Obligor for the purchase of the related Financed Vehicle, or (y)
originated by an Acquisition Subsidiary or UAC for the retail sale of
the related Financed Vehicle in the ordinary course of its business,
shall have been validly assigned to UAC if such Receivable had been
originated by an Acquisition Subsidiary (other than PAC) or to PFC if
such Receivable had been originated by PAC or UAC d/b/a PAC, shall have
been fully and properly executed by the parties thereto, and shall have
been advanced directly to or for the benefit of the Obligor for the
purchase of the related Financed Vehicle, (B) shall have been sold by
UAC or PFC to the Debtor pursuant to the Sale and Purchase Agree ment
or the PFC Sale and Purchase Agreement, as applicable, and 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
9
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
subdivi sion or agency;
(iii) which is not a Defaulted Receivable at the time of
the initial creation of an interest of the Company therein;
(iv) which is not a Delinquent Receivable at the time of
the initial creation of an interest of the Company therein;
(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 amortizes the amount financed over the original
term;
(vi) the Contract related thereto shall pro vide for the
calculation of interest payable thereunder under either the
"simple interest" or "Rule of 78's" or the "sum of the
periodic time balances" method;
(vii) the Contract related to which provides for no more
than 84 monthly payments;
(viii) which is an "eligible asset" as defined in Rule
3a-7 under the Investment Company Act of 1940, as amended;
(ix) which is "chattel paper" within the meaning of
Article 9 of the Relevant UCC, and which is secured by a first
priority perfected lien on the related Financed Vehicle, free
and clear of any Adverse Claim or for which all necessary
steps to result in such a first priority perfected lien shall
have been taken;
(x) which is denominated and payable only in United
States dollars in the United States;
10
(xi) which arises under a Contract that, to gether with
the Receivable related thereto, is in full force and effect
and constitutes the legal, valid and binding obligation of the
related Obligor enforceable against such Obligor in accordance
with its terms and is not subject to any offset, counterclaim
or other defense at such time;
(xii) which, together with the Contract related thereto,
does not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to usury laws, the
Federal Truth-in- Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Re porting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the
Xxxxxxxx-Xxxx Warranty Act, Regulations 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 require ments
of the Credit and Collection Policy and is identified on the
Collection Agent's master servicing records as a "prime" loan
(by code designation as a "type 84" or "type 85" loan) or a
"non-prime" loan (by code designation as a "type 54" or "type
55" loan), (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 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 and the Debtor have each performed all obligations
required to be performed by them thereunder, and delivery of
the Financed Vehicle to the related Obligor has occurred, and
(D) complies with such other criteria and requirements as the
Company may from time to time reasonably specify to the Debtor
following sixty (60) days' notice; and
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(xiv) the Obligor of which has been directed to make all
payments to a specified account of the Collection Agent.
"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 Code (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 at any time of determination over (ii) the product of
2.5% and the Net Receivables Balance (calculated without giving effect to clause
(iv) of the definition thereof) at any time of determination; provided, that if
the Excess Delinquent Receiv xxxxx 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
12
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 $450,000,000.
"Fee Letter" shall mean the letter agreement dated the date
hereof between the Debtor and the Company, as amended, modified or supplemented
from time to time.
"Finance Charges" shall mean, with respect to a Contract, any
finance, interest or similar charges owing by an Obligor or another Person
pursuant to such Contract.
"Financed Vehicle" shall mean, with respect to a Receivable,
any new or used automobile, van or light-duty truck, together with all
accessories thereto, securing the related Obligor's indebtedness thereunder.
"Fitch" shall mean Fitch IBCA, Inc.
"Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Funding Date" shall have the meaning specified in the Note
Purchase Agreement.
"Hedge Proceeds Account" shall have the meaning specified in
Section 2.16(a).
"Hedging Arrangement" shall mean any financial arrangement
obtained by the Collection Agent satisfying the requirements of Section 5.3
hereof and other wise in form and substance reasonably satisfactory to the
Company, the Insurer, and the Administrative Agent, the benefits (but not the
obligations) of which are, on and after the occurrence of a Termination Event,
in favor of the Debtor.
"Initial Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Insurance Agreement" shall mean that certain Insurance
Agreement, dated as of September 18, 1998, among the Collection Agent, the
Debtor, the Collateral Agent and the Insurer.
13
"Insurer" shall mean MBIA Insurance Corporation, a New York
stock insurance company.
"Insurer Default" shall mean, at any time, any failure by the
Insurer to make any payment when due under the Insurance Agreement or under any
other insurance policy or financial guaranty insurance policy issued by it.
"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 provided, 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 equivalent rate per annum.
"Interest Reserve Advance" shall mean, with respect to any
Remit tance Date, the amount, if any (which shall not be less than zero), equal
to (i) the product of (x) the daily weighted average amount on deposit in the
Prefunding Account during the preceding Settlement Period, (y) the Targeted
Interest Rate for such Settlement Period (on a per annum basis) and (z) a
fraction the numerator of which is the number of days in such Settlement Period
and the denominator of which is 360 minus (ii) the amount earned during the
preceding Settlement Period on amounts on deposit in the Prefunding Account.
"Interest Reserve Deposit" shall have the meaning specified in
Section 2.11.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"LIBOR Rate" means, with respect to any Settlement Period, the
rate determined by NationsBank 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 near est 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
14
arithmetic mean (rounded upwards, if necessary, to the nearest 1/100,000 of 1%)
of the offered quotations obtained by NationsBank from four major banks in the
London interbank market selected by NationsBank (the "Reference Banks") for
deposits in U.S. Dollars to leading banks in the London interbank market as of
approximately 11:00 a.m. (London time) on the day that is two London Business
Days prior to the first day of such Settlement Period, unless such first day of
the Settlement Period is not a Business Day, in which case, the first preceding
day that is a Business Day or (iii) if fewer than two Reference Banks provide
NationsBank with such quotations, the LIBOR Rate shall be the rate per annum
which NationsBank 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 NationsBank 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 avail able, 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.
15
"London Business Day" shall mean any day which is a Business
Day and also is a day on which commercial banks are open for international
business (including dealings in U.S. Dollar deposits) in London.
"Majority Investors" shall have the meaning specified in the
Note Purchase Agreement.
"Minimum Required APR" shall mean, as of any date of
determination, 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 subse quently published by the Board of Governors of the Federal
Reserve System in H.15(519) under the heading "Commercial Paper" plus 1.40% per
annum and (ii) the current yield to maturity of the United States Treasury
Security having a maturity of two years (or if there is more than one such
security, the average of the yields to maturity thereof) plus 1.63% per annum.
"Modified Receivable" means indebtedness owed to the Debtor by
an Obligor (without giving effect to any transfer under this Agreement) under a
Contract which has been modified and is classified as a type 44, 45, 74 or 75
receivable in the Debtor's records, whether constituting an account, chattel
paper, instrument or general intangible, arising out of or in connection with
the sale of new or used automobiles, vans or light-duty trucks or the rendering
of services by the originating dealer in connection therewith, and includes the
right of payment of any finance charges and other obligations of the Obligor
with respect thereto.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"NationsBank" shall have the meaning specified in the preamble
hereto.
"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, (b)
plus 1.40%, minus (c) the Targeted Interest Rate.
16
"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 Collection Agent on or prior to any date of
determination but have not yet been deposited in the Collection Account (if such
Receipts of Principal are not so deposited therein within 2 Business Days of the
receipt thereof by the Collection Agent the "Net Investment" shall thereupon be
recalculated, effective as of the original date of determination, without giving
effect to such Receipts of Principal) plus (c) the aggregate amount of Collec
tions received and applied by the Company to reduce such Net Investment pursuant
to Section 2.3, minus (vi) draws on the Policy distributed and applied in
reduction of Net Investment, and minus (vii) the aggregate amount of funds
received and applied to reduce such Net Investment pursuant to Sections 2.7,
2.15 and 2.16; provided that the Net Investment shall be restored in the amount
of any Collections so received and applied if at any time the distribution of
such Collections is rescinded or must other wise be returned for any reason;
provided further, that as to the Insurer, draws made under the Policy will not
reduce the principal amount due under the Note.
"Net Negative Hedging Amounts" shall mean, as of any
Remittance Date, an amount equal to the amount by which (i) the aggregate amount
of losses incurred by the Collection Agent on any 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
Hedging Arrange ments during the related Settlement Period and any prior
Settlement Periods and (y) amounts distributed to the Collection Agent pursuant
to Section 2.3(a)(xiii) on any prior Remittance Date.
"Net Receivables Balance" means at any time the Outstanding
Balance of the Eligible Receivables at such time reduced by the sum of (i) the
amount by which the aggregate Outstanding Balance of Undocumented Receivables
exceeds $15,000,000, plus (ii) the aggregate Outstanding Balance of all Eligible
Receivables which are Defaulted Receivables, plus (iii) the amount, if any, by
which the aggregate outstanding Balance of all Eligible Receivables which are
type 54 or 55 loans (the
17
"non-prime" loans) exceeds the product of (x) 5% and (y) the Outstanding Balance
of all Eligible Receivables, plus (iv) the Excess Delinquent Receivables
Balance.
"Net Yield" shall mean, as calculated on each Determination
Date, the product of (i) 12 and (ii) a fraction, the numerator of which is (x)
the Available Funds less the aggregate amount of Carrying Costs accrued during
the related Settlement Period less the aggregate Outstanding Balance of all
Receivables which became Defaulted Receivables during the related Settlement
Period net of the aggregate amount of recoveries received during such Settlement
Period, and the denominator of which is (y) the average daily Net Investment for
such Settlement Period. The Net Yield shall be expressed as a percentage.
"Note" shall have the meaning specified in the Note Purchase
Agree ment.
"Noteholder's Percentage" shall mean an amount equal to 100%
less the product of (i) 2, and (ii) the amount, if any, by which the Target Net
Yield exceeds the Net Yield as of the most recent Determination Date. The
Noteholder's Percentage shall initially equal 100%
"Note Purchase Agreement" shall mean that certain Note
Purchase Agreement, dated as of September 18, 1998, 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 instrumental ity 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.
18
"PAC" shall mean Performance Acceptance Corporation, an
Indiana corporation, and its successors and assigns, including UAC and UAC d/b/a
PAC.
"Person" shall mean any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization, enterprise,
government or any department or agency of any government.
"PFC" shall mean Performance Funding Corporation, a Delaware
corporation, and its successors and assigns.
"PFC Sale and Purchase Agreement" shall mean the Purchase and
Assignment Agreement, dated as of February 28, 1998, among the Debtor, as
purchaser, and PFC, as seller, as amended to the date hereof and as amended,
modi fied or supplemented from time to time hereafter.
"Policy" shall mean that certain financial guaranty insurance
policy, substantially in the form attached hereto as Exhibit C.
"Potential Termination Event" shall mean an event which but
for the lapse of time or the giving of notice, or both, would constitute a
Termination Event.
"Prefunding Account" shall mean the account established by the
Collateral Agent, for the benefit of the Secured Parties, pursuant to Section
2.11.
"Prefunding Date" shall mean the 1st calendar day of each
month (or if such day is not a Business Day, the next succeeding Business Day)
and such other 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
one additional Prefunding Date 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
estab lished by the Collateral Agent, for the benefit of the Secured Parties,
pursuant to Section 2.11.
19
"Prefunding Period" shall mean, with respect to any Prefunding
Date, the period from such date to the succeeding Prefunding Date.
"Premium" shall have the meaning specified in the Insurance
Agree ment.
"Proceeds" shall mean "proceeds" as defined in Section
9-306(1) of the Relevant UCC.
"Receipts of Interest" shall mean that portion of the
Collections with respect to the Receivables which are properly designated as
Finance Charges in accordance with the Credit and Collection Policy, together
with (i) any recoveries in respect of Defaulted Receivables and Related Security
with respect thereto, and (ii) amounts considered to be "Receipts of Interest"
pursuant to Sections 2.7, 2.10 and 2.15.
"Receipts of Principal" shall mean all Collections, other than
those designated as Receipts of Interest, together with all amounts considered
to be "Re ceipts of Principal" pursuant to Sections 2.7 and 2.15, provided, that
Collections con stituting 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) included 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,
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 in cludes 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 pursu ant to
Section 2.7 or Section 2.15 hereof, it shall no longer constitute a Receivable
hereunder. The term "Receivable" specifically excludes Modified Receivables.
"Records" shall mean all Contracts and other documents, books,
records and other information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors.
20
"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
acquisition 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
Financed Vehicles (including repossessed vehicles) or in any document
or writing evidencing any security interest in any Financed Vehicle and
all of the Debtor's interest in all rights to payment under all
insurance contracts with respect to a Financed Vehicle, including,
without limitation, any monies collected from whatever source in
connection with any default of an Obligor with respect to a Financed
Vehicle and any proceeds from claims or refunds of premiums on any
physical damage, lender's single interest, credit life, disability and
hospitaliza tion 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);
21
(v) all of the Debtor's interest in all Re
cords, documents and writings evidencing or related to such Receiv
xxxxx or the Contracts; and
(vi) all Proceeds of the foregoing.
"Relevant UCC" shall mean the Uniform Commercial Code as from
time to time in effect in all applicable jurisdictions.
"Remittance Date" shall mean, for each Settlement Period, the
tenth (10th) day of the next succeeding calendar month; provided that if such
day is not a Business Day, then the Remittance Date shall be the next succeeding
Business Day.
"Required Reserve Account Amount" shall mean, at any time of
determination, an amount equal to the product of (a) 3.25% 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 rated at least investment grade by S&P and
Moody's.
"S&P" shall mean Standard & Poor's Ratings Services, a
Division of the McGraw Hill Companies.
"Sale and Purchase Agreement" shall mean, as applicable,
either or both of (i) the Amended and Restated Sale and Purchase Agreement dated
as of December 23, 1996, between the Debtor, as purchaser, and UAC, as seller,
and (ii) the Amended and Restated Sale and Purchase Agreement dated as of
December 23, 1996, between PFC, as purchaser, and UAC, as seller, each as
amended to the date hereof and as amended, modified or supplemented from time to
time hereafter.
22
"Secured Parties" shall mean the Company, the Bank Investors
and the Insurer.
"Securities Intermediary" shall mean NationsBank, and any
other entity acting in the capacity of a "securities intermediary" as defined in
Section 8- 102(14) of the UCC.
"Servicer Advance" shall have the meaning specified in Section
2.3(c).
"Servicing Fee" shall mean, for any Settlement Period, the fee
payable pursuant to Section 2.3 on the related Remittance Date by the Company to
the Col lection 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
Settlement Period.
"Settlement Period" shall mean any calendar month, provided
that the initial Settlement Period shall commence on the Cut-Off Date and end on
October 31, 1998.
"Settlement Statement" shall mean a report, in substantially
the form of Exhibit D or in such other form as is mutually agreed to by the
Debtor and the Company, furnished by the Collection Agent to the Collateral
Agent, the Agent, Xxxxx'x, S&P and the Insurer on each Determination Date
pursuant to Section 2.9.
"Subsidiary" of a Person shall mean any corporation more than
50% of the outstanding voting securities of which, and any partnership more than
50% of the partnership interests of which, shall at any time be owned or
controlled, directly or indirectly, by such Person or by one or more
Subsidiaries of such Person or any simi lar 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 Outstanding Balance of
Receivables immediately after the Take-Out shall be no more than 25% of the
highest Outstanding Balance of Receivables in existence as of a date not more
than 31 days prior to the Take-Out.
"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 Col lection Agent, such other rate to be effective three (3) Business
Days after the date of such notice.
23
"Target Net Yield" shall mean 5.0%
"Termination Date" shall mean the earliest of (i) that
Business Day designated by the Debtor to the Agent as the Termination Date at
any time following 60 days' written notice to the Agent, (ii) the date of
termination of the liquidity commitment of the Liquidity Provider under the
Liquidity Provider Agreement, (iii) the date of termination of the commitment of
the Credit Support Provider under the Credit Support Agreement, (iv) the day on
which a Termination Event occurs pursu ant to Section 7.1, (v) two business days
prior to the Commitment Termination Date, or (vi) September 17, 1999, unless
extended prior to such date pursuant to a Revolv ing Period Extension (as
defined in the Insurance Agreement).
"Termination Event" shall mean an event described in Section
7.1.
"Transaction Documents" shall mean this Agreement, the Note
Purchase Agreement, the Note, the Sale and Purchase Agreement, the Insurance
Agreement, the Policy, the Fee Letter and all other agreements, documents and
instruments delivered pursuant thereto or in connection therewith.
"Transferred Interest" shall mean, at any time of
determination, an undivided interest in the Note.
"UAC" shall mean Union Acceptance Corporation, an Indiana
corpo ration, and its successors and assigns.
"UARC" shall mean Union Acceptance Receivables Corporation, a
Delaware corporation, and its successors and assigns.
"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 Subsid iary, 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.
"Withdrawal Notice" shall have the meaning specified in
Section 2.12(a).
24
"Yield Protection Provision" shall mean the compensation of
the Company and the Bank Investors by the Debtor of the Company's and the Bank
Investors' costs due to increased taxes, reserve and funding costs as described
in Section 4.2 of the Note Purchase Agreement.
"Yield Supplement Account" shall mean the account established
by the Collateral Agent, for the benefit of the Company, pursuant to Section
2.13.
SECTION 1.2 Other Terms. Unless the context otherwise
requires, all capi talized 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 obliga tions under the Note, the Note Purchase Agreement, the Insurance
Agreement, this Agreement and the other Transaction Documents, the Debtor hereby
grants to the Collateral Agent, for the benefit of the Secured Parties, without
recourse except as provided herein, a security interest in and continuing Lien
on all of the Debtor's property, in existence on the Cut-Off Date or thereafter
acquired and wherever located, including, without limitation, all of its right,
title and interest in, to and under all accounts, contract rights, general
intangibles, chattel paper, instruments, docu ments, money, cash, deposit
accounts, certificates of deposit, goods, letters of credit, securities,
investment property, financial assets or security entitlements (all of the
foregoing, collectively, the "Collateral"); provided, that once the Company has
released its interest in a Receivable and the related Contract pursuant to
Section 2.7
25
or 2.15 hereof, such Receivable and related Contract shall no longer be part of
the Collateral.
In connection with such grant, the Debtor agrees to record and
file, at its own expense, financing statements with respect to the Collateral
now existing and hereafter created meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
first priority security interest of the Collateral Agent in the Collateral, and
to deliver a file-stamped copy of such financing statements or other evidence of
such filing (which may, for purposes of this Section 2.1, consist of telephone
confirmation of such filing) to the Collateral Agent on or prior to the Closing
Date. In addition, the Debtor and the Collection Agent agree to clearly and
unambiguously xxxx their respective general ledgers and all accounting records
and documents and all computer tapes and records to show that the Collat eral,
including that portion of the Collateral consisting of the Receivables 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 Commer cial Paper notes to the extent such
notes were issued in order to fund the Net Invest ment 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 Ad
vances; 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 to the extent not required pursuant to Section
2.11 to be distrib uted to the Collection Agent in reimbursement for previously
advanced Interest
26
Reserve Advances plus all amounts deposited in the Prefunding Interest Reserve
Account with respect to the related Settlement Period (together with any
earnings thereon during such Settlement Period) plus any Interest Reserve
Advance made by the Collection Agent on such Remittance Date pursuant to Section
2.11 plus any payments to the Debtor under an Acceptable Hedging Arrangement
plus all amounts to be applied pursuant to Section 2.14(c)(ii)(y) (the aggregate
of such amounts in re spect of any remittance date, the "Available Funds") shall
be applied, without duplica tion, by the Collection Agent as follows:
(i) first, (A) to pay any amounts due under
an Acceptable Hedging Arrangement, and (B) to the Reserve Account, in
the amount of Reserve Account Advances related to such Settle ment
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 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 (exclusive of all amounts payable pursuant to the
Yield Protection Provision) in respect of such Settlement Period and
with respect to any previous Settlement Period to the extent not
previously paid;
(v) fifth, to the extent of any remaining
Available Funds, to the payment of the Agent, for the account of the
Company and the Bank Investors, as applicable, to be applied in
reduction of the Net Investment, of the amount by which the Net
Investment less the quotient of (A) the amount on deposit in the
Prefunding Account and (B) 100% less the quotient of (x) the percent
age used to determine the Required Reserve Account Amount and (y) the
Noteholder's Percentage exceeds the product of the Noteholder's
Percentage and the Net Receivables Balance;
27
(vi) sixth, to the extent of any remaining
Available Funds, to the Insurer, the aggregate amount of any previ
ously unreimbursed draws on the Policy, plus accrued interest thereon
at the rate provided in the Insurance Agreement;
(vii) seventh, to the extent of any
remaining Available Funds, to the Insurer, the Premium, including any
overdue Premium, accrued interest thereon plus any amounts owed under
the Policy or the Insurance Agreement;
(viii) eighth, to the extent of any
remaining Available Funds, to the Reserve Account, to the extent
necessary to cause the amount on deposit therein to equal the Required
Reserve Account Amount;
(ix) ninth, to the extent of any remaining
Available Funds, to the Yield Supplement Account to the extent of any
amounts previously withdrawn therefrom pursuant to Section 2.3(c) and
not previously reimbursed to the credit of the Yield Supplement
Account; provided that there shall be no requirement to reimburse such
account for amounts withdrawn therefrom related to any Receiv xxxxx 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;
(x) tenth, to the extent of any remaining
Available Funds, to the payment of the Collection Agent (if the Collec
tion Agent is UAC), of the Servicing Fee for such Settlement Period and
any unreimbursed Interest Reserve Advances made by the Collec tion
Agent and not previously reimbursed;
(xi) eleventh, to the extent of any
remaining Available Funds, on or after the Termination Date, such
remaining Available Funds shall be paid to the Agent, for the account
of the Company and the Bank Investors, as applicable, in reduction of
the Net Investment;
(xii) twelfth, to pay all amounts due under
the Yield Protection Provision;
28
(xiii) thirteenth, 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;
(xiv) fourteenth, to the extent of any
remain ing funds, to the Agent, for the account of the Persons entitled
thereto, an amount equal to all other amounts owed under the Note
Purchase Agreement; and
(xv) fifteenth, any remaining Available
Funds shall be paid to the Debtor.
(b) On any Business Day on which Commercial Paper issued in
connection herewith matures, the Collection Agent may apply and remit to the
Agent, in reduction of the Net Investment, any Receipts of Principal received on
or prior to such day and not previously remitted to the Agent in any such case
in an amount not to exceed the principal component of such maturing Commercial
Paper. On each Remittance Date, the Collection Agent shall apply and remit to
the Agent, in reduction of the Net Investment, all Receipts of Principal
received with respect to the prior Settlement Period and not previously remitted
to the Agent pursuant to the preceding sentence.
(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");
provided, 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 Remit tance 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.
29
(New York City time) there shall be made a Reserve Account Advance and/or an
advance pursuant to any Reserve Account Guaranty equal to the amount of such
deficiency, which amount shall be applied to pay such costs and expenses of the
Company. In the event that any such Reserve Account Advance and/or advance
pursuant to any Reserve Account Guaranty is not made by 11:00 a.m. (New York
City time) on the day requested by the Collection Agent, there shall be made a
draw under the Policy equal to the amount of such deficiency, which amount shall
be paid directly to the Agent and shall be applied to pay such costs and
expenses of the Company.
SECTION 2.4 Liquidation Settlement Procedures. Following any
date after the Termination Date on which all Aggregate Unpaids have been paid in
full, (i) the Collateral Agent shall be considered to have released its security
interest in and continuing Lien on the Collateral, including all of the
Receivables and Related Security, (ii) the Collection Agent shall pay to the
Debtor any remaining Collections set aside and held by the Collection Agent, and
(iii) the Collateral Agent shall execute and deliver to the Debtor, at the
Debtor's expense, such documents or instruments as are necessary to terminate
the Collateral Agent's security interest in the Collateral, including all of the
Receivables and Related Security and Collections 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
con tained 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.
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 pro cessing records
(or to cause such records to be marked) so as to indicate the Collat eral
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 to similarly
30
xxxx its records to reflect the sale of the Receivables and the Contracts to the
Debtor 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 appli cable law, the Collateral
Agent shall be permitted to sign and file continuation state ments and
amendments thereto and assignments thereof without the Debtor's signa ture.
Carbon, photographic 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 Collat eral Agent and the Insurer at least thirty (30) days
prior notice thereof and (ii) prepared at the Debtor's expense and delivered to
the Collateral Agent all financing statements, instruments and other documents
necessary to preserve and protect the Collateral or requested by the Collateral
Agent or the Insurer in connection with such change or relocation. Any filings
under the Relevant UCC or otherwise that are occa sioned by such change in name
or location shall be made at the expense of the Debtor. On the Closing Date, the
Debtor shall deliver to the Collateral Agent and the Insurer a listing by
account number of the Contracts as of the Cut-Off Date, which listing shall
constitute Schedule A hereto and is hereby incorporated herein by reference. On
the second Business Day after the end of each Settlement Period, the Debtor
shall deliver to the Collateral Agent an updated listing by account number of
the Contracts as of the last day of such Settlement Period (giving effect to any
releases by the Company pursuant to Section 2.7 or Section 2.15) and such
updated list shall thereupon consti tute Schedule A hereto and is hereby
incorporated by reference herein.
(a) 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 and the Insurer. The Collection
Agent shall not terminate any bank as a Lock-Box Bank unless the Collateral
Agent and the Insurer shall have received fifteen (15) days' prior notice of
such termination. If the Debtor or the Collection Agent receives any
Collections, the Debtor or the Collection Agent, as applicable, shall
immediately, but in any event within two (2) Business Days of receipt, remit
such Collections to a Lock-Box Account.
31
SECTION 2.7 Payments on Receivables; Application of Payments.
If, on any day,
(a) the Outstanding Balance of a Receivable is either (x)
reduced as a result of any defective, rejected or returned goods or services,
any cash discount, credit, rebate, allowance or other dilution factor, any
billing adjustment or other adjustment, or (y) reduced or canceled as a result
of a setoff or offset in respect of any claim by any Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction); or
(b) as to any Undocumented Receivable, all documentation
required to be received after the origination of such Receivable pursuant to the
Credit and Collection Policy has not been received and accepted by the
Collection Agent within twenty (20) days following the date of the initial draft
drawn by the originating dealer on UAC in connection with the origination of
such Receivable; or
(c) any of the representations or warranties in Article III is
no longer true with respect to a Receivable;
then, in any such event, the Collateral Agent shall release its security
interest in and Lien on such Receivable and the related Contract; provided that
if such release would result in the Net Asset Test not being satisfied, then as
a condition precedent to such release the Debtor shall deposit into the
Collection Account an amount equal to the amount which, if applied to the
reduction of the Net Investment, would cause the Net Asset Test to be satisfied.
Such amount shall be applied as a Receipt of Principal pursuant to Section 2.3.
All collections of Finance Charges received with respect to any such released
Receivable through the last day of the Settlement Period in which such
Receivable is released shall continue to constitute Receipts of Interest
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; if such amounts are
payable to the Insurer, they shall be paid or deposited in the Insurer's account
indicated in Section 9.3, until otherwise notified by the Insurer. The Debtor
shall, to the extent permitted by law, pay to the applicable Secured Parties
upon demand, interest on all amounts not paid or deposit ed when due to the
Secured Parties hereunder at a rate equal to 2% per annum plus
32
the Base Rate. All computations of Carrying Costs, interest and all per annum
fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days elapsed. Any computations of amounts payable by the Debtor
hereunder to any of the Secured Parties, the Liquidity Provider or the Credit
Support Provider shall be binding absent manifest error.
SECTION 2.9 Reports. On or before each Determination Date, the
Collection Agent shall prepare and forward to the Collateral Agent, the Adminis
trative Agent, Xxxxx'x, S&P and the Insurer, (i) a Settlement Statement as of
the end of the preceding Settlement Period, (ii) if requested by the Collateral
Agent, the Administrative Agent or the Insurer, a computer tape listing by
Obligor all Receiv xxxxx, together with an aging of such Receivables, and (iii)
such other information as the Collateral Agent, the Administrative Agent or the
Insurer may reasonably request. The Agent shall provide to the Debtor, on the
day prior to each Determination Date, a monthly settlement statement containing
information relating to the amount of each obligation of the Company which
comprises Carrying Costs for the most recent Collection Period and the amount of
interest earnings on all related accounts for such Collection Period.
SECTION 2.10 Collection Account. 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
designa tion clearly indicating that the funds deposited therein are held for
the benefit of the Secured Parties. Subject to the terms hereof, the Collateral
Agent shall possess all right, title and interest in and to all funds deposited
from time to time in the Collection Account. The Collateral Agent will maintain
the Collection Account at an Eligible Institution. If the Eligible Institution
holding the Collection Account shall cease to be an Eligible Institution, the
Collateral Agent shall have the right to direct the transfer of the Collection
Account to an Eligible Institution. The Collection 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.
(a) Funds on deposit in the Collection Account shall be
invested in Eligible Investments by or at the written direction of the Debtor,
provided
33
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.
(b) 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. NationsBank hereby agrees (and any other Securities
Interme diary 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 Com mercial Code) received by it with respect to the Collection Account
from the Collat eral Agent.
(c) Funds on deposit in the Collection Account (other than
investment earnings) shall be invested by the Collateral Agent in Eligible
Investments that will mature so that such funds will be available on the
Remittance Date with respect to the Settlement Period during which such funds
were received. No Eligible Investment may be liquidated or disposed of prior to
its maturity. All proceeds of any such Eligible Investment shall be deposited in
the Collection Account. Investments may be made in the Collection Account on any
date (provided such investments mature in accordance herewith), only after
giving effect to deposits to and withdraw als from the Collection Account on
such date. Realized losses, if any, on amounts invested in such Eligible
Investments shall be charged against investment earnings on amounts on deposit
in the Collection Account
(d) 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 Account.
(e) Eligible Investments shall be maintained by the Collat
eral 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. NationsBank, 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.
34
SECTION 2.11 Prefunding Account; Prefunding Interest Reserve
Account; Interest Reserve Deposits; Interest Reserve Advances; Reimbursements.
(a) 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.
(1) Funds on deposit in the Prefunding Account and the
Prefunding Interest Reserve Account shall be invested by the Collateral Agent in
overnight Eligible Investments by or at the written direction of the Debtor,
provided that if a Termination Event shall have occurred, such investments shall
be made as directed by the Collateral Agent. Any such written directions shall
specify the particular investment to be made and shall certify that such
investment is an Eligible Investment and is permitted to be made under this
Agreement.
(2) 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.
NationsBank, 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.
(3) Funds on deposit in the Prefunding Account and the
Prefunding Interest Reserve Account shall be invested in Eligible Investments
that will mature overnight. No such Eligible Investment may be liquidated or
disposed of prior to its maturity. All proceeds of any such Eligible Investment
shall be deposited in the Prefunding Account or the Prefunding Interest Reserve
Account, as applicable. Investments may be made in either account on any date
(provided such investments
35
mature in accordance herewith), only after giving effect to deposits to and
withdraw als 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.
(4) 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.
(5) 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. NationsBank, agrees (and any other Securities Intermediary holding the
Prefunding Account or the Prefunding Interest Reserve Account shall so agree)
that it shall not agree to comply with Entitlement Orders (as defined in Section
8-102 of the 1994 version of the Official Text of Article 8 of the Uniform
Commercial Code) with respect to the Prefunding Account or the Prefunding
Interest Reserve Account given to it by any Person other than the Collateral
Agent.
(b) On the Business Day preceding each Prefunding Date, the
Debtor shall deposit in the Prefunding Interest Reserve Account an amount equal
to the product of (i) the Negative Carry for such Prefunding Date, (ii) the
principal component of the amount of Commercial Paper which would be required on
such date to fund the Prefunding Deposit, or if such deposit is to be made by
the Bank Investors, the amount to be advanced by the Bank Investors, and (iii) a
fraction, the numerator of which is the number of days from the Prefunding Date
through the end of the Settlement Period during which such Prefunding Date
occurs and the denom inator 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
36
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 certif
ication in substantially the form of Exhibit E (a "Withdrawal Notice") from the
Debtor setting forth, among other things, the amount requested to be released
from the Prefunding Account and certifying that (i) after giving effect to the
amount to be funded with respect to such additional Receivables, the Net Asset
Test shall be satisfied, (ii) the amount on deposit in the Reserve Account shall
not be less than the Required Reserve Account Amount (calculated (x) immediately
prior to the related Prefunding Date and (y) as if such Prefunding Deposit shall
have occurred), (iii) the Debtor shall have made any deposit into the Yield
Supplement Account required pursuant to Section 2.13 in connection with such
Receivables, if any, and (iv) the Collection Agent shall be in compliance with
the requirements of Section 5.3 in re spect 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.
37
(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.
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 Con tract provides for interest to accrue thereunder at a rate less than
the Minimum Re quired APR (determined as of the date of such recordation on the
Collection Agent's master servicing records) an amount (each such amount, a
"Required Yield Deposit Amount") equal to the product of (i) the number of
monthly payments originally required under such Contract and (ii) an amount
equal to (x) the scheduled monthly payment on such Contract which would be
required to be made by the Obligor there under 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 foregoing, no Required Yield Deposit Amount need be
deposited to the Yield Supplement Account until the total amount of all
undeposited Required Yield Deposit Amounts equals or exceeds $1,000.
(b) 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 desig nation clearly indicating that the funds deposited therein are
held for the benefit of the Secured Parties. Subject to the terms hereof, the
Collateral Agent shall possess all right, title and interest in and to all funds
deposited from time to time in the 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.
(1) Funds on deposit in the Yield Supplement Account shall be
invested in overnight Eligible Investments by or at the written
38
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 Agree ment.
(2) 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. NationsBank 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.
(3) 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.
(4) 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.
(5) 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 Supple ment
Account in favor of the Collateral Agent on behalf of the Secured Parties.
NationsBank agrees (and any other Securities Intermediary holding the Yield
Supple ment 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.
39
(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 distribu tions and payments. Funds may also be released from the
Yield Supplement Account each month in accordance with Section 2.3(c). On any
day on which the Collateral Agent, pursuant to Section 2.7 or Section 2.15,
releases to the Debtor its security interest in a Contract and related
Receivable with respect to which the Debtor deposited funds in the Yield
Supplement Account pursuant to Section 2.13(a), the amount of such deposit
(together with any earnings thereon) less any amounts released from the Yield
Supplement Account in accordance with Section 2.3(c) shall be released to the
Debtor. Upon the occurrence of a Termination Event, all amounts on deposit in
the Yield Supplement Account shall be released to the Agent, for the account of
the Company and the Bank Investors, as applicable, and applied in reduction of
the Net Investment.
SECTION 2.14 Reserve Account; Withdrawals; Releases; Draws on
Policy.
(a) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segre gated 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 Required Reserve Account Amount.
The amount of any Reserve Account Guaranty shall be counted toward the amount of
funds available in the Reserve Account.
(1) Funds on deposit in the Reserve Account shall be invested
in Eligible Investments by or at the written direction of the Debtor, provided
that if a Termination Event shall have occurred, such investments shall be made
as directed by the Collateral Agent. Any such written directions shall specify
40
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.
(2) The Collateral Agent agrees that it shall not accept for
credit to the Reserve Account any investment as to which it has knowledge of any
adverse claim thereto. NationsBank hereby agrees (and any other Securities
Intermediary holding the Reserve Account shall so agree) to comply with all
Entitle ment 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.
(3) No Eligible Investment in the Reserve Account may be
liquidated or disposed of prior to its maturity. All proceeds of any such
Eligible Investment shall be deposited in the Reserve Account. Investments may
be made in the Reserve Account on any date (provided such investments mature in
accordance herewith), only after giving effect to deposits to and withdrawals
from such account on such date. Realized losses, if any, on amounts invested in
such Eligible Investments shall be charged against investment earnings on
amounts on deposit in the Reserve Account, as applicable.
(4) 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.
(5) 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. NationsBank agrees (and any other Securities Intermediary
holding the Reserve Account shall so agree) that it shall not agree to comply
with Entitlement Orders (as defined in Section 8-102 of the 1994 version of the
Official Text of Article 8 of the Uniform Commercial Code) with respect to the
Reserve Account given to it by any Person other than the Collateral Agent.
(b) Funds on deposit in the Reserve Account shall be invested
by the Collateral Agent in Eligible Investments with maturities such that all
funds on deposit in the Reserve Account will be available on the next succeeding
Remittance Date following such investment. The Collateral Agent shall maintain
possession of the negotiable instruments or securities, if any, evidencing the
Eligible Investments from the time of purchase thereof until the time of sale or
maturity. Such
41
investments shall be held in the name of the Collateral Agent, for the benefit
of the Secured Parties.
(c) In the event that Available Funds with respect to any
Remittance Date and any withdrawals from the Yield Supplement Account are
insufficient to provide for the payment of the amounts described in Sections
2.3(a)(ii), (iv) and (v), the Collateral Agent shall make a withdrawal from the
Reserve Account in the amount of such deficiency and the proceeds from such
withdrawal shall be applied by the Collateral Agent to the required
distributions and payments. Funds may also be released from the Reserve Account
each month in accordance with Section 2.3(c). To the extent that amounts
available in the Reserve Account are insufficient to cover such costs and the
Debtor fails to make a deposit to the Reserve Account in the amount of such
shortfall, the Agent shall make a demand for payment under the Policy in
accordance with its terms.
(i) In the event that on any Remittance Date or day on which a
Take-Out occurs after giving effect to clause (c)(i) above, the amount on
deposit in the Reserve Account (calculated as of the related Determination Date
or the date of the Take-Out, as applicable) exceeds the Required Reserve Account
Amount, the Collateral Agent shall (x) if no Termination Event shall have
occurred, release to the Debtor an amount equal to the excess of the amount on
deposit in the Reserve Account over the Required Reserve Account Amount and (y)
if a Termina tion Event shall have occurred, apply as part of Available Funds
pursuant to Section 2.3 an amount equal to the excess of the amount on deposit
in the Reserve Account over the Required Reserve Account Amount.
(ii) After the occurrence of the Termination Date upon the
earlier of (i) the day on which the Net Investment is zero and the Secured
Parties shall have received all Aggregate Unpaids and (ii) the day on which the
aggregate Outstanding Balance of the Receivables shall be zero, the Collateral
Agent shall release to the Debtor all amounts on deposit in the Reserve Account.
SECTION 2.15 Optional Release.
(a) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
the Con tracts and the related Receivables (excluding any Contracts and related
Receivables booked after the cut-off date applicable to the 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) on the terms and
conditions set forth herein.
42
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 pro posed 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 such portion of the Net
Investment or the principal com ponent subject to the funding period utilized by
the Bank Investors and the Liquidity Provider to fund such portion of the Net
Investment, as applicable and (y) be at least $5,000,000, (iii) the Debtor shall
deposit to the Collection Account an amount equal to the sum of (x) all
unreimbursed Servicer Advances and (y) all interest costs associated with the
Company's Commercial Paper issued to fund its interest in the Contracts and
related Receivables proposed to be reassigned or all interest costs associated
with any funding periods utilized by the Bank Investors or the Liquidity
Provider with respect to their respective interests in such Contracts and
related Receivables, as applicable, as well as all Carrying Costs accrued
through the date of the maturity of such Commercial Paper or funding period,
(iv) the Debtor shall have given the Agent, the Collateral Agent and the Insurer
at least ten (10) days prior written notice of its intention to request release
with respect to such Contracts and Receivables, (v) after giving effect to such
release the amount on deposit in the Reserve Account shall be at least equal to
the Required Reserve Account Amount, and (vi) all amounts due and owing to the
Insurer from the Debtor shall have been paid in full. It is the intention of the
parties that the Debtor shall pay to the Agent, for the benefit of the Company
and the Bank Investors, as applicable, and the Collection Account, as
applicable, such amounts as are required under this Section on the closing date
of such structured finance transaction.
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 assign ment 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
43
and deliver to the Debtor, at the Debtor's expense, such documents or
instruments as are necessary to terminate the Collateral Agent's security
interest in the Receivables and the Contracts related thereto. Any such
documents shall be prepared by or on behalf of the Debtor.
(b) In connection with a Take-Out, the Debtor shall have the
right, from time to time thereafter (but not more frequently than once per
calendar week), on the maturity date of any Commercial Paper note issued by the
Company to fund the Net Investment or upon the termination of any funding period
utilized by the Liquidity Provider or the Bank Investors, as applicable, to
require the Collateral Agent to release its security interest in and Lien on
specified Contracts and the related Receivables, provided that (x) such
Contracts and related Receivables are to be assigned or sold by the Debtor,
directly or indirectly, to a structured finance vehicle established by or on
behalf of the Debtor or an affiliate, in connection with an asset-
securitization or other structured financing having a prefunding (or similar)
feature, (y) the aggregate Outstanding Balance of such Receivables shall be (i)
not greater than the principal component of such maturing Commercial Paper or
the principal component subject to such funding period, as applicable and (ii)
at least $5,000,000 and (z) the Debtor shall have given the Agent, the
Collateral Agent and the Insurer at least seven (7) days prior written notice of
its intention to effect a release with respect to such Contracts and
Receivables. Any such release shall be in consideration for the deposit by the
Debtor into the Collection Account of an amount equal to the sum of (i) the
Outstanding Balance of such Receivables on the day of such assignment plus (ii)
all accrued and unpaid interest thereon (whether or not due thereunder) at the
rate set forth in the related Contracts to such date of assignment. The amount
described in clause (i) above shall be allocated and applied on such day
(whether or not a Remit tance 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 Remit tance Date) in the order of priorities set
forth in Section 2.3(a) as a Receipt of Interest (in which case "Settlement
Period" as used in said Section 2.3(a) shall be considered to be the period from
the last date of the previous Settlement Period to the date on which the amounts
required to be paid under this Section 2.15(b) are paid). The Debtor shall also
be obligated to pay to the Agent (i) an amount equal to $2,500 as an
administrative fee in connection with any such assignment and (ii) the
reasonable legal fees and expenses of the Company, the Collateral Agent, the
Bank Investors and the Administrative Agent incurred in connection with any such
release. Upon the deposit to the Collection Account and 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
44
Collateral Agent's interest in the Receivables and the Contracts related
thereto. Any such documents shall be prepared by or on behalf of the Debtor.
(c) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and its Lien on
specified Contracts and the related Receivables on the terms and conditions set
forth herein. It shall be a condition precedent to any such release that,
immediately after such release, (i) the Debtor shall pay to the Company and the
Bank Investors, as applicable, an amount equal to the amount necessary to cause
the Net Asset Test to be satisfied calculated after giving effect to the
proposed release, (ii) after giving effect to such release, the amount on
deposit in the Reserve Account shall be at least equal to the Required Reserve
Account Amount, and (iii) all amounts due and owing to the Insurer from the
Debtor shall have been paid in full.
(d) On any Business Day, the Debtor shall have the right to
require the Collateral Agent to release its security interest in and Lien on all
of the Contracts and the related Receivables on the terms and conditions set
forth herein. It shall be condition precedent to any such release that (i) the
Debtor shall pay to the Agent, for the benefit of the Company and the Bank
Investors, as applicable, an amount equal to the Net Investment at the time of
such release, (ii) the Debtor shall pay to the Agent, for the benefit of the
Company and the Bank Investors, as applica ble, an amount equal to all interest
costs associated with the Company's Commercial Paper issued to fund the Net
Investment through the date of maturity or all interest costs associated with
all funding periods utilized by the Bank Investors for the Liquidity Provider
with respect to its interest in the Contracts, related Receivables and
Transferred Interest, as applicable, as well as all Carrying Costs accrued
through the date of such release and all other costs which constitute Carrying
Costs which will accrue after such date, (iii) the Debtor shall have given the
Collateral Agent, the Administrative Agent and the Insurer at least thirty (30)
days prior written notice of its intention to effect such a release the
Contracts and Receivables, and (iv) all amounts due and owing to the Insurer
from the Debtor shall have been paid in full.
SECTION 2.16 Hedging Amounts.
(a) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, with the Collateral Agent, a
segre gated account (the "Hedge Proceeds Account"), bearing a designation
clearly indicat ing that the funds deposited therein are held for the benefit of
the Secured Parties. Subject to the terms hereof, the Collateral Agent shall
possess all right, title and interest in and to all funds deposited from time to
time in the Hedge Proceeds
45
Account. The Collateral Agent will maintain the Hedge Proceeds Account at an
Eligible Institution. If the Eligible Institution holding the Hedge Proceeds
Account shall cease to be an Eligible Institution, the Collateral Agent shall
have the right to direct the transfer of the Hedge Proceeds Account to an
Eligible Institution. Funds on deposit in the Hedge Proceeds Account shall be
invested by the Collateral Agent in overnight Eligible Investments.
(1) Funds on deposit in the Hedge Proceeds
Account shall be invested in Eligible Investments by or at the written
direction of the Debtor, provided that if a Termination Event shall
have occurred, such investments shall be made as directed by the
Collateral Agent. Any such written directions shall specify the
particular investment to be made and shall certify that such investment
is an Eligible Investment and is permitted to be made under this
Agreement.
(2) The Collateral Agent agrees that it
shall not accept for credit to the Hedge Proceeds Account any
investment as to which it has knowledge of any adverse claim thereto.
NationsBank hereby agrees (and any other Securities Intermediary
holding the Hedge Proceeds Account shall so agree) to comply with all
Entitlement Orders (as defined in Section 8-102 of the 1994 Official
Text of the Uniform Commercial Code) received by it with respect to the
Hedge Proceeds Account from the Collateral Agent.
(3) No Eligible Investment held in the Hedge
Proceeds Account may be liquidated or disposed of prior to its
maturity. All pro ceeds of any such Eligible Investment shall be
deposited in the Hedge Proceeds Account. Investments may be made in the
Hedge Proceeds Account on any date (provided such investments mature in
accordance herewith), only after giving effect to deposits to and
withdrawals from such account on such date. Realized losses, if any, on
amounts invested in such Eligible Investments shall be charged against
investment earnings on amounts on deposit in the Hedge Proceeds
Account.
(4) The Debtor shall provide the Collateral
Agent on the date hereof and from time to time an incumbency
certificate or the substantial equivalent with respect to each officer
of the Debtor that is authorized to provide instructions relating to
investments in Eligible Investments in the Hedge Proceeds Account.
(5) Eligible Investments shall be maintained
in the Hedge Proceeds Accounts by the Collateral Agent in such manner
as may be neces sary to maintain the first priority perfected security
interest in favor of the Collateral
46
Agent on behalf of the Secured Parties. NationsBank, agrees (and any other
Securi ties Intermediary holding the Reserve Account shall so agree) that it
shall not agree to comply with Entitlement Orders (as defined in Section 8-102
of the 1994 version of the Official Text of Article 8 of the Uniform Commercial
Code) with respect to the Hedge Proceeds Account given to it by any Person other
than the Collateral Agent.
(b) On and after the occurrence of any
Termination Event or in the event of the receipt of any proceeds
received by the Collection Agent pursuant to any Hedging Arrangement
and immediately thereafter Hedging Arrange ments which satisfy the
requirements of Section 5.3 are not in place, the Collection Agent, for
the benefit of the Debtor, shall remit to the Collateral Agent for
deposit into the Hedge Proceeds Account any proceeds received by the
Collection Agent of any Hedging Arrangement. Such amounts shall be held
by the Collateral Agent as security for the repayment to the Company,
the Bank Investors and the Insurer, as applicable, of the Net
Investment and the Aggregate Unpaids. At any time after the deposit of
such amounts to the credit of the Hedge Proceeds Account, the
Collateral Agent may apply such amounts either (i) to reduce the Net
Investment, (ii) to provide for the payment to the Company, the Bank
Investors and the Insurer, as applicable, of the Aggregate Unpaids, or
(iii) to purchase an interest rate hedge acceptable to the Insurer.
Upon the termination of this Agreement, provided that the Net
Investment shall be zero and all other Aggregate Unpaids shall have
been paid in full, the Collat eral Agent shall release to the Debtor
any amounts remaining on deposit in the Hedge Proceeds Account.
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 Agree ment and the other Transaction Documents
are within the Debtor's corporate powers, have been duly authorized by
all necessary corporate action, require no action by or in respect of,
or filing with, any governmental body, agency or official (except as
contemplated by Section 2.6), and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
Certificate of Incorporation or Bylaws of the Debtor or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Debtor or result in the creation or imposition of any
lien on assets of the Debtor (except as contemplated by Section 2.6),
or require the consent or approval of, or the filing of any notice or
other documentation with, any governmental authority or other Person
(except as contemplated by Section 2.6).
(c) Binding Effect. Each of this Agreement
and the other Transaction Documents constitutes the legal, valid and
binding obligation of the Debtor, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors.
(d) Perfection. Immediately preceding each
Funding, the Debtor shall be the owner of all of the Receivables, free
and clear of all liens, encumbrances, security interests, preferences
or other security arrangement of any kind or nature whatsoever, except
as permitted by this Agreement and the other Transaction Documents. On
or prior to each Funding and each day on which a Receivable is sold to
the Debtor by UAC pursuant to the Sale and Purchase Agree ment, 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, PFC 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.
47
(f) Tax Status. All tax returns (federal,
state and local) required to be filed with respect to the Debtor have
been filed (which filings may be made by an Affiliate of the Debtor on
a consolidated basis covering the Debtor and other Persons) and there
has been paid or adequate provision made for the payment of all taxes,
assessments and other governmental charges in respect of the Debtor (or
in the event consolidated returns have been filed, with respect to the
Persons subject to such returns).
(g) Action, Suits. Except as set forth in
Exhibit F, there are no actions, suits or proceedings pending, or to
the knowledge of the Debtor threatened, against or affecting the Debtor
or any Affiliate of the Debtor or their respective properties, in or
before any court, arbitrator or other body, which may have a material
adverse effect on the Debtor's ability to perform its obligations
hereunder or under the Sale and Purchase Agreement.
(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 UAC pursuant to the Sale and Pur chase Agreement, (b) to pay down
debt in connection with the purchase of the Receivables and Contracts
pursuant to the Sale and Purchase 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 UAC pursuant to the Sale and Purchase 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
Collections with respect thereto free and clear of any Adverse Claim.
(k) Tradenames, Etc. As of the date hereof:
(i) the Debtor has only the subsidiaries and divisions listed on
Exhibit H hereto; and (ii) the Debtor has, within the last five (5)
years, operated only under the tradenames identified in Exhibit H
hereto, and, within the last five (5) years, has not changed its name,
merged
48
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 instru ment delivered hereunder or in connection
with the other Transaction Documents is an Eligible Receivable at the
time of such representation.
(m) Coverage; Amount of Receivables. The Net Asset Test is
currently satisfied. As of September 17, 1998, the aggregate Outstanding Balance
of the Receivables in existence was $86,193,823.44 and the aggregate Outstanding
Balance of all Eligible Receivables was $85,808,215.61.
(n) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or a
Poten tial Termination Event.
(o) Not an Investment Company. The Debtor is not an "in
vestment company" within the meaning of the Investment Company Act of 1940, as
amended, or is exempt from all provisions of such Act.
(p) ERISA. The Debtor is in compliance in all material
respects with ERISA and no lien in favor of the Pension Benefit Guaranty Corpora
tion on any of the Receivables shall exist.
(q) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at
such Lock-Box Banks, are specified in Exhibit B hereto (or at such other Lock-
Box Banks and/or with such other Lock-Box Accounts as have been notified to the
Administrative Agent). All Obligors have been instructed to make payment to a
Lock-Box Account. (r) Insurance Policies. At the time of the sale of each
Receivable and related Contract by UAC to the Debtor pursuant to the Sale and
Purchase 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.
(s) Year 2000 Compliance. The Debtor (i) has initiated a
review and assessment of all areas within its and each of its Subsidiaries'
business and
49
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Debtor or any of its Subsidiaries (or
suppliers, vendors and customers) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) is in the process of developing a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) will
implement that plan in accordance with that timetable. Based on the foregoing,
the Debtor believes that all computer applications (including those of its
suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so could not be reasonably expected to have a material
adverse effect on the Debtor or on the transaction documented under this
Agreement, or to result in a Termination Event.
The Debtor (i) has completed a review and assessment of all
computer applications (including, but not limited to those of its suppliers,
vendors, customers, and any third party servicers), which are related to or
involved in the origination, collection, management or servicing of the
Receivables (the "Receivables Systems") and (ii) has identified any of such
Receivables Systems which are "mission critical" operations (i.e. those which
jeopardize the viability of the Debtor's business if not Year 2000 Compliant).
The Debtor will implement a plan to ensure that all "mission critical"
operations of the Receivables Systems are Year 2000 Compliant or will be Year
2000 Compliant on or before June 30, 1999, and thereafter.
The costs of all assessment, remediation, testing and
integration related to the Debtor's plan for becoming Year 2000 Compliant will
not have a material adverse effect on the financial condition or operations of
the Debtor.
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
50
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.
(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
Administrative Agent will be, true and accurate in every material
respect, on the date such informa tion is stated or certified.
(e) Credit and Collection Policy. Since June
30, 1998, (except for any changes as received by the Administrative
Agent in writing), there have been no material changes in the Credit
and Collection Policy; since such date, no material adverse change has
occurred in the overall rate of collection of the Receiv xxxxx.
(f) Collections and Servicing. Since June
30, 1998, there has been no material adverse change in the ability of
UAC, as Collection Agent hereunder, to service and collect the
Receivables.
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(g) Year 2000 Compliance. The Collection
Agent (i) has initiated a review and assessment of all areas within its
and each of its Subsidiaries' business and operations (including those
affected by suppliers, vendors and custom ers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Collection Agent or any of its Subsidiaries
(or suppliers, vendors and customers) may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior
to and any date after December 31, 1999), (ii) is in the process of
developing a plan and timeline for addressing the Year 2000 Problem on
a timely basis, and (iii) will implement that plan in accordance with
that timetable. Based on the foregoing, the Collateral Agent believes
that all computer applications (including those of its suppliers,
vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions
for all dates before and after January 1, 2000 (that is, be "Year 2000
Compliant"), except to the extent that a failure to do so could not be
reasonably expected to have a material adverse effect on the Collateral
Agent or on the transaction documented under this Agreement, or to
result in a Termination Event.
The Collateral Agent (i) has completed a review and assessment
of all computer applications (including, but not limited to those of its
suppliers, vendors, customers, and any third party servicers), which are related
to or involved in the origination, collection, management or servicing of the
Receivables (the "Receivables Systems") and (ii) has identified any of such
Receivables Systems which are "mission critical" operations (i.e. those which
jeopardize the viability of the Collection Agent's business if not Year 2000
Compliant). The Collection Agent will implement a plan to ensure that all
"mission critical" operations of the Receivables Systems are Year 2000 Compliant
or will be Year 2000 Compliant on or before June 30, 1999, and thereaf ter.
The costs of all assessment, remediation, testing and
integration related to the Collection Agent's plan for becoming Year 2000
Compliant will not have a material adverse effect on the financial condition or
operations of the Collec tion Agent.
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.
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SECTION 3.3 Reaffirmation of Representations and Warranties.
On each Determination Date, Remittance Date and day on which a Funding is made,
each of the Debtor and the Collection Agent, shall be deemed to have certified
that all of its respective representations and warranties described in Sections
3.1 and 3.2 are correct on and as of such day as though made on and as of such
day.
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ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Effectiveness. This Agreement shall
become effective on the first day on which all of the following conditions have
been satisfied:
(a) A Certificate of the Secretary of the
Debtor certifying (i) the names and signatures of the officers and
other agents authorized on its behalf to execute this Agreement and the
other Transaction Documents and any other documents to be delivered by
it hereunder or thereunder (on which Certificate the Collateral Agent
and the Secured Parties may conclusively rely until such time as the
Collateral Agent and the Secured Parties shall receive from the Debtor
a revised Certificate meeting the requirements of this clause (a)(i)),
(ii) a copy of the Debtor's Certificate of Incorporation, as amended to
the date hereof, certified by the Secretary of State of the State of
Delaware, (iii) a copy of the Debtor's By-laws, as amended to the date
hereof, (iv) a copy of resolutions of the Debtor's Board of Directors
approv ing the transactions contemplated hereby and (v) a certificate
of the Secretary of State of the State of Delaware certifying the
Debtor's good standing.
(b) A Certificate of the Secretary of the
Collection Agent certifying (i) the names and signatures of the
officers authorized on its behalf to execute this Agreement and any
other documents to be delivered by it hereunder (on which Certificate
the Collateral Agent and the Secured Parties may conclusively rely
until such time as the Collateral Agent and Secured Parties shall
receive from the Collection Agent a revised Certificate meeting the
requirements of this clause (a)(i)), (ii) a copy of the Collection
Agent's Articles of Incorporation, as amended to the date hereof,
certified by the Secretary of State of the State of Indiana, (iii) a
copy of the Collection Agent's By-laws, as amended to the date hereof,
(iv) a copy of resolutions of the Collection Agent's Board of Directors
approving the transactions contemplated hereby and (v) a certificate of
the Secretary of State of the State of Indiana certifying the
Collection Agent's existence.
(c) Copies of proper financing statements
(Form UCC-1), naming UAC 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
54
security interest in the Receivables, Related Security and Collections, free and
clear of any Adverse Claim.
(d) Copies of proper financing statements
(Form UCC-1), dated a date reasonably near to the date of the Initial
Funding 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.
(e) Copies of proper financing statements
(Form UCC-3), if any, necessary under the Relevant UCC to terminate all
security interests and other rights of any person in the Collateral,
including the Receivables, Related Security and Collections, previously
granted by the Debtor.
(f) Certified copies of request for
information or copies (Form UCC-11) (or a similar search report
certified by parties acceptable to the Collateral Agent) dated a date
reasonably near the date of the Initial Funding listing all effective
financing statements which name the Debtor (under its present name and
any previous name) 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 state ments (none of which shall cover any
Receivables or Contracts).
(g) Opinions of Xxxxxx & Xxxxxxxxx, special
counsel to the Debtor and the Collection Agent, covering the matters
set forth in (i) Exhibit I hereto, and (ii) Exhibit J hereto.
(h) An opinion of Xxxxxxx & McNagny, special
counsel to the Debtor and the Collection Agent, covering matters
relating to Florida law.
(i) A list setting forth all Receivables and
the Outstanding Balances thereon as of the close of business on the
Cut-Off Date and such other infor mation as the Collateral Agent or any
of the Secured Parties may reasonably request.
(j) An executed copy of the Fee Letter.
(k) The Note, duly executed by the Debtor
and appropri ately completed.
55
(l) A Termination and Release Agreement, dated as of September
18, 1998, among the Company, the Debtor and UAC, terminating the Transfer and
Administration Agreement, dated as of June 27, 1995 (as amended to the date
hereof), among the Company, the Debtor and UAC.
(m) A Termination and Release Agreement,
dated as of September 18, 1998, among the Company, the Debtor and UAC
terminating the Transfer and Administration Agreement, dated as of
August 24, 1995 (as amended to the date hereof), among the Company, PFC
and UAC.
(n) The Arrangement Fee in accordance with
Section 2.5.
(o) Such other documents as the Collateral
Agent or the Secured Parties shall reasonably request.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Debtor 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 and UAC
each will maintain, for itself and each Subsidiary, a system of
accounting established and administered in accordance with generally
accepted accounting principles, and UAC (or, in the case of the first
sentence of clauses (iii), (iv), and clause (ix), the Debtor) will
furnish to the Administrative Agent, the Collateral Agent and the
Insurer:
(i) Annual Reporting. Within ninety (90)
days after the close of each of its fiscal years, audited
financial state ments, prepared in accordance with generally
accepted accounting principles on a consolidated basis for
itself and its Subsidiaries, includ ing balance sheets as of
the end of such period, related statements of operations,
shareholder's equity and cash flows, accompanied by an audit
report of a nationally recognized firm of independent
certified public accountants (or such other firm of
independent certified public accountants acceptable to the
Administrative Agent, the Collateral
56
Agent, and the Insurer) 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 operations 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 re lated statements of
operations, shareholder's equity and cash flows for the period
from the beginning of such fiscal year to the end of such
quarter, all certified by its chief financial officer.
(iii) Compliance Certificate. Concurrently
with the delivery by UAC of the financial statements required
hereun der, a compliance certificate signed by its treasurer
or vice president stating that no Termination Event or
Potential Termination Event ex ists, or if any Termination
Event or Potential Termination Event exists, stating the
nature and status thereof. On and after the date of any change
in ownership of UAC contemplated by Section 5.2(i), together
with the financial statements hereunder, a compliance
certificate signed by the chief financial officer of UAC
showing the computation of, and showing compliance with, each
of the quarterly financial tests or conditions set forth in
Section 5.2(i).
(iv) Notice of Termination Events or Poten
tial 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 pro poses to take with
respect thereto.
(v) Change in Credit and Collection Policy
and Debt Ratings. Within ten (10) days after the date any
material change in or amendment to the Credit and Collection
Policy is made, a
57
copy of the Credit and Collection Policy then in effect
indicating such change or amendment.
(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) Green Book. Within forty-five (45)
days after the close of the quarterly period of each of its
fiscal years, a copy of the Union Acceptance Corporation Tier
II Quarterly Statistical Update (a/k/a UAC's "green book") or
the equivalent information in some other written form.
(ix) 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 or UAC files under ERISA with the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which the Debtor, UAC or any ERISA
Affiliates of the Debtor or UAC receives from the Internal
Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor.
(x) 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 rea sonably request.
(b) Conduct of Business. The Debtor will and UAC will (x)
carry on and conduct its business in substantially the same manner and in
substan tially 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 conducted.
58
(c) Compliance with Laws. The Debtor will and UAC will comply
in all material respects with all laws, rules, regulations, orders, writs, judg
ments, 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 identi fying the Obligor and the Outstanding Balance for each
Receivable. Upon at least two (2) Business Days prior notice, the Debtor and UAC
will during regular business hours permit the Collateral Agent or any Secured
Party, or their agents or representa tives, (i) to examine and make copies of
and abstracts from all Records and (ii) to visit the offices and properties of
the Debtor and UAC for the purpose of examining such Records, and to discuss
matters relating to Receivables or the Debtor's or UAC's performance hereunder
or under the Sale and Purchase Agreement with any of the officers, employees or
independent public accountants of the Debtor or UAC having knowledge of such
matters.
(e) Keeping of Records and Books of Account. The Debtor 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 (in cluding, 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 and UAC will give the
Collateral Agent, the Insurer, Xxxxx'x and S&P notice of any material change in
the administrative and operating procedures referred to in the previous
sentence.
(f) Performance and Compliance with Receivables and Contracts.
The Debtor 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.
59
(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 authorized officers and agents,
(e) make investments directly or by brokers engaged and paid by the Debtor or
its agents (provided that if any such Agent is an Affiliate of the Debtor it
shall be compensated at a fair market rate for its services), (f) separately
manage the Debtor's liabilities from those of UAC or any Affiliates of UAC and
pay its own liabil ities, including all administrative expenses, from its own
separate assets, and (g) pay from the Debtor's assets all obligations and
indebtedness of any kind incurred by the Debtor. The Debtor shall abide by all
corporate formalities, including the mainte xxxxx of current minute books, and
the Debtor shall cause its financial statements to be prepared in accordance
with generally accepted accounting principles 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
Affil iate 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.
(l) Year 2000 Compliance. Each of the Debtor and UAC will
promptly notify the Administrative Agent and the Insurer in the event the Debtor
60
or UAC discovers or determines that any computer application (including those of
its suppliers, vendors and customers) (i) that is necessary for the origination,
collection, management, or servicing of the Receivables will not be Year 2000
Compliant on or before June 30, 1999 and thereafter, (ii) that is otherwise
material to its or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant on a timely basis, except to the extent that, in the case of
(ii) above, such failure could not reasonably be expected (x) to have a material
adverse effect on the Debtor or UAC or on the transaction documented under this
Agreement, or (y) to result in a Termination Event, or (iii) notwithstanding the
foregoing, that is necessary for "mission critical" operations will not be Year
2000 Compliant on or before June 30, 1999.
Further, each of the Debtor and UAC will deliver
simultaneously with any quarterly or annual financial statements or reports to
be delivered under the Agreement, a letter, report, certificate or statement
signed by the appropriate officer that no material event, problems or conditions
have occurred which in the opinion of management would (i) prevent or materially
delay the Debtor's or UAC's plan to become Year 2000 Compliant or (ii) cause or
be likely to cause the Debtor's or UAC's representations and warranties with
respect to being or becoming Year 2000 Compli ant to no longer be true.
SECTION 5.2 Negative Covenants of Debtor 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,
neither the Debtor nor UAC will sell, assign (by operation of law or other wise)
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 Collections of any Receivable are sent, or assign any
right to re ceive income in respect thereof.
(b) No Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.2, neither the Debtor 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 Sale and Purchase Agreement. The Debtor
shall not amend or otherwise modify the Sale and Purchase Agreement with out the
prior written consent of the Secured Parties.
61
(d) No Change in Business or Credit and Collection Policy.
Neither the Debtor 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 Receiv able 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 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 Take-Out 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).
(f) Change in Payment Instructions to Obligors. Neither the
Debtor 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 regarding
pay ments 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 addi tion, termination or change at least 30 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 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, respec tively, is the surviving entity.
(i) Sale Treatment. Neither the Debtor nor UAC will account
for (including for accounting and tax purposes), or otherwise treat, the
transactions contemplated by the Sale and Purchase Agreement in any manner other
than as a sale of Receivables by UAC to the Debtor.
(j) Other Debt. Except as provided for herein, the Debtor will
not create, incur, assume or suffer to exist any indebtedness whether current or
62
funded, or any other liability other than (i) indebtedness of the Debtor
representing fees, expenses and indemnities arising hereunder or under the Sale
and Purchase Agreement for the purchase price of the Receivables under the Sale
and Purchase Agreement, and (ii) other indebtedness incurred in the ordinary
course of its business in an amount not to exceed $9,500 (except for
indebtedness incurred in connection with the repurchase of Receivables from
UARC) at any time outstanding.
SECTION 5.3 Hedging Arrangements. The Collection Agent shall
(i) at or prior to the time of any Funding, provide to the Administrative Agent,
the Collateral Agent and the Insurer an officer's certificate stating that the
Collection Agent has Hedging Arrangements in place satisfying the conditions of
this Section 5.3 as set forth below and after January 1, 1999, qualifies as an
Acceptable Hedging Arrangement (as defined in the Insurance Agreement), and (ii)
in connection with any Settlement Statement provided hereunder, provide an
executed copy of all existing Hedging Arrangements, which Hedging Arrangements
shall be satisfactory to the Administrative Agent, the Collateral Agent and the
Insurer, and with respect to which at any time after the occurrence of a
Termination Event the Debtor shall be the bene ficiary, in respect of an
aggregate notional amount at least equal to the Net Invest ment. The form and
structure and counterparty to each Hedging Arrangement shall be acceptable to
the Administrative Agent, the Collateral Agent and the Insurer and must be in
full force and effect at all times during which the Net Investment is greater
than zero (however such required amount may be reduced for the period of time be
tween 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).
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1 Appointment of Collection Agent. The servicing,
administering and collection of the Receivables shall be conducted by such
Person (the "Collection Agent") so designated from time to time in accordance
with this Section 6.1. Until the Collateral Agent gives notice to UAC of the
designation of a new Collection Agent, UAC is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Collection Agent pursuant
to the terms hereof. The Collateral Agent, upon the written request of the
Insurer shall, or may, with the consent of the Insurer, upon the occurrence of a
Collection Agent Default or any other Termination Event, designate as Collection
Agent any Person (including itself)
63
acceptable to the Insurer to succeed UAC or any successor Collection Agent, on
the condition in each case that any such Person so designated shall agree to
perform the duties and obligations of the Collection Agent pursuant to the terms
hereof, but in any event the Company shall notify Xxxxx'x and S&P of any
Collection Agent Default. 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, each Bank Investor and the
Insurer hereby appoints as its Agent the Collection Agent, from time to time
designated pursuant to Section 6.1, to enforce its respective rights and
interests in and under the Receivables, the Related Security and the Contracts.
The Collection Agent shall remit daily, within two (2) Business Days of receipt,
to the Collection Account all Collections received with respect to any
Receivables. The Collection Agent shall segregate and deposit to the Agent's,
the Company's, the Bank Investor's or the Insurer's account, as applicable, such
Person's allocable share of Collections of Receivables when required pursuant to
Article II hereof. So long as no Termination Event shall have occurred and be
con tinuing, 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, upon the direction or with the consent of the
Insurer, the Debtor shall deliver to the Collection Agent and the Collection
Agent shall hold in trust for the Debtor and the Secured Parties in accordance
with their respective interests, all Records which evidence or relate to
Receivables or Related Security. Notwithstanding anything to the contrary
contained herein, the Collateral Agent shall have the absolute and unlimited
right to direct the Collection Agent (whether the Collection Agent is the Debtor
or any other Person) to commence or settle any legal action to enforce
collection of any Receiv able or to foreclose upon or repossess any Related
Security.
(b) The Collection Agent shall, as soon as practicable fol
lowing 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 Col lection Agent, the Collection Agent, by giving three (3)
Business Days' prior written notice to the Collateral Agent, the Agent and the
Insurer, may revise the percentage used to calculate the Servicing Fee so long
as the revised percentage will not result in a Servicing Fee that exceeds 110%
of the reasonable and appropriate out-of-pocket costs and expenses of such
Collection Agent incurred in connection with the perfor xxxxx of its obligations
hereunder as documented to the reasonable satisfaction of the Collateral Agent,
the Agent and the Insurer. The Collection Agent, if other than the Debtor, shall
as soon as practicable upon demand, deliver to the Debtor all Records in its
possession which evidence or relate to indebtedness of an Obligor which is not a
Receivable.
(c) On or before ninety (90) days after the end of each fiscal
year of the Collection Agent, beginning with the fiscal year ending June 30,
1999, the Collection Agent shall cause a firm of independent public accountants
(who may also render other services to the Collection Agent or the Debtor) to
furnish a report on applying agreed upon procedures to the Collateral Agent to
the effect that they have (i) compared the information contained in the
Settlement Statements and Withdrawal Notices delivered during such fiscal year,
based on a sample size provided by the Agent, with the information contained in
the Contracts and the Collection Agent's records and computer systems for such
period, (ii) verified the Net Receiv xxxxx 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 servic ing the
Receivables contained correct information with regard to due dates and
outstanding balances, except, in each case for (a) such exceptions as such firm
shall believe to be immaterial (which exceptions need not be enumerated) and (b)
such other exceptions as shall be set forth in such report.
(d) Notwithstanding anything to the contrary contained in this
Article VI, the Collection Agent, if not the Debtor, shall have no obligation to
collect, enforce or take any other action described in this Article VI with
respect to any Receivable that is not included in the Collateral other than to
deliver to the Debtor the Collections and documents with respect to any such
Receivable as de scribed in Section 6.2(b).
(e) In the event that a Take-Out does not occur at least once
in any period of sixteen (16) consecutive calendar weeks, the Collateral Agent,
the Company or the Insurer shall have the right to conduct (or to cause its
accoun tants or other third parties to conduct) an audit of the Collection
Agent's records (including all Records and Contracts) and servicing, reporting
and collection proce dures.
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.
SECTION 6.4 Rights After Designation of New Collection Agent.
At any time following the designation of a Collection Agent (other than UAC)
pursuant to Section 6.1:
(i) The Agent or the Insurer may direct that
payment of all amounts payable under any Receivable be made
directly to the Collateral Agent and the Insurer, as
applicable, or their respec tive designees.
(ii) The Debtor shall, at the Agent's or the
Insurer's request and at the Debtor's expense, give notice of
the Collat eral Agent's interest in the Receivables to each
Obligor and direct that payments be made directly to the
Collateral Agent or its designee.
(iii) The Debtor shall, at the Agent's or
the Insurer's request, (A) assemble all of the Records, and
shall make the same available to the Collateral Agent and the
Insurer at a place se lected by the Collateral Agent and the
Insurer or their respective designees, and (B) segregate all
cash, checks and other instruments received by it from time to
time constituting Collections of Receivables in a manner
acceptable to the Collateral Agent and the Insurer and shall,
promptly upon receipt, remit all such cash, checks and instru
ments, 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 Receiv xxxxx and Related
Security with respect thereto, including, without limitation,
endorsing the Debtor's name on checks and other instru ments
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 obliga tions
of the Debtor thereunder.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1 Termination Events. The occurrence of any one or
more of the following events shall constitute a Termination Event:
(a) any representation, warranty,
certification or statement made by the Debtor or UAC in this
Agreement, the 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;
(b) the Debtor or UAC shall default in the
performance of (i) any payment obligation hereunder or under
the Sale and Purchase Agreement or (ii) any other covenant or
undertaking hereunder or under the Sale and Purchase
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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 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 the Receivables and Related Security and
Collections with respect thereto, free and clear of any
Adverse Claim; or
(g) either of the Debtor or the Collection
Agent shall con solidate 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 or the
Collection Agent since the Closing Date, or any other event
shall have occurred which materially affects the Debtor's or
the Collection Agent's ability to either collect the
Receivables or to perform under this Agreement, the Sale and
Purchase Agreement or any other Transaction Document; or
(i) the Liquidity Provider or the Credit
Support Provider shall have given notice that an event of
default has occurred and is continuing under its agreements
with the Company; or
(j) the Commercial Paper issued by the
Company shall not be rated at least "A-2" by S&P and at least
"P-2" by 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
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(m) the Net Yield as of any Determination
Date is less than 2.00%;
(n) a draw is made under the Policy or an
Insurer Default has occurred and is continuing;
(o) the Insurer shall have given notice that
an event of default has occurred and is continuing under the
Insurance Agreement;
(p) the term of the Policy is not of the
term required by the Company (which term shall be at least
equal to the term of the latest maturing Receivable in the
facility plus 90 days); and
(q) the sum of the (i) amount on deposit in
the Reserve Account and (ii) the amount available pursuant to
any Reserve Account Guaranty is less than the Required Reserve
Account Amount for two (2) consecutive Business Days.
SECTION 7.2 Termination. If a Termination Event occurs
hereunder and is continuing, the Collateral Agent, at the written direction of
the Insurer shall, or the Collateral Agent may, with the consent of the Insurer,
in either case by notice to the Debtor, (i) if UAC is the Collection Agent at
the time, terminate UAC as Collec tion Agent hereunder, or (ii) declare any date
as the date upon which the Note shall become due and payable, and, subject to
the limitations on recourse set forth in Section 2.1 hereof and Section 6.8 of
the Note Purchase Agreement, the Collateral Agent shall have all of the rights
and remedies provided to a secured creditor or a purchaser of chattel paper
under the Relevant UCC by applicable law in respect thereto (including, but not
limited to, initiating foreclosure and/or liquidation proceed ings with respect
to all of the Receivables and Contracts or any portion thereof). In addition,
the Agent shall have the right to designate the Base Rate plus, if an Insurer
Default shall have occurred, 2%, to be applicable to the Net Investment (except
in the case of a Termination Event described under clauses (i) and (j) above, in
which case the Adjusted LIBOR Rate or the Base Rate, as applicable, shall be
applicable), and the Company shall have the right to cease issuing Commercial
Paper in order to maintain the Net Investment and may assign to the Bank
Investors all of its right, title and interest hereunder.
No waiver of any Termination Event or Potential Termination
Event shall be effective without the prior written consent of the Insurer.
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If the Note is declared due and payable in accordance with
this Section 7.2, the Collateral Agent shall, at the direction of the Insurer,
and may, with the consent of the Insurer, do any one or more of the following:
(i) take all necessary action to foreclose
upon the Collateral;
(ii) retain in satisfaction of any amounts
owing from the Debtor all amounts otherwise payable to the Debtor
pursuant to this Agreement to the extent necessary to pay in full all
amounts (including principal and interest) (i) due and payable under
the Note, (ii) due and payable by the Debtor under the Note Purchase
Agreement, and (iii) all amounts due and payable by the Debtor under
the Insurance Agreement;
(iii) subject to the limitations on recourse
set forth in Section 2.1 hereof and Section 6.8 of the Note Purchase
Agreement, pursue any available remedy by proceeding at law or in
equity including complete or partial foreclosure of the lien upon the
Collateral and sale of the Collateral or any portion thereof or rights
or interest therein as may appear necessary or desirable (i) to collect
amounts owed pursuant to the Note and any other payments then due and
thereafter to become due under the Note or (ii) to enforce the
performance and observance of any obligation, covenant, agreement or
provision contained in this Agreement to be observed or performed by
the Debtor; or
(iv) subject to the limitations on recourse
set forth in Section 2.1 hereof and Section 6.8 of the Note Purchase
Agreement, exercise any remedies of a secured party under the Uni form
Commercial Code and take any other appropriate action to 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 and UAC hereby grant
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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 and the Debtor acknowledge that such power of attorney is irrevocable and
is coupled with an interest. In connection with any sale of the Receivables by
the Collateral Agent after the occurrence of a Termination Event, the Debtor
shall have, for a period of five (5) Business Days after notice of such proposed
sale from or on behalf of the Secured Parties, the right to repurchase the
Receivables and related Contracts for a price, payable in immediately available
funds, in an amount equal to the Aggregate Unpaids.
SECTION 7.3 Proceeds. The proceeds from the sale, disposition
or liquidation of the Receivables pursuant to Section 7.2 above shall be treated
as Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions governing allocations set forth herein.
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Duties of the Collateral Agent. The Secured
Parties hereby appoint NationsBank to act solely on their behalf as Collateral
Agent hereun der, and NationsBank 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 to gether 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 provi sions of Article II hereof.
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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 responsibility as Collateral Agent or otherwise be
subject to replacement pursuant to or such agreement governing its
responsibility as Collateral Agent or (iv) materially breach any of the
provisions of this Agreement or provided, further, that, without the consent of
the Agent and the Insurer, such resignation shall not be effective until a
successor Collateral Agent acceptable to the Insurer shall have accepted
appointment as 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 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 suc cessor Collateral Agent approved by the Agent and the Insurer and the
successor Collateral Agent shall have assumed the responsibilities and
obligations of the Collat eral Agent hereunder.
This Agreement shall be administered in the Corporate Trust
Office of the Collateral Agent. The Collateral Agent shall maintain fidelity
bond coverage insuring against losses through wrongdoing of its officers and
employees who are involved in the administration of Collections covering such
actions and in such amounts as the Collateral Agent believes to be reasonable in
light of industry xxxx dards from time to time.
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
69
(ii) the compensation and expenses of its counsel and agents) pursuant to a
separate letter agreement between the Collateral Agent and the Debtor. All such
amounts shall be payable from funds available therefor in accordance with
Section 2.3(a)(iii) hereof with any increase in such amounts to be approved by
the Insurer. Subject to the terms of such letter agreement, the Collateral Agent
shall be required to pay the ex penses 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).
(a) The Debtor shall indemnify the Collateral Agent, its
officers, directors, employees and agents for, and hold it harmless against any
loss, liability or expense incurred without willful misconduct, gross negligence
or bad faith on its part, arising out of or in connection with (i) the
acceptance or 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.
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 Transactions Documents 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.
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(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 their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity).
(d) No Conflict. The execution and delivery by the Collateral
Agent of this Agreement and the other Transaction Documents to which the
Collateral Agent is a party, and the performance of the transactions
contemplated by this Agreement and the other Transaction Documents and the
fulfillment of the terms hereof and thereof applicable to the Collateral Agent,
will not conflict with, violate, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any Requirement of Law applicable to the Collateral Agent or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Collateral Agent is a party or by which it is bound.
SECTION 8.4 Liability of the Collateral Agent.
(a) The Collateral Agent shall be liable in accordance here
with only to the extent of the obligations specifically undertaken by the
Collateral 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 certificates or opinions furnished to the Collateral
Agent and conforming to the requirements 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.
71
(d) The Collateral Agent shall not be charged with knowl edge
of any Termination Event unless a Trust Officer assigned to the Collateral
Agent's Corporate Trust Office obtains actual knowledge of such event or the
Collat eral Agent receives written notice of such event from the Debtor, the
Company, any Bank Investor, the Insurer or the Agent, as the case may be.
(e) Without limiting the generality of this Section 8.4, the
Collateral Agent shall have no duty (i) to see to any recording, filing or
depositing of this Agreement or any other Transaction Document or any financing
statement or continuation statement evidencing a security interest in the
Receivables or the Financed Vehicles, or to see to the maintenance of any such
recording or filing or depositing or to any recording, refiling or redepositing
of any thereof, (ii) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
Lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Receivables, (iv) to confirm or verify the contents of
any reports or certificates of the Collection Agent or the Debtor delivered to
the Collateral Agent pursuant to this Agreement believed by the Collateral Agent
to be genuine and to have been signed or presented by the proper party or
parties or (v) to inspect the Financed Vehicles at any time or ascertain or
inquire as to the performance or observance of any of the Debtor's or the
Collection Agent's repre sentations, warranties or covenants or the Collection
Agent's duties and obligations as Collection Agent and as custodian of books,
records, files and computer 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 Collateral 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
Settle ment Statement, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or
72
document reasonably believed by it to be genuine and to have been signed or pre
sented by the proper party or parties.
(h) The Collateral Agent may consult with counsel and any
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this Agreement
in good faith and in accordance with such opinion of counsel.
(i) The Collateral Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement or to
institute, conduct or defend any litigation under this Agreement or in relation
to this Agree ment, at the request, order or direction of the Agent pursuant to
the provisions of this Agreement, unless the Agent shall have offered to the
Collateral Agent reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; nothing contained in
this Agreement, however, shall relieve the Collateral Agent of its obligations,
upon the occurrence of a Termination Event (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(j) The Collateral Agent shall not be liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement.
(k) Prior to the occurrence of a Termination Event and before
the Collateral Agent has received notice of such Termination Event and after the
waiver of any Termination Event that may have occurred, the Collateral Agent
shall not be bound to make any investigation into the facts of matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to 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.
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(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 xxxxxxx dation or into
which the Collateral Agent is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Collateral Agent substantially as
an entirety shall be a corporation organized and existing under the laws of the
United States of America or any State or the District of Columbia and, if the
Collateral Agent is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Secured Parties in
form satisfactory to the Secured Parties, the performance of every covenant and
obligation of the Collateral Agent hereunder; and
(ii) the Collateral Agent has delivered to the Secured Parties
an officer's certificate and an opinion of counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental agreement
comply with this Section 8.5 and that all conditions precedent herein provided
for relating to such transaction 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 xxxx less
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
74
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 perfor xxxxx of duties or by reason of reckless disregard of
obligations and duties hereun der. The Collateral Agent may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Collateral Agent shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to administer the Collections and the Collection
Account in accordance with this Agreement which in its reasonable opinion may
involve it in any expense or liability.
SECTION 8.7 Indemnification of the Secured Parties. The
Collateral Agent shall indemnify and hold harmless the Agent and the Secured
Parties from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of willful misfeasance, bad faith, or gross negligence in
the performance of the duties of the Collateral Agent or by reason of reckless
disregard of obligations and duties of the Collateral Agent hereunder or by
reason of the acts, omissions or alleged acts or omissions of the Collateral
Agent pursuant to this Agreement. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
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 or UAC
pursuant to this Agree ment, (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 termina tion of this Agreement.
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SECTION 9.2 Waivers; Amendments. (a) No failure or delay on
the part of the Collateral Agent or any of the Secured Parties in exercising any
power, right or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or remedy
preclude any other further exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement may be amended or waived
if, but only if, such amendment is in writing and is signed by the Debtor, the
Collection Agent, the Insurer and the Majority Investors (and, if Article VI or
the rights or duties of the Collateral Agent are affected thereby, by the
Collateral Agent); 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 termination of any Commitment, (iv) change the
percentage of the Commitments or the number of Bank Investors, which shall be
required for the Bank Investors or any of them to take any action under this
Section or any other provision of this Agreement, (v) extend or permit the
extension of the Commitment Termination Date, (vi) reduce or impair Collections
or the payment of fees payable hereunder to the Bank Investors or delay the
scheduled dates for payment of such amounts, (vii) increase the Servicing Fee to
a percentage greater than 1.0% per annum of the aggregate Outstanding Balance of
the Receivables as of the first day of the related Settlement Period, (viii)
modify any provisions of this Agreement or the Sale and Purchase Agreement
relating to the timing of payments required to be made by the Issuer 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 Com pany'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 determining whether the
Collateral Agent shall have obtained sufficient consent hereunder.
76
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 purposes of notice to such party. Each such notice or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and
confirmation is received, (ii) if given by mail 3 Business Days following such
posting, or (iii) if given by any other shall mean, when received at the address
specified in this Section. Notice to Moody's and S&P will be provided for all
waivers, consents, approvals, amendments and extensions with respect to or under
the Transaction Documents. Each of the Debtor and the Collection 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 ab sence of such confirmation shall not affect the validity of such notice.
If the written confirmation differs in any material respect from the action
taken by the Company, the records of the Company shall govern absent manifest
error.
If to the Company:
ENTERPRISE FUNDING CORPORATION
c/o Merrill Xxxxx Money Markets Inc.
World Financial Center--South Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
Bankers Trust Company
ABA# 000000000
Account# 00000000
Reference Enterprise Funding - UAC
(with a copy to the Administrative Agent)
If to the Debtor:
UNION ACCEPTANCE FUNDING CORPORATION
0000 Xxxxxx Xxxxx Xxxx, Xxxxx 0000-X
00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
Union Federal Savings Bank
of Indianapolis
ABA #: 0000-0000-0
Account #: 590070304
Reference: Nations Line
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
If to the Collateral Agent:
NATIONSBANK, N.A.
NationsBank 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:
NATIONSBANK, N.A.
NationsBank Corporate Xxxxxx--00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx--
Investment Banking
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
78
If the to Insurer:
MBIA INSURANCE CORPORATION
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: Insured Portfolio Management - SF
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information: MBIA Insurance Corporation
ABA #: 000-000-000
Account #: 000-0-000000
Reference: UAFC Enterprise Auto WH
If the to Agent:
NATIONSBANK, N.A.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
NC1-007-10-07
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information: NationsBank, N.A.
ABA #: 000000000
Account #: 1093601650000
Reference: UAC
If to S&P:
STANDARD & POOR'S RATINGS SERVICES
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Moody's:
XXXXX'X INVESTORS SERVICE
79
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 10007
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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, 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
proceedings 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, 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 understandings.
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 jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unen forceable such provision in any
other jurisdiction.
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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, 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 Collateral
Agent and the Insurer. No provision of this Agreement shall in any manner
restrict the ability of the Collateral Agent to assign, participate, grant
security interests in, or otherwise transfer any portion of the Collateral.
(b) Each of the Debtor and UAC hereby agrees and con sents 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 Liquidity Pro
vider.
SECTION 9.7 Waiver of Confidentiality. Each of the Debtor and
UAC hereby consents to the disclosure of any non-public information with respect
to it received by the Company or the Administrative Agent to any of the Company,
any nationally recognized rating agency rating the Company's commercial paper,
the Administrative Agent, the Insurer, the Liquidity Provider or the Credit
Support Provider in relation to this Agreement.
SECTION 9.8 Confidentiality Agreement. Each of the Debtor 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 Administrative
Agent of the material to be disclosed).
81
SECTION 9.9 No Bankruptcy Petition Against the Company. Each
of the Debtor, UAC, the Insurer 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 any
bankruptcy, reorganization, 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
Docu ments are solely the corporate obligations of the Company and shall be
payable solely from the assets of the Company in excess of funds necessary to
pay matured and maturing Commercial Paper. No recourse under any obligation,
covenant or agree ment of the Company contained in this Agreement shall be had
against Xxxxxxx Xxxxx Money Markets Inc. (or any affiliate thereof), or any
stockholder, officer or director of the Company, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise; it being expressly agreed and understood that this Agreement is
solely a corporate obligation of the Company, and that no personal liability
whatsoever shall attach to or be incurred by Xxxxxxx Xxxxx Money Markets Inc.
(or any affiliate thereof), or the stockholders, officers or directors of the
Company, as such, or any of them, under or by reason of any of the obligations,
covenants or agreements of the Company contained in this Agreement, or implied
therefrom, and that any and all personal liability for breaches by the Company
of any of such obligations, covenants or agreements, either at common law or at
equity, or by statute or constitution, of Xxxxxxx Xxxxx Money Markets Inc. (or
any affiliate thereof) and every such stockholder, officer or director of the
Company is hereby expressly waived as a condition of and consideration for the
execution of this Agreement.
SECTION 9.11 Further Assurances. The Debtor agrees to do such
further acts and things and to execute and deliver to the Secured Parties, the
Adminis trative Agent or the Collateral Agent such additional assignments,
agreements, powers and instruments as are required by the Collateral Agent or
the Insurer to carry into effect the purposes of this Agreement or to better
assure and confirm unto the Collateral Agent or the Insurer its rights, powers
and remedies hereunder.
82
SECTION 9.12 Exercise of Rights by Insurer. All rights granted
to the Insurer pursuant to this Agreement shall terminate during the pendency of
a payment default by the Insurer under the Policy or during the pendency of a
Surety Insolvency (as defined in the Insurance Agreement as in effect on the
date hereof) and during such time the Insurer's rights may be exercised by the
Collateral Agent or Company, provided, however, the Insurer's rights shall be
reinstated in full, immedi ately upon the cure of such default.
SECTION 9.13 Characterization of the Transactions Contemplated
by the Agreement; Tax Treatment. The parties hereto agree that this Agreement
shall constitute a security agreement under applicable law. The Debtor hereby
assigns to the Collateral Agent, for the benefit of the Secured Parties, all of
its rights to pay ment (i) under the Sale and Purchase Agreement and the PFC
Sale and Purchase Agreement with respect to the Receivables and with respect to
any obligations there under of UAC or PFC, as applicable, with respect to the
Receivables and (ii) under or in connection with any Hedging Arrangement. The
Collateral Agent agrees that upon any release of a Receivable or Contract to the
Debtor, the Collateral Agent shall be deemed to have released its security
interest therein and reassigned to the Debtor all of the Collateral Agent's
rights under the Sale and Purchase Agreement or the PFC Sale and Purchase
Agreement, as applicable, with respect to such Receivable or Con tract. The
Debtor agrees that neither it nor the Collection Agent shall give any con sent
or waiver required or permitted to be given under the Sale and Purchase Agree
ment with respect to the Receivables or the Contracts without the prior consent
of either the Collateral Agent, the Administrative Agent or the Insurer.
(a) 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.
83
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Security Agreement as of the date first written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By: _______________________________
Name:
Title:
UNION ACCEPTANCE FUNDING
CORPORATION, as Debtor
By: _______________________________
Name:
Title:
UNION ACCEPTANCE CORPORATION,
individually and as Collection Agent
By: _______________________________
Name:
Title:
MBIA INSURANCE CORPORATION,
as Insurer
By: _______________________________
Name:
Title:
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