SECURITY AGREEMENT
among
UAC BOAT FUNDING CORP.
as Debtor,
ENTERPRISE FUNDING CORPORATION,
as Company,
NATIONSBANK, N.A.
individually and as Collateral Agent,
CAPITAL MARKETS ASSURANCE CORPORATION
as Surety Bond Provider,
and
UNION ACCEPTANCE CORPORATION
as Seller and Servicer
Dated as of April 3, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions................................................. 2
ARTICLE II
GRANT OF SECURITY INTEREST
SECTION 2.1 Grant of Security Interest.................................. 34
SECTION 2.2 Subrogation................................................. 36
SECTION 2.3 Increase of Note;Limit on
Commercial Paper Maturity................................... 36
SECTION 2.4 Release of Receivables...................................... 38
SECTION 2.5 Yield Supplement Account, Deposits,
Withdrawals................................................. 40
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEBTOR
SECTION 3.1 Representations and Warranties
Concerning Receivables....................................... 44
SECTION 3.2 Covenants of the Debtor...................................... 45
ARTICLE IV
SERVICING AND ADMINISTRATION
SECTION 4.1 Servicing.................................................... 54
SECTION 4.2 Duties of the Servicer....................................... 56
SECTION 4.3 Rights After Designation of
Successor Servicer........................................... 57
SECTION 4.4 Responsibilities of the Debtor............................... 58
SECTION 4.5 Monthly Debtor's Certificate................................. 58
SECTION 4.6 Additional Representations and Warranties
of UAC as Servicer........................................... 58
ARTICLE V
ALLOCATION AND APPLICATION
OF COLLECTIONS; RESERVE ACCOUNT
SECTION 5.1 Collections................................................... 60
SECTION 5.2 Remittances to the Secured Parties............................ 64
SECTION 5.3 Reserve Account............................................... 65
SECTION 5.4 Carrying Costs Account........................................ 68
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Page
ARTICLE VI
TERMINATION EVENTS; WIND-DOWN EVENTS
SECTION 6.1 Termination Events............................................ 71
SECTION 6.2 Wind-Down Events.............................................. 74
SECTION 6.3 Remedies...................................................... 74
SECTION 6.4 Application of Proceeds....................................... 76
ARTICLE VII
THE COLLATERAL AGENT
SECTION 7.1 Duties of the Collateral Agent................................ 77
SECTION 7.2 Compensation and Indemnification
of Collateral Agent........................................... 78
SECTION 7.3 Representations, Warranties and
Covenants of the Collateral Agent............................. 78
SECTION 7.4 Liability of the Collateral Agent............................. 79
SECTION 7.5 Merger or Consolidation of,
or Assumption of the Obligations
of, the Collateral Agent...................................... 82
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices, Etc.................................................. 84
SECTION 8.2 Successors and Assigns........................................ 85
SECTION 8.3 Severability Clause........................................... 86
SECTION 8.4 Amendments.................................................... 86
SECTION 8.5 Governing Law................................................. 86
SECTION 8.6 No Bankruptcy Petition Against
the Company................................................... 86
SECTION 8.7 Setoff........................................................ 86
SECTION 8.8 No Recourse................................................... 87
SECTION 8.9 Further Assurances; Replacement Surety
Bond.......................................................... 87
SECTION 8.10 Other Costs, Expenses and
Related Matters............................................... 87
SECTION 8.11 Direction of Collateral Agent; Replacement
Surety Bond................................................... 88
SECTION 8.12 Counterparts.................................................. 88
SECTION 8.13 Headings...................................................... 88
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Page
EXHIBITS
EXHIBIT A Receivables Schedule A-1
EXHIBIT B Form of Surety Bond B-1
EXHIBIT C Location of Records C-1
EXHIBIT D Form of Monthly Debtor's Certificate D-1
EXHIBIT E Servicing Agreement E-1
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of April 3,
1997 among ENTERPRISE FUNDING CORPORATION, a Delaware corporation, as a secured
party (together with its successors and assigns, the "Company"), UAC BOAT
FUNDING CORP., a Delaware corporation, as debtor (together with its successors
and assigns, the "Debtor"), CAPITAL MARKETS ASSURANCE CORPORATION, a New York
monoline stock insurance company, as a secured party and as Surety Bond Provider
(in such capacity, the "Surety Bond Provider"), UNION ACCEPTANCE CORPORATION, an
Indiana corporation (the "Seller" or the "Servicer," as appropriate), and
NATIONSBANK, N.A., a national banking association ("NationsBank"), individually
and as collateral agent (together with its successors and assigns in such
capacity, the "Collateral Agent").
W I T N E S S E T H :
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 security interest in the
Boats and the Collections derived therefrom during the full term of this
Agreement;
WHEREAS, pursuant to the Insurance Agreement, the Surety Bond
Provider has issued its Surety Bond 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 such
Note to pay the principal of and interest on such 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 the
Note, the Note Purchase Agreement and the Insurance Agreement;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. All capitalized terms used herein
shall have the meanings herein specified, and shall include in the singular
number the plural and in the plural number the singular:
"Accrued Interest Component" shall mean for any Collection
Period, the Interest Component of all Related Commercial Paper outstanding at
any time during such Collection Period which has accrued from the first day
through the last day of such Collection Period whether or not such Related
Commercial Paper matures during such Collection Period. For purposes of the
immediately preceding sentence, the portion of the Interest Component of Related
Commercial Paper accrued in a Collection Period in which Related Commercial
Paper has a stated maturity date on a day other than the last day of such
Collection Period shall be based on the actual number of days elapsed in such
Collection Period during which such Related Commercial Paper was outstanding.
"Acquisition Subsidiary" shall mean a wholly owned subsidiary
of the Seller which has entered into (i) agreements with Dealers in certain
states for the origination or purchase of Receivables, and (ii) an agreement
with the Seller pursuant to which the Seller acquires all Receivables originated
or purchased by the Acquisition Subsidiary.
"Adjusted LIBOR Rate" means, with respect to any Collection
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 Collection Period
in respect of eurocurrency or eurodollar funding, lending or
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liabilities (or, if more than one percentage shall be so applicable, the daily
average of such percentage for those days in such Collection Period during which
any such percentage shall be applicable) plus (B) the then daily net annual
assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as
estimated by the Agent for determining the current annual assessment payable by
the Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.
"Administrative Agent" shall mean NationsBank, N.A., as
administrative agent for the Company.
"Administrative Fee" shall have the meaning specified in the
Fee Letter.
"Advance Termination Date" means the second Business Day after
the delivery by the Company to the Debtor and the Surety Bond Provider of
written notice that the Company elects to cease advancing additional funds to
the Debtor.
"Adverse Claim" shall mean a lien, security interest, charge
or encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affiliate" shall mean, with respect to a Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning specified in the Note Purchase
Agreement.
"Agreement" shall mean this Security Agreement, as it may from
time to time be amended, supplemented or otherwise modified in accordance with
the terms hereof.
"Amount Financed" with respect to a Receivable means the
amount advanced under the Receivable toward the purchase price of the related
Boat and any related costs.
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"Annual Percentage Rate" or "APR" of a Receivable means the
annual rate of finance charges stated in the Receivable.
"Available Collections" shall mean, with respect to each
Remittance Date, all Collections received by the Servicer, from whatever source,
during or with respect to the prior Collection Period.
"Bailee" means a "Bailee" within the meaning of Section 9-305
of the UCC.
"Bank Investors" shall have the meaning specified in the Note
Purchase Agreement.
"Base Rate" means, a rate per annum equal to the greater of
(i) the prime rate of interest announced by the Liquidity Provider (or, if more
than one Liquidity Provider, then by NationsBank, N.A.) from time to time,
changing when and as said prime rate changes (such rate not necessarily being
the lowest or best rate charged by the Liquidity Provider (or NationsBank, N.A.
as applicable)) and (ii) the sum of (a) 1.50% and (b) the rate equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Liquidity Provider
(or, if more than one Liquidity Provider, then by NationsBank, N.A.) from three
Federal funds brokers of recognized standing selected by it.
"Boat" shall mean, with respect to a Receivable, any new or
used boat, boat motor, accompanying boat trailer or Personal Watercraft and
accompanying trailer, together with all accessories thereto, securing the
related Obligor's indebtedness thereunder.
"Borrowing Base" shall mean, at any time, the sum of (a) the
Borrowing Base (Boats) and (b) the Borrowing Base (Personal Watercraft).
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"Borrowing Base (Boats)" shall mean, at any time, the
aggregate outstanding Principal Balance of all Eligible Receivables originated
in connection with the sale of a Boat (other than Personal Watercraft).
"Borrowing Base (Personal Watercraft)" shall mean, at any
time, the sum of (a) the Borrowing Base (Personal Watercraft - Extended Term)
and (b) the Borrowing Base (Personal Watercraft - Regular Term).
"Borrowing Base (Personal Watercraft - Extended Term)" shall
mean, the aggregate outstanding Principal Balance of all Eligible Receivables
originated in connection with the sale of Personal Watercraft with 49-60
scheduled monthly payments at origination.
"Borrowing Base (Personal Watercraft - Regular Term)" shall
mean, the aggregate outstanding Principal Balance of all Eligible Receivables
originated in connection with the sale of Personal Watercraft which had less
than 49 scheduled monthly payments at origination.
"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 or Indianapolis, Indiana are authorized or required by law
to close.
"Carrying Costs Account" shall mean the account established in
Section 5.4 hereof.
"Carrying Costs" shall mean for a Collection Period the sum of
(i) the sum of the dollar amount of the Company's obligations for such
Collection Period determined on an accrual basis in accordance with generally
accepted accounting principles consistently applied (a) to pay interest with
respect to Purchased Interests pursuant to the provisions of the Liquidity
Agreement (such interest to be calculated based on the Adjusted LIBOR Rate, if
available, otherwise the Base Rate, provided that if a Termination Event shall
have occurred and if a Surety Bond Provider Default shall have occurred, such
interest shall be calculated at the Base Rate plus 2.00%) outstanding at any
time during such Collection Period accrued from the day of the acquisition of
the related Purchased Interest through the last day of such Collection Period
whether or not such interest is payable
5
during such Collection Period and to pay interest with respect to amounts
disbursed with respect to the Note by the Credit Support Provider pursuant to
the Credit Support Agreement outstanding at any time during such Collection
Period accrued from the first day of the acquisition of the related Purchased
Interest or the day on which such amounts are disbursed by the Credit Support
Provider through the last day of such Collection Period whether or not such
interest is payable during such Collection Period, (b) to pay the Accrued
Interest Component with respect to such Collection Period, (c) without
duplication to pay a dealer fee of 0.05% per annum of the face amount of Related
Commercial Paper issued during such Collection Period, (d) to pay any past due
interest not paid in clause (a) and (b) with respect to prior Collection
Periods, and (e) to pay the costs of the Company with respect to the operation
of the Yield Protection Provision, which amounts paid pursuant to this clause
(e) shall not exceed 1% per annum of the Net Investment and (ii) the Program
Fee, Liquidity Fee and Administrative Fee accrued from the first day through the
last day of such Collection Period whether or not such amount is payable during
such Collection Period, the sum of which amounts shall not exceed 0.30% per
annum of the Net Investment, in the case of the Program Fee and the
Administrative Fee and which amount shall not exceed 0.17% per annum of the
Facility Limit, in the case of the Liquidity Fee. During any Collection 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 (b) and (c) above, Carrying Costs shall include interest on
the daily average Net Investment for the related Collection Period at the
Adjusted LIBOR Rate, or if such rate is unavailable, at the Base Rate, or if a
Surety Bond Provider Default and a Termination Event shall have occurred and be
continuing, at the Base Rate plus 2.00%.
"Certificated Securities" means "certificated securities" as
defined in Section 8-102(l)(a) of the UCC which are in the continuous possession
in the State of North Carolina of the Financial Intermediary.
"Clearing Corporation" means The Depository Trust Company.
6
"Clearing Corporation Securities" means "certificated
securities" as defined in Section 8-102(l)(a) of the UCC which are in the
continuous possession in the States of North Carolina or New York of the
Clearing Corporation or a Custodian Bank.
"Closing Date" shall mean April 3, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time (including any successor statute), and the regulations
promulgated and the rulings issued thereunder.
"Collateral" shall have the meaning set forth in Section 2.1
of this Agreement.
"Collateral Agent" shall mean NationsBank, N.A., or any
successor thereto, as Collateral Agent hereunder.
"Collection Account" shall mean the account established
pursuant to Section 4.1(b) of this Agreement.
"Collection Period" shall mean with respect to any Remittance
Date, the calendar month immediately preceding the month of such Remittance Date
(and with respect to the initial Remittance Date, the time period from the
Closing Date to April 30, 1997).
"Collections" shall mean all Principal Collections and Finance
Charge Collections received by the Servicer in respect of the Collateral in the
form of cash, checks, wire transfers or other form of payment, but shall not
include any late fees, insufficient check charges and related charges assessed
against Obligors.
"Commercial Paper" shall mean promissory notes of the Company
issued by the Company in the commercial paper market.
"Commitment Termination Date" shall have the meaning specified
in the Note Purchase Agreement.
"Common Stock" shall mean the 100 shares of the Debtor's $1.00
par value common stock.
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"Company" shall mean Enterprise Funding Corporation, a
Delaware corporation, together with its successors and assigns.
"Contract" shall mean a retail installment sales contract or
installment loan and security interest contract.
"Credit Guidelines" shall mean policies and procedures of the
Servicer, relating to the operation of the marine financing business of the
Servicer, including, without limitation, the policies and procedures for
determining the creditworthiness of retail marine installment sales contract
customers, the extension of credit to such customers and relating to the
maintenance and collection of retail marine installment sales contracts, as such
policies and procedures may be amended from time to time.
"Credit Support Agreement" means any 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 of Commercial Paper.
"Credit Support Provider" means the Person or Persons who will
provide credit support to the Company in connection with the issuance by the
Company of its Commercial Paper.
"Cumulative Charge-Off Ratio" shall mean with respect to any
date of determination, a fraction (expressed as a percentage) the numerator of
which is equal to (A) the aggregate principal balance at the time such
Receivable became a Defaulted Receivable of all Receivables which were added to
the Collateral from the period commencing on the day immediately following the
cut-off date relating to the most recent Take-Out (or, prior to the first
Take-Out, since the Closing Date) and ending on the last calendar day of the
fourth month prior to such date of determination; provided, however, that if the
cut-off date relating to the most recent Take-Out occurred less than four
calendar months prior to the date of determination then the ending date of such
period shall be the last day of the calendar month immediately preceding the
date of determination, minus (B) the aggregate dollar amount of Liquidation
Proceeds received on
8
the Receivables designated in clause (A) above and the denominator of which is
equal to the aggregate outstanding principal balance of Receivables as of the
time such Receivables were added to the Collateral for all Receivables
designated in clause (A) above.
"Custodian Bank" means a "custodian bank" as defined in
Section 8-102(4) of the UCC.
"Dealer" shall mean a factory authorized dealer which has
entered into a Dealer Agreement with the Seller or an Acquisition Subsidiary.
"Dealer Agreement" shall mean the agreement between the Seller
or an Acquisition Subsidiary and a Dealer relating to the purchase of a
Receivable.
"Debtor" shall mean UAC Boat Funding Corp. and its successors
and assigns.
"Default Ratio" shall mean, with respect to any Collection
Period, a fraction (expressed as a percentage) (x) the numerator of which is the
aggregate Principal Balance of all Eligible Receivables in existence on the last
day of such Collection Period which became Defaulted Receivables during such
Collection Period and (y) the denominator of which is the aggregate outstanding
Principal Balance of all Eligible Receivables as of the first day of such
Collection Period.
"Defaulted Receivable" shall mean each Receivable with respect
to which (i) in accordance with the Credit Guidelines the Servicer has
determined that eventual payment in full is unlikely, (ii) the related Boat has
been repossessed or (iii) any payment is over 120 days contractually delinquent.
"Delinquent Receivable" shall mean each Receivable (i) as to
which any payment, or part thereof, remains unpaid for 30 days or more from the
original due date for such payment and (ii) is not a Defaulted Receivable.
"Delinquency Ratio" shall mean, with respect to any date of
determination, a fraction (expressed as a percentage) the numerator of which is
the aggregate outstanding Principal Balance of all Eligible Receivables
9
which are Delinquent Receivables as of such date and the denominator of which is
the aggregate outstanding Principal Balance of all Eligible Receivables as of
such date provided, however, that with respect to (i) the calculation of the
Noteholder's Percentage (Boats) and Noteholder's Percentage (Personal
Watercraft-Regular Term) the denominator of the Delinquency Ratio calculated on
the date of determination occurring in each December and (ii) the Monthly
Debtor's Certificate, the denominator of the Delinquency Ratio calculated on
each date of determination occurring in each October and each month thereafter
until a Take-Out shall have occurred shall equal the aggregate outstanding
Principal Balance of all Eligible Receivables as of the date of determination in
the third prior month.
"Determination Date" shall mean with respect to any Remittance
Date, two Business Days prior to the day of the month in which the related
Remittance Date falls.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"EFC Collateral Agent" shall mean NationsBank, N.A. as
collateral agent in respect of the Company's Commercial Paper program.
"Eligible Institution" shall mean a depositary institution or
trust company which has a short-term credit rating from Xxxxx'x and S&P of at
least "P-1" and "A-1", respectively, and a long-term credit rating from Xxxxx'x
and S&P of at least "A2" and "A", respectively.
"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
depositary institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by Federal or state banking or depositary institution authorities;
provided, however, that at the time of 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 such obligation whose rating is
based
10
on collateral or on the credit of a Person other than such institution or trust
company) of such depositary institution or trust company shall have a credit
rating from Xxxxx'x and S&P of at least "P-1" and "A-1", respectively, in the
case of the certificates of deposit or short-term deposits, or a rating not
lower than one of the two highest investment categories granted by Xxxxx'x and
by S&P; (iii) certificates of deposit having, at the time of investment or
contractual commitment to invest therein, a rating from Xxxxx'x and S&P of at
least "P-1" and "A-1", respectively; (iv) investments in money market funds
rated in the highest investment category or otherwise approved in writing by the
applicable rating agencies, (b) demand deposits in any depositary 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
investment or contractual commitment to invest therein, a credit rating from
Xxxxx'x and S&P of at least "P-1" and "A-1", respectively, (d) Eurodollar time
deposits having a credit rating from Xxxxx'x and S&P of at least "P-1" and
"A-1", respectively, 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 investment therein, a
rating from Xxxxx'x and S&P of at least "P-1" and "A-1", respectively.
"Eligible Receivables" shall mean, as of any day, each
Receivable of the Debtor:
(a) which (i) shall have been originated
in the United States by the Seller or a Dealer for the retail sale of a Boat in
the ordinary course of such Dealer's business, shall have been fully and
properly executed by the parties thereto, shall have been purchased by an
Acquisition Subsidiary or the Seller from such Dealer under an existing Dealer
Agreement, as applicable, shall have been validly assigned by such Dealer to
such Acquisition Subsidiary or the Seller, as applicable, and if applicable
shall have been validly assigned by such Acquisition Subsidiary to the Seller,
and shall have been validly assigned by the Seller to the Debtor, (ii) shall
have created or shall create a valid, subsisting and enforceable first priority
perfected security interest in favor of the Seller and/or the Debtor in the
related financed Boat, which security interest has been
11
assigned to the Debtor and shall be validly assignable by the Debtor to the
Collateral Agent for the benefit of the Surety Bond Provider and the Company,
(iii) shall contain customary and enforceable provisions such that the rights
and remedies of the holder thereof shall be adequate for realization against the
collateral of the benefits of the security, (iv) 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 the level payment) that fully
amortize the Amount Financed over the original contractual term and yield
interest at the APR, and (v) shall provide for, in the event that such contract
is prepaid, a prepayment that fully pays the principal balance and includes
accrued but unpaid interest through the date of prepayment in an amount at least
equal to the APR;
(b) which, together with the sale of the related Boat, shall
have complied at the time it was originated or made, and at the date such
Receivable is included as Collateral hereunder, shall comply, in all material
respects with all requirements of applicable Federal, state, and local laws and
regulations thereunder, including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal
Reserve Board's Regulations B and Z, the Federal Trade Commission Credit
Practices Rule, state unfair and deceptive trade practice laws, and state
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code, and any other applicable consumer credit, equal credit opportunity and
disclosure laws;
(c) which shall represent the genuine, legal, valid and
binding payment obligation in writing of the Obligor thereunder, enforceable by
the holder thereof in accordance with its terms;
(d) which shall not be due from the United States of America
or any state or local government or from any agency, department or
instrumentality of the United States of America or any state or local
government;
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(e) which, as of the date such Receivable first became part of
the Collateral, shall not have been satisfied, subordinated or rescinded, nor
shall the related Boat have been released from the security interests granted by
such related Receivable in whole or in part;
(f) which, as of the date such Receivable first became part of
the Collateral, no waiver (other than any waiver with respect to a delinquency
in payment permitted in accordance with the Servicer's Credit Guidelines) of any
term thereof shall be in effect;
(g) which, as of the date such Receivable first became part of
the Collateral, no right of rescission, setoff, counterclaim or defense shall
have been asserted or threatened with respect to such Receivable;
(h) which, as of the date such Receivable first became part of
the Collateral, no liens or claims were on file for work, labor or materials
relating to the related Boat which liens are prior to, or equal or coordinate
with, the security interest in the Boat granted by such Receivable;
(i) which, as of the date such Receivable first became part of
the Collateral, no default, breach, violation or event permitting acceleration
under the terms of such Receivable (other than any of such event to the extent
caused by or resulting from a delinquency in payment) shall have occurred and
neither the Seller nor the Debtor shall have waived any of the foregoing;
(j) the terms of such Receivable require the Obligor to
maintain physical damage insurance;
(k) with respect to which (i) the Debtor has good and
marketable title thereto free and clear of all liens, encumbrances, security
interests and rights of others, other than the lien of the Collateral Agent for
the benefit of the Surety Bond Provider and the Company and (ii) the sale and
assignment thereof to the Debtor pursuant to the Purchase Agreement has been
perfected under the UCC;
(l) which shall not have been originated in or be subject to
the laws of, any jurisdiction under
13
which the sale, transfer and assignment of such Receivable under the Purchase
Agreement or the grant of a security interest therein pursuant to this Agreement
shall be unlawful, void or voidable;
(m) with respect to which all filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Collateral
Agent a first priority perfected security interest therein shall have been made;
(n) of which there shall be in existence one, and only one,
original executed copy of each Receivable;
(o) with respect to which the related Obligor is required to
make payments to a lockbox under the control of the Servicer;
(p) with respect to which the perfection of the security
interest in the related Boat is not governed by the federal Ship Mortgage Act of
1920, as amended;
(q) which constitutes "chattel paper" under and as defined in
Article 9 of the UCC;
(r) which shall have had at origination not more than 240
scheduled monthly payments, provided, that with respect to any Receivable
related to a Personal Watercraft, such Receivable shall have had at origination
not more than 60 scheduled monthly payments;
(s) which, as of the date such Receivable became part of the
Collateral, is not a Delinquent Receivable;
(t) with respect to which the original copies and all related
documents and instruments are kept at the office of UAC;
(u) which is not a Defaulted Receivable as of the date such
Receivable became part of the Collateral;
(v) which when originated and as of the date such Receivable
became part of the Collateral, was
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originated and serviced in compliance with the Credit Guidelines; and
(w) with respect to which, as of the date such Receivable
became part of the Collateral, the related Obligor was not noted in the records
of the Seller, the Servicer or the Debtor as the subject of any bankruptcy
proceeding.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean with respect to the Debtor, at
any time, each trade or business (whether or not incorporated) that would, at
the time, be treated together with the Debtor as a single employer under Section
4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"Facility Limit" shall mean $50,000,000; provided that on
March 10, 1998 the Facility Limit shall be increased to $75,000,000.
"Federal Book-Entry Securities" means securities issued by the
U.S. Treasury, FNMA or by FHLMC which are maintained in book-entry form on the
records of the Federal Reserve Bank of Richmond.
"Fee Advance" shall mean any advance by the Servicer or any
successor Servicer, in its sole discretion, in an amount equal to the Liquidity
Fee and/or the Unused Portion of the Surety Bond Premium, the sum of all such
advances during the term hereof not to exceed $500,000.
"Fee Letter" shall mean the letter agreement, dated the
Closing Date, among the Company, the Administrative Agent and the Debtor in
respect of the payment by the Debtor of certain fees.
"Finance Charge Collections" shall mean, with respect to any
Collection Period, the sum of the following amounts: (i) that portion of all
collections on Receivables allocable to interest (excluding any late fees,
insufficient check charges or related charges against Obligors), (ii)
Liquidation Proceeds, (iii) the amount paid by the Debtor in respect of a breach
of the
15
representation set forth in Section 3.1(a) pursuant to clause (y) of the last
paragraph of Section 3.1, (iv) interest and investment earnings or amounts on
deposit in the Collection Account, (v) Interest Rate Hedge Receipts and (vi) any
amounts withdrawn from the Yield Supplement Account and deposited in the
Collection Account on or with respect to the Remittance Date related to such
Collection Period.
"Finance Charge Collections (Net Yield)" shall mean, with
respect to any Collection Period, the sum of the following amounts: (i) that
portion of all collections on Receivables allocable to interest (excluding any
late fees, insufficient check charges or related charges against Obligors), (ii)
Liquidation Proceeds, (iii) the amount paid by the Debtor in respect of a breach
of the representation set forth in Section 3.1(a) pursuant to clause (y) of the
last paragraph of Section 3.1, (iv) interest and investment earnings or amounts
on deposit in the Collection Account, (v) Interest Rate Hedge Receipts, (vi) the
Facility Fee (as defined in the Fee Letter), (vii) the Unused Portion of the
Surety Bond Premium and (viii) any amounts withdrawn from the Yield Supplement
Account and deposited in the Collection Account on or with respect to the
Remittance Date related to such Collection Period.
"Financial Intermediary" means NationsBank, N.A. and any other
entity acting in the capacity of a "financial intermediary" as defined in
Section 8-313(4) of the UCC.
"Financial Intermediary Securities Account" means a reserve
account which is a securities account maintained by the Financial Intermediary
in the name of NationsBank, N.A. as Collateral Agent for the Secured Parties.
"Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
16
"Guaranty" shall mean any agreement, undertaking or
arrangement by which any Person guarantees, endorses, or otherwise becomes
contingently liable (whether directly, or indirectly by way of agreement,
contingent or otherwise, or purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor, or otherwise to assure the creditor
against loss) upon, the indebtedness, obligation or liability of any Person, or
guarantees the payment of dividends or other distributions upon the stock of any
corporation.
"Hedge Counterparty" shall mean any Person reasonably
acceptable to the Surety Bond Provider who enters into an Interest Rate Hedge
with the Debtor pursuant to Section 6.1(n) hereof.
"Ineligible Receivable" shall mean each Receivable other than
an Eligible Receivable.
"Initial Funding" shall have the meaning specified in the Note
Purchase Agreement.
"Instruments" means "instruments" as defined in Section 9-105
of the UCC.
"Insurance Agreement" shall mean that certain Insurance and
Reimbursement Agreement dated as of April 3, 1997 among UAC, as Seller and as
Servicer, the Collateral Agent, the Debtor and the Surety Bond Provider.
"Interest Component" shall mean, (i) with respect to any
Related Commercial Paper issued on an interest-bearing basis, the interest
payable on such Related Commercial Paper at its maturity (including any dealer
commissions) and (ii) with respect to any Related Commercial Paper issued on a
discount basis, the portion of the face amount of such Related Commercial Paper
representing the discount incurred in respect thereof (including any dealer
commissions to the extent included as part of such discount).
"Interest Rate Hedge" shall mean any interest rate hedging
arrangement entered into by the Debtor in compliance with Section 6.1(n) hereof
and acceptable to the Surety Bond Provider.
17
"Interest Rate Hedge Receipts" shall mean for any Collection
Period, any amounts paid by the Hedge Counterparty to the Collateral Agent
during such Collection Period pursuant to the terms of any Interest Rate Hedge
during such Collection Period.
"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 Collection Period, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in U.S. dollars at approximately 11:00 a.m. (London
time) two London Business Days prior to the first day of such Collection Period
for a term of one month. If for any reason such rate is not available, the term
"LIBOR Rate" shall mean, for any Collection Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London inter- bank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two London Business Days prior to the
first day of such Collection Period for a term of one month; provided, however,
if more than one rate is specified on the Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"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 for the purpose of security,
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 Uniform
Commercial Code (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing.
"Liquidation Proceeds" shall mean (i) proceeds of any claim
under any credit insurance policy and (ii)
18
all monies collected in connection with the disposition of any Boat (including
any recoveries received after the disposition of the related Boat), from
whatever source, securing a Defaulted Receivable, net of the sum of (x) any
amounts expended by the Servicer in connection with the liquidation of such Boat
for the account of the Obligor and (y) any such amounts required by law to be
remitted to the Obligor.
"Liquidity Agreement" shall mean the agreement between the
Company and any Liquidity Provider evidencing the obligation of the Liquidity
Provider to provide liquidity support to the Company in connection with the
issuance of Commercial Paper.
"Liquidity Fee" shall have the meaning specified in the Fee
Letter.
"Liquidity Provider" shall mean the Person or Persons who will
provide liquidity support to the Company in connection with the issuance by the
Company of its Commercial Paper and shall include any Person acquiring a
participation interest therein.
"London Business Day" 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.
"Material Adverse Change" Any circumstance or event which in
the reasonable judgment of the Surety Bond Provider, so long as no Surety Bond
Provider Default has occurred and is continuing (a) may be reasonably expected
to cause a material adverse change to the validity or enforceability of this
Agreement or the Servicing Agreement, (b) may be reasonably expected to be
material and adverse to the financial condition, business, operations or
property of the Servicer or (c) may be reasonably expected to materially impair
the ability of the Servicer to fulfill its obligations under this Agreement or
the Servicing Agreement.
"Maximum Permitted Borrowing Base" shall mean, at any time,
(a) the sum of (1) the Maximum Permitted Borrowing Base (Boats) plus (2) the
Maximum Permitted Borrowing Base (Personal Watercraft) minus (b) the aggregate
Principal Balance of all Eligible Receivables which
19
are Precomputed Receivables to the extent that such aggregate amount exceeds 10%
of the Borrowing Base.
"Maximum Permitted Borrowing Base (Boats)" shall mean, at any
time, the product of the Noteholder's Percentage (Boats) times the Borrowing
Base (Boats).
"Maximum Permitted Borrowing Base (Personal Watercraft)" shall
mean, at any time the sum of (a) the Noteholder's Percentage (Personal
Watercraft - Extended Term) multiplied by the Borrowing Base (Personal
Watercraft - Extended Term) and (b) the Noteholder's Percentage (Personal
Watercraft - Regular Term) multiplied by the Borrowing Base (Personal Watercraft
- Regular Term).
"Minimum Required APR" shall mean, as of the end of the
related Collection Period, the then current yield to maturity of the United
States Treasury Security having a maturity of three years (as published on
Bloomberg at the close of such Business Day) plus the sum of (a) the Servicing
Fee (calculated as if UAC or an Affiliate is not the Servicer) and (b)(i) 2.70%
per annum in the case of Boats (other than Personal Watercraft) and (ii) 3.70%
per annum in the case of Personal Watercraft.
"Monthly Debtor's Certificate" shall have the meaning
specified in Section 4.5 hereof.
"Moody's" shall mean Xxxxx'x Investors Service,
Inc.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which contributions are or have been
made by the Debtor or any ERISA Affiliate of the Debtor.
"Net Investment" shall mean with respect to any Determination
Date, (i) the amount of the Initial Funding and any Subsequent Funding occurring
on or prior to such Determination Date less (ii) all Collections distributed to
the Noteholder in reduction of the Net Investment pursuant to Section 5.1 hereof
on or prior to such Determination Date less (iii) any draws from the Reserve
Account distributed to the Noteholder in reduction of the Net Investment, less
(iv) any amounts paid to the Noteholder allocable to principal pursuant to
Section 3.1, less (v) amounts deposited in the Collection Account
20
pursuant to Section 6.1(m) and less (vi) draws on the Surety Bond distributed to
the Noteholder in reduction of the Net Investment provided however that such
draws on the Surety Bond shall not reduce the Surety Bond Provider's right of
subrogation in the Net Investment before giving effect to any such draws.
"Net Yield" shall mean, as of the last day of any Collection
Period, the product of (i) 4 and (ii) a fraction, the numerator of which is
equal to Finance Charge Collections (Net Yield) for such Collection Period and
each of the immediately preceding two Collection Periods minus Carrying Costs
for such Collection Period and each of the immediately preceding two Collection
Periods minus the aggregate Principal Balance of Receivables which became
Defaulted Receivables during such Collection Period and each of the immediately
preceding two Collection Periods minus the Servicing Fee for such Collection
Period and each of the immediately preceding two Collection Periods minus the
Surety Bond Premium during such Collection Period and each of the immediately
preceding two Collection Periods and the denominator of which is the average of
the outstanding Principal Balance of the Eligible Receivables over such
Collection Period and the immediately preceding two Collection Periods provided,
that the calculation of Net Yield shall not be made or applicable during any
Collection Period following a Take-Out, but prior to the Termination Date,
during which Collection Period the Net Investment equals zero.
"Note" shall mean the note issued by the Debtor to the Company
pursuant to Section 2.1(e) of the Note Purchase Agreement.
"Noteholder" shall mean the Company as holder of the Note or
any assignee thereof.
"Noteholder's Percentage (Boats)" shall be 85% provided that
(A) on and following each Ratio Calculation Date (September) on which (i) the
Delinquency Ratio as of the end of the previous Collection Period is less than
2.25% and (ii) the Cumulative Charge-Off Ratio as of the end of the previous
Collection Period is less than 1.00%, the Noteholder's Percentage (Boats) shall
be 88%, (B) on and following any Ratio Calculation Date (December) on which (i)
the Delinquency Ratio as of the end of the previous Collection Period is less
than 3.50% and (ii)
21
the Cumulative Charge-Off Ratio as of the end of the previous Collection Period
is less than 1.50%, the Noteholder's Percentage (Boats) shall mean 90% and (C)
for so long as S&P has not provided written notice to the Surety Bond Provider,
the Agent and the Debtor that such determination will cause an S&P Rating Event;
provided, however, that on any date after the Noteholder's Percentage
(Boats) has been determined previously pursuant to clauses (A) or (B)
above and on or after any subsequent Ratio Calculation Date (September)
with respect to on which the Delinquency Ratio or Cumulative Charge-Off
Ratio exceeds the percentages set forth in clause (A) above, (1) if no
Take-Out has occurred, the Noteholder's Percentage (Boats) shall remain
at the amount determined previously pursuant to clauses (A) and (B)
above or (2) if a Take-out has occurred the Noteholder's Percentage
(Boats) shall be reduced to 85%, provided, further, that on any date
after the Noteholder's Percentage (Boats) has been determined
previously pursuant to clauses (A) or (B) above and on or after any
subsequent Ratio Calculation Date (December) with respect to which the
Delinquency Ratio or Cumulative Charge-Off Ratio exceeds the
percentages set forth in clause (B) above, (1) if no Take-Out has
occurred, the Noteholder's Percentage (Boats) shall remain at the
amount determined previously pursuant to clauses (A) and (B) above or
(2) if a Take-out has occurred the Noteholder's Percentage (Boats)
shall be reduced to 88%.
In addition, on any date on which the Target Net Yield exceeds the Net Yield as
of the last day of the previous Collection Period, the Noteholder Percentage
(Boats) shall equal the percentage determined above minus the product of (a) 3.5
and (b) the difference between (1) Target Net Yield and (2) Net Yield.
"Noteholder's Percentage (Personal Watercraft- Extended Term)"
shall mean with respect to Personal Watercraft with 49-60 scheduled monthly
payments at origination, 65%, provided that on any date on which the Target Net
Yield exceeds the Net Yield as of the last day of the previous Collection
Period, the Noteholder Percentage (Personal Watercraft - Extended Term) shall be
22
65% minus the product of (a) 2.0 and (b) the difference between (1) Target Net
Yield and (2) Net Yield.
"Noteholder's Percentage (Personal Watercraft- Regular Term)"
shall mean with respect to any Personal Watercraft with less than 49 scheduled
monthly payments at origination, 80%, provided that (A) on and following each
Ratio Calculation Date (September) on which (i) the Delinquency Ratio as of the
end of the prior Collection Period is less than 2.25% and (ii) the Cumulative
Charge- Off Ratio as of the end of the previous Collection Period is less than
1.00%, the Noteholder's Percentage (Personal Watercraft - Regular Term) shall be
83%, (B) on and following any Ratio Calculation Date (December) on which (i) the
Delinquency Ratio as of the end of the prior Collection Period is less than
3.50% and (ii) the Cumulative Charge-Off Ratio at the end of the prior
Collection Period is less than 1.50%, the Noteholder's Percentage (Personal
Watercraft - Regular Term) shall be 85% and (c) for so long as S&P has not
provided written notice to the Surety Bond Provider, the Agent and the Debtor
that such determination will cause an S&P Rating Event;
provided, however, that on any date after the Noteholder's Percentage
(Personal Watercraft - Regular Term) has been determined previously
pursuant to clauses (A) or (B) above and on or after any subsequent
Ratio Calculation Date (September) with respect to which the
Delinquency Ratio or Cumulative Charge-Off Ratio exceeds the
percentages set forth in clause (A) above, (1) if no Take-Out has
occurred, the Noteholder's Percentage (Personal Watercraft - Regular
Term) shall remain at the amount determined previously pursuant to
clauses (A) and (B) above or (2) if a Take-Out has occurred the
Noteholder's Percentage (Personal Watercraft- Regular Term) shall be
reduced to 80%, provided, further, that on any date after the
Noteholder's Percentage (Personal Watercraft - Regular Term) has been
determined previously pursuant to clauses (A) or (B) above and on or
after any subsequent Ratio Calculation Date (December) with respect to
which the Delinquency Ratio or Cumulative Charge-Off Ratio exceeds the
percentages set forth in clause (B) above, (1) if no Take-out has
occurred, the Noteholder's Percentage (Personal Watercraft Regular
Term) shall remain at the amount determined
23
previously pursuant to clauses (A) and (B) above or (2) if a Take-out
has occurred the Noteholder's Percentage (Personal Watercraft - Regular
Term) shall be reduced to 83%.
In addition, on any date on which the Target Net Yield exceeds the Net Yield as
of the last day of the previous Collection Period, the Noteholder Percentage
(Personal Watercraft-Regular Term) shall be the amount determined above minus
the product of (a) 2.0 and (b) the difference between (1) Target Net Yield and
(2) Net Yield.
"Note Purchase Agreement" shall mean the Note Purchase
Agreement dated as of April 3, 1997 among the Debtor, the Company and
NationsBank as Agent and as a Bank Investor, as such agreement may be amended,
modified and supplemented from time to time.
"Obligor" shall mean, for any Receivable, each person who owes
payments under such Receivable.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Pay Out Commencement Date" shall mean the date on which a
Termination Event is deemed to occur pursuant to Section 6.1 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any other entity succeeding to the functions currently performed by the Pension
Benefit Guaranty Corporation.
"Person" shall mean and include an individual, a partnership,
a corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a government or
an agency or political subdivision thereof.
"Personal Watercraft" shall mean a vessel less than 16 feet in
length, propelled by machinery and designed to be operated sitting, standing, or
kneeling on, instead of inside, the vessel.
24
"Plan" shall mean any employee pension benefit plan that (a)
is or has been maintained by the Debtor or any ERISA Affiliate of the Debtor, or
to which contributions by any such Person are or have been required to be made,
(b) is subject to the provisions of Title IV of ERISA and (c) is not a
Multiemployer Plan.
"Plan Event" shall mean (a) the provisions of a notice of
intent to terminate any Plan under Section 4041 of ERISA other than in a
"standard termination", or the treatment of a Plan amendment as a distress
termination under Section 4041 of ERISA, (b) the receipt of any notice by any
Plan to the effect that the PBGC intends to apply for the appointment of a
trustee to administer any Plan, (c) the termination of any Plan which may result
in a material liability to the Debtor, (d) the withdrawal of the Debtor or any
ERISA Affiliate of the Debtor from any Plan described in Section 4063 of ERISA
which may result in a material liability of the Debtor, (e) the complete or
partial withdrawal of the Debtor or any ERISA Affiliate of the Debtor from any
Multiemployer Plan which may result in a material liability of the Debtor, (f) a
"reportable event" described in Section 4043 of ERISA (other than a "reportable
event" not subject to the provision for 30-day notice to the PBGC) or an event
described in Section 4068(f) of ERISA which may result in a material liability
of the Debtor, and (g) any other event or condition which under ERISA or the
Code may constitute grounds for the imposition of a lien on the assets of the
Debtor in respect of any Plan or Multiemployer Plan which is not corrected
within 30 days.
"Potential Termination Event" means an event which but for the
lapse of time or the giving of notice, or both, would constitute a Termination
Event.
"Potential Wind-Down Event" means an event which, but for the
lapse of time or the giving of notice, or both, would constitute a Wind-Down
Event.
"Precomputed Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances or the
sum of monthly balances or any equivalent method or are monthly actuarial
receivables.
25
"Premium Portion" shall have the meaning specified in the
Insurance Agreement.
"Premium Side Letter Agreement" means that certain letter
agreement dated April 3, 1997 among the Surety Bond Provider, UAC and the
Debtor.
"Principal Balance" of a Receivable as of the close of
business on any date means the Amount Financed minus all Collections collected
by the Servicer to and including such day with respect to such Receivable and
applied by the Servicer in accordance with the Servicer's customary servicing
procedures to reduce the principal balance thereof; provided, however, that the
Principal Balance of any Receivable which has been charged-off or which
otherwise qualifies as a Defaulted Receivable or an Ineligible Receivable as
defined herein or with respect to which the Debtor has failed to make a required
deposit into the Yield Supplement Account pursuant to the terms of Section
2.5(b) shall have a Principal Balance of zero.
"Principal Collections" means, for any Remittance Date, the
sum of the following amounts with respect to the preceding Collection Period:
(i) that portion of all collections on Receivables allocable to principal, (ii)
the amount paid by the Debtor in respect of a breach of the representation set
forth in Section 3.1(a) pursuant to clause (x) of the last paragraph of Section
3.1 and (iii) prepayments of any refunded item included in the Amount Financed,
such as extended warranty protection plan costs, or physical damage, credit life
or disability insurance premiums. Principal Collections shall not include any
late fees, insufficient check charges or related charges assessed against
Obligors.
"Principal Component" shall mean with respect to Commercial
Paper (A) in the case of Commercial Paper issued on a discount basis, the amount
of proceeds received by the Company upon the sale thereof and (B) in the case of
Commercial Paper issued on an interest-bear- ing basis, the face amount thereof.
"Program Fee" shall mean a fee payable monthly to the Company
by the Debtor, the terms of which are set forth in the Fee Letter.
26
"Purchase Agreement" shall mean the Amended and Restated Sale
and Purchase Agreement, dated as of April 3, 1997, between the Debtor, as
purchaser thereunder, and the Seller, as seller thereunder, as the same may be
amended, modified and supplemented from time to time in accordance with the
terms thereof and hereof.
"Purchased Interest" shall mean the interest in the Note, if
any, acquired by the Liquidity Provider.
"Ratio Calculation Date" shall mean either a Ratio Calculation
Date (September) or a Ratio Calculation Date (December).
"Ratio Calculation Date (September)" shall mean each
Determination Date occurring in the month of September.
"Ratio Calculation Date (December)" shall mean each
Determination Date occurring in the month of December.
"Receivable" shall mean indebtedness owed to the Debtor under
a Contract, whether constituting an account, chattel paper, instrument,
mortgage, deed of trust or general intangible, arising out of or in connection
with the sale of a Boat including the rendering of services by the Dealer in
connection therewith, and 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
pursuant to Section 2.4 hereof, it shall no longer constitute a Receivable
hereunder.
"Receivable Schedule" shall mean the schedule of Receivables
(which schedule may be in the form of a computer file or microfiche) attached as
Exhibit A to this Agreement, as amended or modified from time to time pursuant
to the terms of this Agreement.
"Receivables File" shall have the meaning specified in the
Purchase Agreement.
"Related Commercial Paper" shall mean Commercial Paper the
proceeds of which were used to acquire, or refinance, the Net Investment.
27
"Relevant UCC State" shall mean the States of New York and
Indiana.
"Re-Xxxxxxx Expense" shall mean all expenses incurred by the
Servicer, the Collateral Agent or any secured party pursuant to Section 6.3(b)
hereof for the purpose of re-titling the Boats to name the Collateral Agent as
first lienholder on the certificate of title thereto and to effect any filings
or other actions necessary to perfect the Collateral Agent's interest as first
lienholder in the related Boat motors and trailers.
"Remittance Date" shall mean the 10th day of each month
beginning May 12, 1997, or, if such 10th day is not a Business Day, the next
succeeding Business Day.
"Replacement Event" shall mean the placing on "Creditwatch" or
other similar list with negative implications, the claims paying ability of the
Surety Bond Provider or the downgrade, reduction or withdrawal of the ratings
assigned by Moody's or S&P to the Surety Bond Provider's claims paying ability.
"Replacement Surety Bond" shall mean a surety bond,
substantially in the form attached hereto as Exhibit B and which has been
provided pursuant to Sections 8.8 and 8.10 hereof.
"Required Reserve Account Balance" shall mean an amount equal
to the product of (i) 0.75% and (ii) the Net Investment.
"Requirements of Law" for any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or to which such Person is
subject, whether Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).
"Reserve Account" shall mean the account established pursuant
to Section 5.3 hereof.
28
"S&P" shall mean Standard & Poor's Ratings Group, a Division
of The XxXxxx-Xxxx Companies.
"S&P Rating Event" shall mean an event which would cause S&P
to downgrade, withdraw or place on "Creditwatch" with negative implications its
rating of the Receivables facility.
"Secured Parties" shall mean the Company, the Bank Investors
and the Surety Bond Provider and their respective successors and assigns.
"Seller" means Union Acceptance Corporation.
"Servicer" shall mean UAC as servicer under the Servicing
Agreement or any successor Servicer.
"Servicer Advance" shall have the meaning
specified in Section 5.1(b).
"Servicer Event of Default" shall mean (a) the failure of the
Servicer to make any payment, transfer or deposit as required hereunder, under
the Note Purchase Agreement or the Servicing Agreement, (b) the failure of the
Servicer to observe or perform in any material respect any other representation,
warranty, covenant or agreements of the Servicer (including its Credit
Guidelines) as reasonably determined by the Surety Bond Provider as set forth in
the Servicing Agreement, (c) the occurrence of any Material Adverse Change and
(d) an event of the type described in Section 6.1(c) shall occur with respect to
the Servicer.
"Servicer Transfer" shall have the meaning specified in the
Servicing Agreement.
"Servicing Agreement" shall mean the Amended and Restated
Servicing Agreement, dated as of April 3, 1997, between UAC as servicer, and the
Debtor, as such agreement may be amended, modified and supplemented from time to
time, attached hereto as Exhibit E.
"Servicing Fee" shall mean, for any Collection Period, the fee
payable pursuant to the Servicing Agreement by the Debtor to the Servicer, such
amount not to exceed 1.00% per annum in the case of UAC or an affiliate and
1.50% per annum in the case of any successor Servicer
29
unaffiliated with UAC, in each case, on the aggregate outstanding Principal
Balance of Receivables as of the first day of such Collection Period.
"Settlement Sheet" shall mean a certificate signed by an
officer of the Debtor setting forth the Borrowing Base and Net Investment as of
the date of such certificate.
"Subsequent Funding" shall have the meaning
specified in the Note Purchase Agreement.
"Subsidiary" means any corporation more than 50% of the
outstanding voting securities of which shall at any time be owned or controlled,
directly or indirectly, by the Debtor or by one or more Subsidiaries or by the
Debtor and one or more Subsidiaries, or any similar business organization which
is so owned or controlled.
"Supplemented Receivable" shall have the meaning set forth in
Section 2.5(b) hereof.
"Surety Bond" shall mean that certain unconditional,
irrevocable surety bond, substantially in the form annexed hereto as Exhibit B,
to be issued by the Surety Bond Provider and naming the Agent as beneficiary.
"Surety Bond Premium" shall have the meaning specified in the
Insurance Agreement.
"Surety Bond Provider" shall mean Capital Markets Assurance
Corporation, a New York monoline stock insurance company.
"Surety Bond Provider Default" shall mean the failure by the
Surety Bond Provider to make a required payment under the Surety Bond.
"Take-Out" shall have the meaning specified in Section 2.4
hereof.
"Target Net Yield" shall mean 2.00% per annum.
"Targeted Monthly Principal Payment" shall mean, with respect
to each Remittance Date, the amount necessary to reduce the Net Investment to
the Maximum Permitted Borrowing Base.
30
"Telerate Page 3750" shall mean the British Bankers
Association Libor Rates (determined at 11:00 a.m. London time) that are
published by Dow Xxxxx Telerate, Inc.
"Termination Date" means the earliest of (i) that day
designated by the Debtor as the Termination Date at any time following 60 days
written notice to the Agent, (ii) the date of termination of the Company's
program liquidity facilities provided by any Liquidity Agreement or the
Company's credit support facilities provided by any Credit Support Agreement,
(iii) the Pay Out Commencement Date, (iv) two Business Days prior to the
Commitment Termination Date, (v) the day on which an Advance Termination Date
shall occur, or (vi) 364 days from closing, unless extended prior to such date
pursuant to a Revolving Period Extension (as defined in the Insurance
Agreement).
"Termination Event" shall have the meaning specified in
Section 6.1 hereof.
"Transaction Documents" shall mean this Agreement, the
Purchase Agreement, the Note Purchase Agree- ment, the Insurance Agreement, the
Servicing Agreement and the Surety Bond.
"Transfer" or "Transferred," when used with respect to
Eligible Investments held or to be held in the Reserve Account means:
(a) with respect to each Clearing Corporation Security,
transfer to the Collateral Agent will occur upon the latest of: (w) the making
by the Clearing Corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of the Financial Intermediary by the amount of such Clearing
Corporation Security, (x) the sending of a confirmation to the Collateral Agent
by the Financial Intermediary of the purchase by the Collateral Agent of such
Clearing Corporation Security and (y) the identification by book entry to the
Financial Intermediary Securities Account by the Financial Intermediary of the
Clearing Corporation Securities as belonging to the Collateral Agent;
31
(b) with respect to each Certificated Security, transfer to
the Collateral Agent will occur upon the latest of (x) the sending of a
confirmation by the Financial Intermediary of the purchase by the Collateral
Agent of such Certificated Security and (y) the identification by book-entry to
the Financial Intermediary Securities Account by the Financial Intermediary of
such Certificated Security as belonging to the Collateral Agent;
(c) with respect to each Federal Book-Entry Security, transfer
to the Collateral Agent will occur upon the latest of (x) the making by the
Federal Reserve Bank of Richmond of appropriate entries transferring the Federal
Book-Entry Security on its books and records to the book-entry account of the
Financial Intermediary at the Federal Reserve Bank of Richmond, (y) the sending
of a confirmation by the Financial Intermediary of the purchase by the
Collateral Agent of such Federal Book- Entry Security, and (z) the
identification by book-entry to the Financial Intermediary Securities Account by
the Financial Intermediary of such Federal Book-Entry Security as belonging to
the Collateral Agent;
(d) with respect to Instruments in the possession of a Bailee,
in the State of North Carolina, the sending of notice to the Bailee by the
Collateral Agent of the security interest of the Collateral Agent and the
sending of an acknowledgment of such notice to the Collateral Agent; and
(e) with respect to any Eligible Investment, by any method
creating a perfected security interest in favor of the Collateral Agent,
provided that the Debtor shall have delivered an opinion of counsel to the
Collateral Agent, Moody's and S&P to the effect that the Collateral Agent on
behalf of the Secured Parties has a valid perfected first priority security
interest in such Eligible Investment.
"UAC" shall mean Union Acceptance Corporation.
"Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code as adopted in the Relevant UCC State.
"Unused Portion" shall have the meaning specified in the
Insurance Agreement.
32
"Wind-Down Event" shall have the meaning specified in Section
6.2.
"Yield Protection Provision" shall mean the compensation of
the Company and each Bank Investor by the Debtor of the Company's and the Bank
Investors' costs due to increased taxes, reserves and funding costs incurred
under Section 4.2 of the Note Purchase Agreement.
"Yield Supplement Account" shall mean the account established
by the Debtor, in the name of the Collateral Agent, for the benefit of the
Secured Parties, pursuant to Section 2.5 hereof.
"Yield Supplement Amount" shall mean, with respect to a
Supplemented Receivable and with respect to each Remittance Date, an amount
equal to the excess, if any, of (i) interest for the related Collection Period
on the outstanding Principal Balance of such Receivable as of the first day of
the related Collection Period at a rate equal to the Minimum Required APR
(determined as of the last Business Day of the Collection Period during which
such Receivable first became part of the Collateral) over (ii) interest for the
related Collection Period at the APR set forth in the related Contract on the
outstanding Principal Balance of such Receivable as of the first day of the
related Collection Period.
"Yield Supplement Deposit Amount" shall mean for each
Supplemented Receivable, the aggregate of the Yield Supplement Amounts for the
period commencing with the Collection Period in which each such Supplemented
Receivable first becomes part of the Collateral and ending with the Collection
Period during which the scheduled maturity of each such Supplemented Receivable
occurs, assuming that payments on such Supplemented Receivables are made as
scheduled and no prepayments thereon are made.
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ARTICLE II
GRANT OF SECURITY INTEREST
SECTION 2.1 Grant of Security Interest. As security for the
prompt and complete payment of the Note and the performance of all of the
Debtor's obligations under the Note, the Note Purchase Agreement, the Insurance
Agreement and this Agreement, the Debtor hereby grants to the Collateral Agent,
on behalf of the Secured Parties, a security interest in and continuing Lien on
all of the Debtor's right, title and interest in, to and under (i) all
Receivables, and the Contracts related thereto, now or hereafter existing, all
monies due or to become due with respect thereto (not including any late fees,
insufficient check charges and related charges assessed against Obligors),
whether such amounts are considered accounts, general intangibles or other
property, all monies or remittances on deposit in any lockbox account which
constitute proceeds of the Receivables and the Contracts (not including any late
fees, insufficient check charges and related charges assessed against Obligors)
and all monies on deposit in the Collection Account, the Yield Supplement
Account, the Carrying Costs Account, and the Reserve Account and any investments
made with the amounts on deposit in such accounts; (ii) the security interests
in the Boats granted by Obligors pursuant to the related Receivables and any
accessions thereto; (iii) any proceeds from claims on any physical damage,
credit life, lender's single interest, disability, hospitalization or other
insurance policies covering Boats or Obligors and any Liquidation Proceeds; (iv)
the interest of the Seller in any proceeds from Dealers relating to the
Receivables; (v) all documents relating to such Receivable including without
limitation all documents contained in the related Receivables File; (vi) any
investment earnings on the Collection Account, Yield Supplement Account, Reserve
Account and Carrying Costs Account, (vii) any Interest Rate Hedge Receipts; and
(viii) proceeds of any and all of the foregoing; in addition, the Debtor hereby
assigns to the Collateral Agent all of its rights under each of the Purchase
Agreement and the Servicing Agreement with respect to the Receivables and the
Contracts related thereto (all of the foregoing, collectively, the
"Collateral"). The foregoing pledge does not constitute an assumption by the
Collateral Agent of any obligations of the Debtor to
34
Obligors or any other Person in connection with the Collateral or under any
agreement and instrument relating to the Collateral, including without
limitation any obligation to make future advances to or on behalf of such
Obligors.
In connection with such pledge, the Debtor agrees to record
and file, at its own expense, financing statements with respect to the
Collateral now existing and hereafter created for the transfer of chattel paper
and general intangibles (each as defined in Article 9 of the UCC as in effect in
the Relevant UCC State) meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the security
interest in the Collateral to the Collateral Agent, 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 Agent on or prior to the Closing Date. In addition, the
Debtor agrees to clearly and unambiguously xxxx all computer tapes and computer
records, if any, to show that the Receivables and the Contracts related thereto
have been pledged to the Collateral Agent hereunder.
In connection with such pledge, the Debtor agrees to direct
UAC as Servicer, on or prior to the Closing Date, to indicate, on or prior to
the Closing Date, clearly and unambiguously in its computer tapes and computer
records described in the preceding paragraph that the Receivables have been
pledged to the Collateral Agent pursuant to this Agreement. The Debtor shall
deliver to the Collateral Agent a computer file or microfiche list containing a
true and complete list of all such Receivables, identified by account number and
Principal Balance as of two Business Days prior to the Closing Date. Such file
or list shall be marked as the Receivable Schedule, delivered to the Collateral
Agent as confidential and proprietary information, and is hereby incorporated
into and made a part of this Agreement. The Debtor agrees to deliver to the
Collateral Agent at such times as requested by the Collateral Agent in
connection with a third-party's request to review Schedule A, as provided in the
financing statement filed by the Collateral Agent under the UCC, a computer file
or microfiche list containing a true and complete list of all Receivables
subject to the lien of this Agreement, identified
35
by account number and by outstanding Principal Balance as of such day or date.
Such updated and revised file or list shall be marked as the Receivable Schedule
and Schedule A to this Agreement, delivered to the Collateral Agent as
confidential and proprietary information, shall replace the previously delivered
Receivable Schedule identified as Schedule A, and shall be incorporated into and
made a part of this Agreement. The Debtor agrees to direct the Servicer, by the
end of each Collection Period, to indicate clearly and unambiguously in its
computer files that the Receivables acquired by the Debtor during such
Collection Period have been pledged to the Collateral Agent pursuant to this
Agreement.
SECTION 2.2 Subrogation. The Debtor, the Company, each Bank
Investor, the Collateral Agent and the Surety Bond Provider acknowledge that, to
the extent of any payment made under the Surety Bond, the Surety Bond Provider
is to be fully subrogated to the extent of such payment, to the rights of the
Noteholder to any moneys paid or payable to such holder in respect of the
corresponding amounts due on such Note and under the Note Purchase Agreement (it
being understood that the Surety Bond Provider shall be entitled to payments in
respect of such subrogation only to the extent that no amounts are at such time
due and payable to the Noteholder under the Note). The parties hereto each agree
to such subrogation and each further agrees to execute such instruments and to
take such actions as, in the sole judgment of the Surety Bond Provider, are
necessary to evidence such subrogation and to perfect the rights of the Surety
Bond Provider to receive any moneys paid or payable hereunder, under the Note
Purchase Agreement and the Insurance Agreement.
SECTION 2.3 Increase in Principal Amount of Note; Limit on
Commercial Paper Maturity. (a) The Debtor may increase the outstanding principal
amount under the Note only upon satisfaction of the following conditions:
(i) neither (x) a Termination Event, a
Potential Termination Event or the Commitment Termination Date (in the
case of a Funding by the Company or the Bank Investors) nor (y) (in the
case of a Funding by the Company only) a Wind-Down Event, a Potential
Wind- Down Event, the Termination Date or the Advance Termination Date
shall have occurred and be continuing;
36
(ii) after giving effect to any such
increase, the Net Investment shall not be greater than the Maximum
Permitted Borrowing Base and the Net Investment plus the Interest
Component shall not exceed the Facility Limit and the Collateral Agent,
the Agent and the Surety Bond Provider shall have received an executed
certification by an authorized officer of the Servicer showing the
calculations necessary to support the foregoing;
(iii) each representation and warranty of
the Debtor herein or in the Note Purchase Agreement shall be true and
correct with respect to the Debtor and each Receivable included in
either the Borrowing Base (Boats) or Borrowing Base (Personal
Watercraft) is an Eligible Receivable as of the date of such Funding;
(iv) the Company is able to obtain funds for
the making of such Funding in the commercial paper market or pursuant
to the Liquidity Agreement (only in the case of a Funding to be made by
the Company);
(v) the Debtor shall have deposited in the
Reserve Account, or shall have given irrevocable instructions to the
Agent to withhold from the proceeds of such Funding and to deposit in
the Reserve Account, an amount equal to the amount necessary to cause
the amount on deposit in the Reserve Account to at least equal the
Required Reserve Account Balance (calculated as if such increase shall
have occurred); and
(vi) the Surety Bond shall be in full force
and effect and no Surety Bond Provider Default shall have occurred.
(b) The Company shall not issue any Related Commercial Paper
with a maturity in excess of 60 days in connection with any financing or
refinancing of an increase in the Note.
37
SECTION 2.4 Release of Receivables. On any Business Day, the
Debtor shall have the right to require the Collateral Agent to release all of
the Collateral Agent's right, title and interest in and to all or certain
specified Receivables on the terms and conditions set forth herein. It shall be
a condition precedent to any such release that (i) after giving effect to any
such release, the Net Investment shall not exceed the Maximum Permitted
Borrowing Base, such determination to be based on the most recent Monthly
Debtor's Certificate or Settlement Sheet delivered by the Debtor provided that,
if after giving effect to any such release, the Net Investment shall exceed the
Maximum Permitted Borrowing Base, the Debtor shall pay to the Collateral Agent,
on or prior to such Business Day, for payment to the Noteholder on the day of
receipt from the Debtor, an amount equal to the amount necessary, if any, to
reduce the Net Investment such that the Net Investment does not exceed the
Maximum Permitted Borrowing Base after giving effect to such release, (ii) such
release does not result in a Termination Event, (iii) the Debtor shall pay to
the Collateral Agent, on or prior to such Business Day, for payment to the
Noteholder on the day of receipt from the Debtor, an amount equal to all unpaid
Carrying Costs (including Carrying Costs not yet accrued) to the extent
reasonably determined by the Collateral Agent to be attributable to that portion
of the Net Investment to be reduced as a result of the payment referred to in
clause (i) above, (iv) the Debtor shall have given the Collateral Agent, the
Surety Bond Provider and the Agent at least five (5) days prior written notice
of its intention to request the release of such Receivables, and (v) all amounts
due hereunder, under the Note Purchase Agreement and the Insurance Agreement, to
the extent accrued to the date of such release or, at the option of the
Collateral Agent, acting upon the instructions of the Agent and the Surety Bond
Provider, acting separately, accrued to such date and to accrue thereafter,
shall be fully paid; provided, however, that if such release is a partial
release, the Delinquency Ratio and the Cumulative Charge- off Ratio shall each
be recalculated as of the most recent Ratio Calculation Date, as if such partial
release had already occurred and such partial release shall
38
only occur if the Noteholder's Percentage would not be reduced by such
recalculation of the related Delinquency Ratio and the Cumulative Charge-off
Ratio. It is the intention of the parties that, to the extent the Company is the
Noteholder and the Company is funding its interest in the Note through Related
Commercial Paper, the Debtor shall pay to the Collateral Agent such amounts as
are required under this Section on the Business Day preceding the maturity date
of the Related Commercial Paper issued by the Company to fund its interest in
the Note. The Company agrees to use its reasonable efforts to reinvest in
overnight Eligible Investments any payments received by the Company from the
Debtor in respect of maturing Commercial Paper prior to the Business Day
preceding such maturity and remit the proceeds of such investments to the
Debtor.
The amount described in clause (i) above upon receipt by the
Noteholder shall be applied in reduction of the Net Investment.
The Debtor shall also be obligated to pay the reasonable legal
fees and expenses of the Collateral Agent, the Company, each Bank Investor, the
Surety Bond Provider, the Administrative Agent and the Agent arising
in connection with any such release.
The Debtor shall at least once in each twelve month period,
the first such period to commence April 3, 1997, cause the release of all
Receivables in existence as of a date not more than 31 days prior to the
proposed date of release, and shall make the requisite payments described above
and satisfy the requisite conditions precedent described above to cause such
release to occur (such a release, a "Take-Out").
Upon the deposit to the Collection Account and the payment to
the respective parties of the amounts described in this Section, the Collateral
Agent shall execute and deliver to the Debtor, at the Debtor's expense, such
documents or instruments as are necessary to terminate the Collateral Agent's
interest in the applicable Receivables and the proceeds thereof. Any such
documents shall be prepared by or on behalf of the Debtor and shall specifically
identify (by loan or account number and outstanding Principal Balance) the
Receivables in which
39
the Collateral Agent's security interest is to be released.
SECTION 2.5 Yield Supplement Account, Deposits, Withdrawals.
(a) On or before the Initial Funding, the
Debtor shall establish a segregated account (the "Yield Supplement
Account") with the Collateral Agent in the name of the Collateral
Agent, 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 shall 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 Surety Bond Provider (as long as no Surety
Bond Provider Default has occurred and is continuing) shall have the
right to direct the transfer of the Yield Supplement Account to an
Eligible Institution. Notwithstanding the foregoing, the Collateral
Agent shall not withdraw any funds from, or otherwise exercise control
over, the Yield Supplement Account except as provided in this
Agreement. All amounts on deposit in the Yield Supplement Account shall
be held by the Collateral Agent for the benefit of the Secured Parties.
(b) On or prior to each Remittance Date,
with respect to all Receivables which were added as Collateral during
the Collection Period relating to such Remittance Date, the Debtor
shall (i) deposit into the Yield Supplement Account or (ii) shall
instruct the Collateral Agent to make such deposit from the proceeds of
Related Commercial Paper issued on such Remittance Date, for each such
Receivable with respect to which the related Contract provides for
interest to accrue thereunder at a rate less than the Minimum Required
APR (determined as of the last Business Day of such Collection Period)
(each, a "Supplemented Receivable") an amount equal to the Yield
Supplement Deposit Amount in respect of each such Supplemented
Receivable.
(c) (i) Funds on deposit in the Yield
Supplement 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,
40
such investments shall be made as directed by the Surety Bond Provider (or by
the Collateral Agent, if there shall have been a Surety Bond Provider Default).
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.
(ii) All investments of amounts on deposit
in the Yield Supplement Account shall be accomplished in a manner so as
to cause such investments to be Transferred to the Collateral Agent;
provided that upon the effectiveness in the State of New York of the
1994 Official Text of Article 8 of the Uniform Commercial Code,
investments need not be Transferred to the Collateral Agent. The
Collateral Agent agrees that, without the prior consent of the Surety
Bond Provider, 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, N.A. hereby agrees (and any other Financial
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.
(iii) Funds on deposit in the Yield
Supplement Account on the Closing Date and thereafter shall be so
invested in Eligible Investments that mature on the Business Day
preceding the succeeding Remittance Date. No Eligible Investment may be
liquidated or disposed of prior to its maturity. All proceeds of any
Eligible Investment shall be deposited in the Yield Supplement Account.
Investments may be made on any date (provided such investments mature
in accordance with the preceding sentence), only after giving effect to
deposits to and withdrawals from the Yield Supplement Account on such
date. Not later than 11:00 a.m. (New York time) on each Remittance
Date, all interest and earnings (net of losses and investment expenses,
if any) received since the
41
previous Remittance Date (or since the Closing Date in the case of the
first Remittance Date) on funds on deposit in the Yield Supplement
Account shall be withdrawn by Collateral Agent and shall be remitted to
the Debtor. Realized losses, if any, on amounts invested in Eligible
Investments shall be charged against undistributed investment earnings
on amounts on deposit in the Yield Supplement Account.
(iv) The Debtor and the Surety Bond Provider
shall each 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 and the Surety Bond
Provider, respectively, that is authorized to provide instructions
relating to investments in Eligible Investments.
(d) 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, N.A. agrees (and any other Financial Intermediary
holding the Yield Supplement Account shall so agree) that it shall not agree to
comply with Entitlement Orders (as defined in Section 8-102 of the 1994 version
of the Official Text of Article 8 of the Uniform Commercial Code) with respect
to the Yield Supplement Account given to it by any Person other than the
Collateral Agent.
All amounts or property credited to the Yield Supplement
Account shall be subject to the lien of the Collateral Agent until released or
withdrawn from the Yield Supplement Account.
(e) Funds may be released from the Yield Supplement Account
under the circumstances described in this Section 2.5(e). On each Remittance
Date the Collateral Agent shall withdraw from the Yield Supplement Account, the
Yield Supplement Amount (as set forth in the Monthly Debtor's Certificate) with
respect to each Supplemented Receivable and deposit such amount(s) in the
Collection Account. On any day on which the Collateral Agent, pursuant to
Section 2.4, releases to the Debtor
42
its interest in a Contract and related Receivable with respect to which the
Debtor deposited funds in the Yield Supplement Account pursuant to Section
2.5(b), the amount of such deposit less any amounts released from the Yield
Supplement Account with respect to such Receivable shall be released to the
Debtor. Amounts on deposit in the Yield Supplement Account will be released to
the Debtor each Remittance Date to the extent the amount on deposit in the Yield
Supplement Account exceeds the sum of all projected Yield Supplement Amounts for
all future Remittance Dates, assuming that future scheduled payments on all
Supplemented Receivables are made on their scheduled due dates and no
prepayments thereon occur. Upon the occurrence of a Termination Event, all
amounts on deposit in the Yield Supplement Account shall be withdrawn at the
option of the Surety Bond Provider (for so long as no Surety Bond Provider
Default has occurred and is continuing) or the Administrative Agent (for so long
as a Surety Bond Provider Default has occurred and is continuing) from such
account and applied in reduction of the Net Investment. Each of the Debtor, the
Seller, the Company and the Surety Bond Provider acknowledge that the Collateral
Agent shall have no liability for amounts withdrawn from the Yield Supplement
Account in reliance upon a Monthly Debtor's Certificate.
43
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEBTOR
SECTION 3.1 Representations and Warranties Concerning
Receivables. The Debtor represents and warrants to and covenants with the
Collateral Agent and the Secured Parties as of the Closing Date and, with
respect to any Receivables added to the Collateral after the Closing Date, on
and as of the date such Receivables were added to the Collateral that:
(a) Eligible Receivable. Each Receivable included in the
applicable Borrowing Base is an Eligible Receivable.
(b) 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 8.1 hereof and the offices where the Debtor keeps all its
records, are located at the address(es) described on Exhibit C.
(c) Merger and Consolidation. As of the date hereof the Debtor
has not changed its name, merged with or into or consolidated with any other
corporation or been the subject of any proceeding under Xxxxx 00, Xxxxxx Xxxxxx
Code (Bankruptcy).
In the event of a breach of the representation set forth in Section
3.1(a) with respect to any Receivable, such Receivable shall be deemed to have a
Principal Balance of zero for purposes of calculating the applicable Borrowing
Base and the Debtor shall pay to the Collateral Agent for deposit into the
Collection Account an amount equal to the sum of (x) the lesser of (A) the
amount, if any, by which the Net Investment exceeds the Maximum Permitted
Borrowing Base (after giving effect to any such exclusion) and (B) the Principal
Balance (determined in this case without giving effect to the proviso in the
definition thereof) of the Receivable with respect to which the breach occurred
and (y) an amount equal to interest accrued and unpaid on such Receivable at the
related APR through the day immediately preceding the succeeding Remittance
Date. Such payment shall be made on the Business Day preceding the next
Remittance Date.
44
SECTION 3.2 Covenants of the Debtor
The Debtor hereby covenants to the Collateral Agent and the
Secured Parties, so long as any amounts shall be outstanding under the Note, the
Note Purchase Agreement or the Insurance Agreement or the Surety Bond is in
effect, that:
(a) Corporate Existence. The Debtor will preserve and maintain
its existence as a corporation duly organized and existing under the laws of the
jurisdiction of its incorporation and will remain duly qualified as a foreign
corporation under the laws of each other jurisdiction in which the failure to so
qualify would have a material adverse effect on the ability of the Debtor to
perform its obligations under this Agreement, the Note Purchase Agreement, the
Note, the Insurance Agreement or the Purchase Agreement.
(b) Losses, Etc. In any suit, proceeding or action brought by
the Collateral Agent or any Secured Party for any sum owing thereto, the Debtor
will save, indemnify and keep the Collateral Agent and the Secured Parties
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of the Obligor under such Receivable, arising out of a breach by the Debtor of
any obligation under the related Receivable or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
Obligor or its successor from the Debtor, and all such obligations of the Debtor
shall be and remain enforceable against and only against the Debtor and shall
not be enforceable against the Collateral Agent or any Secured Party.
(c) Compliance With Law. The Debtor will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental authority applicable to the Receivables or any
part thereof; provided, however, that the Debtor may contest any act, rule,
regulation, order, decree or direction in any reasonable manner which will not
materially and adversely affect the rights of the Collateral Agent in the
Receivables or the collectability of the Receivables.
45
(d) No Instruments. The Debtor will take no action to cause
any Receivable to be evidenced by any instrument (as defined in the UCC as in
effect in the Relevant UCC State).
(e) No Liens. Except for the conveyances contemplated
hereunder, the Debtor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Receivable or any interest therein; the Debtor will notify the Collateral Agent
of the existence of any Lien on any Receivable immediately upon discovery
thereof; and the Debtor shall defend the right, title and interest of the
Collateral Agent in, to and under the applicable Receivables against all claims
of third parties claiming through or under the Debtor; provided, however, that
nothing in this Section 3.2(e) shall prevent the Debtor from suffering to exist
upon any of the Receivables any Liens for taxes and other governmental charges
if such taxes or governmental charges shall not at the time be due and payable
or if the Debtor shall currently be contesting the validity thereof in good
faith by appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto.
(f) Notice to Collateral Agent. The Debtor will advise the
Collateral Agent promptly, in reasonable detail, (i) of any Lien asserted or
claim made against any of the Receivables, (ii) of the occurrence of any breach
by the Debtor of any of its representations, warranties and covenants contained
herein and (iii) of the occurrence of any other event which would have a
material adverse effect on the Collateral Agent's security interest in the
Receivables or the collectability thereof.
(g) Books and Records. The Collateral Agent and its agents and
representatives shall at all times have reasonable access during normal business
hours to all the computer tapes, books, correspondence and records of the Debtor
insofar as they relate to the Receivables, and the Collateral Agent and its
agents and representatives may examine the same, take extracts therefrom and
make photocopies thereof, and the Debtor agrees to render to the Collateral
Agent or its agents and representatives, at the Debtor's cost and expense, such
clerical and other assistance as may be reasonably
46
requested with regard thereto. The Debtor hereby assigns to the Collateral Agent
and its agents and representatives all rights the Debtor has or shall have to
examine computer tapes, books, correspondence and records relating to
Receivables serviced by the Servicer or any successor servicer thereto. The
Collateral Agent acknowledges that in exercising the rights and privileges
conferred in this Section 3.2(g) it, or its agents and representatives, may from
time to time obtain knowledge of information and practices set forth in such
computer tapes, books, correspondence and records (whether in the possession of
the Debtor or the Servicer) of a confidential nature and in which the Debtor has
a proprietary interest. The Collateral Agent agrees that all such information,
practices, books, correspondence and records are to be regarded as confidential
information and that (i) it shall retain in strict confidence and shall use its
best efforts to ensure that its representatives retain in strict confidence and
will not disclose without the prior written consent of the Debtor any or all of
such information, practices, books, correspondence and records furnished to them
and (ii) it will not, and will use its best efforts to ensure that its agents
and representatives will not, make any use whatsoever (other than for the
purposes contemplated by this Agreement) of any of such information, practices,
computer tapes, books, correspondence and records without the prior written
consent of the Debtor, unless such information (i) is generally available to the
public, (ii) is required by law to be disclosed or is requested by any
Governmental Authority having authority over the Company, any Bank Investor, the
Agent, the Collateral Agent, the Administrative Agent, the Surety Bond Provider,
any Liquidity Provider or Credit Support Provider or (iii) is requested by
Xxxxx'x or S&P in connection with their rating of the Company's Commercial Paper
or the implied rating on the facility.
(h) Administrative Procedures. The Debtor will maintain and
implement administrative operating procedures (including, without limitation, an
ability to recreate records evidencing the 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.
47
(i) UCC Filings. The Debtor shall execute and file such
continuation statements and any other documents requested by the Collateral
Agent or which may be required by law to fully preserve and protect the interest
of the Collateral Agent hereunder in and to the Receivables.
(j) Change of Location. The Debtor will not (i) without
providing 30 days' notice to the Agent, the Surety Bond Provider, and the
Collateral Agent and without filing such amendments to any previously filed
financing statements as the Collateral Agent may require, (A) change the
location of its principal executive office or the location of the offices where
the records relating to the accounts are kept, and (B) change its name, identity
or corporate structure in any manner which would, could or might make any
financing statement or continuation statement filed by the Debtor in accordance
with this Agreement seriously misleading within the meaning of Section 9-402(7)
of the UCC or any applicable enactment of the UCC.
(k) Reporting. The Debtor will furnish, or cause to be
furnished to the Agent, the Surety Bond Provider, the Collateral Agent (unless
otherwise provided to the Collateral Agent) and, each of Xxxxx'x and S&P:
(i) Notice of Termination Event, Potential
Termination Event or Servicer Event of Default. As soon as possible and
in any event within five days after the occurrence of each Termination
Event, or each Potential Termination Event hereunder, or each Servicer
Event of Default, a statement of the chief financial officer or chief
accounting officer of the Debtor setting forth details of such
Termination Event, Potential Termination Event or Servicer Event of
Default and the action which the Debtor proposes to take with respect
thereto.
(ii) Change in Credit Guidelines. Within 15
days of the effectiveness of any material change in or amendment to the
Credit Guidelines notice thereof, and within 30 days after such
effective date, a copy of the
48
Credit Guidelines, then in effect indicating such change or amendment.
(iii) Annual Reporting. Within ninety (90)
days after the close of each of its fiscal years, audited financial
statements, prepared in accordance with generally accepted accounting
principles on a consolidated basis for UAC and its subsidiaries,
including 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 Collateral
Agent and the Surety Bond Provider) 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 each of 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.
(iv) Quarterly Reporting. Within forty-five
(45) days after the close of the first three quarterly periods of each
of its fiscal years, for UAC and its subsidiaries, consolidated
unaudited balance sheets as of the close of each such period and
consolidated related statements of operations, shareholder's equity and
cash flows for the period from the beginning of such fiscal year to the
end of such quarter, all certified by UAC's chief financial officer.
(v) Compliance Certificate. Concurrently
with the delivery by the Debtor of the financial statements with
respect to UAC and its subsidiaries including the Debtor required
hereunder, a compliance certificate signed by an appropriate officer
reasonably familiar with the applicable provisions of this
49
Agreement stating that no Termination Event, Potential Termination
Event or Servicer Event of Default exists, or if any Termination Event
or Potential Termination Event exists, stating the nature and status
thereof.
(l) The Debtor shall not, without the prior written consent of
the Collateral Agent,
(i) engage in any business or activity other
than those set forth in Article [III] of the Debtor's Certificate of
Incorpora- tion;
(ii) incur any indebtedness, assume or
guaranty an indebtedness of any other entity, other than any
indebtedness to the Seller thereof incurred in connection with the
acquisition of Receivables, which indebtedness shall be subordinated to
all other obligations of the Debtor or engage in any transactions with
any affiliates, except as contemplated under this Agreement, the Note
Purchase Agreement, the Servicing Agreement or pursuant to a Take-Out;
(iii) institute proceedings to be
adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the corporation or a substantial part of
its property, or make any assignment for the benefit of creditors, or
admit in writing its inability to pay its debts generally as they
become due, or take corporate action in furtherance of any such action,
in each case, without the affirmative vote of 100% of the members of
the Board of Directors of the Debtor.
(iv) fail to (a) to the extent the Debtor's
office is located in the offices
50
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 liabilities, including all
administrative expenses, from its own separate assets, and (g) pay from
the Debtor's assets all obligations and indebtedness of any kind
incurred by the Debtor. The Debtor shall abide by all corporate
formalities, including the maintenance of current minute books, and the
Debtor shall cause its financial statements to be prepared in
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 Affiliate of UAC, and (iii) not
guarantee the liabilities of UAC or any Affiliate of UAC. The officers
and directors of the Debtor (as appropriate) shall make decisions with
respect to the business and daily operations of the Debtor independent
of and not dictated by any controlling entity.
(v) amend, alter, change or repeal Articles
III, IV, V, VI, and XI of its Certificate of Incorporation as in effect
on the date hereof without the prior written consent of the Surety Bond
Provider.
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(vi) transfer any shares of its Common
Stock, or issue additional shares of its Common Stock or any other
equity interests in the Debtor to any Person other than the Seller or
acquire any shares of stock or equity interest in any other entity or
have any subsidiaries.
(vii) change its name, merge with or into or
be consolidated with any other corporation.
(m) Opinion of Counsel. At the end of each calendar quarter,
commencing in June, 1997, with respect to any state in which Obligors are
located with respect to Eligible Receivables that account for more than 10% of
the aggregate Principal Balance of Eligible Receivables and with respect to such
state, the Debtor has not previously delivered a security interest opinion
relating to the Boats, the Debtor shall be required to deliver a legal opinion
satisfactory to the Surety Bond Provider, counsel for the Surety Bond Provider
and S&P and shall be required to deliver a copy of such opinion to Xxxxx'x as to
the status of the security interest of the Collateral Agent, on behalf of the
Secured Parties, in the related Boats, provided that any Eligible Receivable the
Obligor of which is located in a state that accounts for more than 10% of the
aggregate Principal Balance of Eligible Receivables and with respect to such
state the Debtor has failed to deliver the security interest opinion described
above, the Principal Balance of such Eligible Receivable for purposes of
calculating the Borrowing Base shall be deemed to be $0.
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(n) Yield Supplement Account. The Debtor shall, with respect
to each Supplemented Receivable, deposit the Yield Supplement Deposit Amount, on
or prior to the Business Day prior to the Remittance Date relating to the first
Collection Period during which such Supplemented Receivable became part of the
Collateral, into the Yield Supplement Account for the period commencing with the
Collection Period in which each such Supplemented Receivable first becomes part
of the Collateral and ending with the Collection Period during which the
scheduled maturity of each such Supplemented Receivable occurs, assuming that
payments on such Supplemented Receiv xxxxx are made as scheduled and no
prepayments thereon are made.
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ARTICLE IV
SERVICING AND ADMINISTRATION
SECTION 4.1 Servicing. (a) Pursuant to the Servicing
Agreement, the Debtor has contracted with Union Acceptance Corporation ("UAC")
to act as servicer to manage, collect and administer each of the Receivables.
Until such time as UAC is terminated as servicer under the Servicing Agreement,
references to the Servicer herein shall refer to UAC as servicer under the terms
of the Servicing Agreement. In the event of a Servicer Event of Default, the
Collateral Agent, acting, for so long as no Surety Bond Provider Default has
occurred, upon the written direction of the Surety Bond Provider, shall have the
right to cause the Debtor to terminate UAC as servicer thereunder. Upon
termination of UAC as servicer of the Receivables pursuant to Section 6.02 of
the Servicing Agreement, the Collateral Agent, acting upon, for so long as no
Surety Bond Provider Default has occurred, the written direction of the Surety
Bond Provider shall have the right to appoint a successor servicer and enter
into a servicing agreement with such successor servicer at such time and direct
the Collateral Agent in the exercise of its rights under Section 4.3 hereof.
Such appointment shall be subject to the consent of the Debtor, which consent
shall not be unreasonably withheld; provided, however, that if a Termination
Event shall have occurred, or a Potential Termination Event shall have occurred
and be continuing, the consent of the Debtor shall not be required. In the event
that a successor Servicer is not appointed within 30 days of the Servicer Event
of Default which led to the termination of the preceding Servicer, NationsBank,
N.A. shall thereupon be appointed to act as successor Servicer and NationsBank,
N.A. agrees to so act. Such servicing agreement shall specify the duties and
obligations of such successor Servicer, and all references herein to the
Servicer shall be deemed to refer to such successor servicer. Notwithstanding
the above, NationsBank, N.A. may appoint any established financial institution
having a net worth of not less than $50,000,000 and whose regular business
includes the servicing of automobile or marine installment sales contracts as
the successor Servicer hereunder.
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(b) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties in the name of the Collateral
Agent, a segregated account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Secured Parties. Funds on deposit in the Collection Account (other than
investment earnings) shall be invested by the Collateral Agent at the direction
of the Debtor in Eligible Investments that will mature so that such funds will
be available prior to the next Remittance Date, except that in the case of funds
representing Collections with respect to a succeeding Collection Period, such
Eligible Investments may mature so that such funds will be available no later
than the Business Day prior to the Remittance Date for such Collection Period.
Any funds on deposit in the Collection Account to be so invested shall be
invested solely in Eligible Investments. 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
Surety Bond Provider (as long as no Surety Bond Provider Default has occurred
and is continuing) shall have the right to direct the transfer of the Collection
Account to an Eligible Institution. On each Remittance Date, all interest and
earnings (net of losses and investment expenses) on funds on deposit in the
Collection Account shall be included in Available Collections and be distributed
pursuant to Section 5.1.
(c) After the Initial Funding, the Debtor shall cause the
Servicer under the Servicing Agreement to deposit all Collections (other than
Liquidation Proceeds which shall be deposited on or prior to the Determination
Date) into the Collection Account no later than two Business Days after receipt
thereof.
(d) On or before ninety (90) days after the end of each fiscal
year of the Servicer, beginning with the fiscal year ending June 30, 1997, the
Servicer shall cause a firm of independent public accountants (who may also
render other services to the Servicer or the Debtor) to furnish a report to the
Collateral Agent and the Secured Parties to the effect that they have (i)
compared the information contained in the Monthly Debtor's Certificates
delivered during such fiscal year, based on a sample size provided by the
Collateral Agent, with the
55
information contained in the Contracts and the Servicer's records and computer
systems for such period, and that, on the basis of such agreed upon procedures,
such firm is of the opinion that the information contained in the Monthly
Debtor's Certificates reconciles with the information contained in the Contracts
and the Servicer's records and computer system and that the servicing of the
Receivables has been conducted in compliance with this Agreement, (ii) verified
the aggregate Principal Balance of the Receivables as of the end of each
Collection Period during such fiscal year, and (iii) verified that a sample of
Receivables treated by the Servicer 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
Servicer's records and computer system used in servicing the Receivables
contained correct information with regard to due dates and outstanding balances,
except, in each case for (a) such exceptions as such firm shall believe to be
immaterial (which exceptions need not be enumerated) and (b) such other
exceptions as shall be set forth in such statement.
SECTION 4.2 Duties of the Servicer.
(a) The Servicer 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 Guidelines.
Each of the Debtor and the Secured Parties hereby appoints as its agent the
Servicer, from time to time designated pursuant to Section 4.1, to enforce its
respective rights and interests in and under the Collateral. So long as no
Termination Event shall have occurred, the Servicer may, unless otherwise
required by law, in accordance with the Credit Guidelines, extend the maturity
of Receivables, as the Servicer may determine to be appropriate to maximize
Collections thereof. The Servicer shall hold in trust for the Secured Parties
all records which evidence or relate to all or any part of the Collateral. In
the event that a successor Servicer is appointed, the outgoing Servicer shall
deliver to the successor Servicer and the successor Servicer shall hold in trust
for the Debtor and the Secured Parties all records which evidence or relate to
all or any part of the Collateral.
56
(b) If UAC or any affiliate thereof is not the Servicer, the
Collateral Agent, with the consent of the Surety Bond Provider and the Agent may
revise the percentage used to calculate the Servicing Fee so long as the revised
percentage will not result in a Servicing Fee that exceeds 1.50% per annum. The
Servicer, if other than UAC, 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.
SECTION 4.3 Rights After Designation of Successor Servicer. At
any time following the designation of a Servicer (other than UAC) pursuant to
Section 4.1:
(i) The Collateral Agent may intercept
payments made by or on behalf of Obligors and direct that payment of
all amounts payable under any Receivable be made directly to the
Collateral Agent or its designee.
(ii) The Debtor shall, at the Collateral
Agent's request and at the Debtor's expense, give notice of the
Collateral Agent's interest in the Receivables to each Obligor and
direct that payments be made directly to the Collateral Agent or its
designee.
(iii) The Debtor shall, at the Collateral
Agent's request, (A) assemble all of the records relating to the
Collateral, including all Receivables Files, and shall make the same
available to the Collateral Agent at a place selected by the Collateral
Agent or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting collections
of Collateral in a manner acceptable to the Collateral Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments,
duly endorsed or with duly executed instruments of transfer, to the
Collateral Agent or its designee.
(iv) The Debtor hereby authorizes the
Collateral Agent to take any and all steps in the Debtor's name and on
behalf of the
57
Debtor necessary or desirable, in the determination of the Collateral
Agent, to collect all amounts due under any and all of the Collateral
with respect thereto, including, without limitation, endorsing the
Debtor's name on checks and other instruments representing Collections
and enforcing the Receivables.
SECTION 4.4 Responsibilities of the Debtor. Anything herein to
the contrary notwithstanding, the Debtor shall (i) perform all of its
obligations under the Receivables to the same extent as if a security interest
in such Receivables had not been granted 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, nor shall any of them be
obligated to perform any of the obligations of the Debtor thereunder.
SECTION 4.5 Monthly Debtor's Certificate. On each
Determination Date, the Debtor shall deliver to the Agent, the Surety Bond
Provider and the Collateral Agent a certificate in substantially the form of
Exhibit D attached hereto (the "Monthly Debtor's Certificate") for the related
Collection Period. The Agent shall provide to the Debtor, by the day prior to
the related Determination Date in the calendar month following the Collection
Period to which such Monthly Debtor's Certificate relates, information relating
to the amount of each obligation of the Company which comprises Carrying Costs
for such Collection Period. The Monthly Debtor's Certificate shall specify
whether a Termination Event is deemed to have occurred with respect to the
Collection Period preceding such Determination Date. Upon receipt of the Monthly
Debtor's Certificate, the Collateral Agent shall rely (and shall be fully
protected in so relying) on the information contained therein for the purposes
of making distributions and allocations as provided for herein.
SECTION 4.6 Additional Representations and Warranties of UAC
as Servicer. UAC, in its capacity as Servicer, represents and warrants to the
Surety Bond Provider and the Collateral Agent, as of the Closing Date
58
that the only material servicing computer systems and related software utilized
by the Servicer to service the Receivables are provided by Alltell Information
Services, Inc. (formerly known as Systematics System Financial Services, Inc.)
under an agreement (and related non-exclusive license) and related letter
agreements dated July 13, 1994 and October 25, 1994. Should the Servicer or any
of its Affiliates develop and implement computer software for servicing that is
owned or exclusively licensed to the Servicer or an Affiliate and utilize such
software in the servicing of the Receivables, the Surety Bond Provider shall be
entitled to compel a license or sublicense for the benefit of the Surety Bond
Provider or its designee of any such rights to the extent the Surety Bond
Provider deems reasonably necessary and appropriate to assure that it or a duly
appointed successor servicer would be able to continue to service the
Receivables should that be required in accordance with the Servicing Agreement.
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ARTICLE V
ALLOCATION AND APPLICATION
OF COLLECTIONS; RESERVE ACCOUNT
SECTION 5.1 Collections. (a) On each Remittance Date, the
Collateral Agent shall determine by reference to the Monthly Debtor's
Certificate, the Available Collections with respect to such Remittance Date and
shall withdraw such amount from the Collection Account including amounts
deposited in the Collection Account from the Yield Supplement Account pursuant
to Section 2.5(e) and allocate and pay such amounts in the following order of
priority:
(i) to the Servicer, to repay Servicer
Advances and then to the successor Servicer, to pay any and all
expenses relating to a Servicer Transfer then due and payable which
have not been previously paid by or on behalf of the Debtor;
(ii) if UAC or an Affiliate is
not the Servicer, to the Servicer, an amount
equal to the Servicing Fee;
(iii) to the Agent, for the account of the
Company or the Bank Investors an amount equal to Carrying Costs payable
on such Remittance Date;
(iv) to the Carrying Costs Account, an
amount equal to interest accrued on the Related Commercial Paper
through such Remittance Date net of all such amounts paid in respect of
the Interest Component of Related Commercial Paper on the maturity date
thereof on or prior to such Remittance Date;
(v) to the Agent, for the account of the
Company or the Bank Investors, an amount equal to the Targeted Monthly
Principal Payment;
(vi) to the Collateral Agent, for the
account of the Hedge Counterparty, any
60
amounts owed to the Hedge Counterparty under any Interest Rate Hedge,
which have not previously been paid;
(vii) if UAC or an Affiliate is the
Servicer, to the Servicer, an amount equal to the Servicing Fee;
(viii) provided no Surety Bond Provider
Default shall have occurred and be continuing, to the Surety Bond
Provider, the Unused Portion and the Premium Portion of the Surety Bond
Premium, including any overdue Surety Bond Premiums and accrued
interest thereon at the rate provided in the Insurance Agreement;
(ix) to the Surety Bond Provider, the
aggregate amount of any previously unreimbursed draws on the Surety
Bond (plus any other amounts payable to the Surety Bond Provider under
the Insurance Agreement, plus accrued interest thereon at the rate
provided in the Insurance Agreement);
(x) to the Collateral Agent or
the Surety Bond Provider, the amount to be applied by the Collateral
Agent or the Surety Bond Provider, as appropriate, to pay any and all
Re-Xxxxxxx Expenses then due and payable which have not been previously
paid by or on behalf of the Debtor;
(xi) after the occurrence of a Termination
Event, to the Noteholder to reduce the Net Investment, until the Net
Investment has been reduced to zero;
(xii) to the Reserve Account, the amount
necessary to increase the amount on deposit in the Reserve Account to
the Required Reserve Account Balance;
(xiii) to the Agent, for the account of the
Persons entitled thereto, an amount equal to all other amounts owed
under the Note Purchase Agreement;
61
(xiv) to the Servicer, an amount equal to
reimburse any Fee Advance then due and payable which has not been
previously paid by or on behalf of the Debtor; and
(xv) prior to the occurrence of a
Termination Event, all remaining amounts shall be distributed to the
Debtor. Following the occurrence of a Termination Event all remaining
amounts will be held in the Collection Account and applied until all
amounts owing to the Secured Parties under the Transaction Documents
have been paid in full.
(b) On any date that a tranche of Related Commercial Paper
matures whether or not such date is a Remittance Date (each, an "Interest
Payment Date"), the Interest Component of matured or maturing Related Commercial
Paper due and payable on such day shall be payable as interest on the Note
("Note Interest"). Accordingly, the Collateral Agent, acting upon notice from
the Administrative Agent, shall withdraw such amount from funds on deposit in
the Carrying Cost Account, to the extent of amounts on deposit therein, and
remit such amount to the Agent for the account of the Company. To the extent
that amounts withdrawn by the Collateral Agent from the Carrying Costs Account
are insufficient to pay such costs, the Collateral Agent, acting upon notice
from the Administrative Agent,shall withdraw the amount of such remaining
shortfall from the Collection Account, to the extent of Collections on deposit
therein, and remit such amount to the Agent for the account of the Company. To
the extent that amounts withdrawn by the Agent, as specified above are
insufficient to pay such costs, the Servicer, acting upon notice from the
Administrative Agent, shall make an advance in an amount equal to such costs due
and payable on such day (a "Servicer Advance") and remit to the Agent for the
account of the Company, the amount of such advance provided, however, that the
Servicer shall not be obligated to make any such advance except to the extent
that the Servicer reasonably expects to be reimbursed for such advance on a
succeeding Remittance Date pursuant to Section 5.1(a)(i). To the extent that
amounts advanced by the Servicer are insufficient to pay such costs and the
Debtor fails to make a payment to the Collateral Agent on such day in the amount
of such shortfall, the
62
Collateral Agent shall withdraw the amount of such remaining shortfall from the
Reserve Account, to the extent of amounts on deposit therein, and remit such
amount to the Agent, for the account of the Company. To the extent that there
remains a shortfall, the Agent shall make a demand for payment under the Surety
Bond, in accordance with the terms thereof. Amounts required to be remitted
pursuant to this Section 5.1(b) to the Agent or the Collateral Agent shall be
remitted in immediately available funds to the Agent's account no later than
11:00 a.m., New York City time, on the date due.
(c) If the Available Collections in respect of a Remittance
Date are insufficient to pay the sum of the amounts to be distributed pursuant
to clauses (i) through (iii) of Section 5.1(a), the Collateral Agent shall
withdraw the amount of such shortfall from the Reserve Account, to the extent of
amounts on deposit therein, and apply such amount to the payment of the items
described in clauses (i), (ii) and (iii) of Section 5.1(a), in that order of
priority.
(d) If on any Remittance Date, after giving effect to any
withdrawals from the Reserve Account pursuant to Section 5.1(c), there remains
any shortfall in amounts available to pay the amounts to be distributed pursuant
to clause (iii) of Section 5.1 (a), the Servicer, or any successor Servicer may
make a Fee Advance in respect of the Liquidity Fee, and if the Servicer or any
successor Servicer declines to make a Fee Advance with respect to any Liquidity
Fee due thereunder, or after giving effect such Fee Advance, a shortfall
remains, the Agent shall review the terms of the Surety Bond, and if a demand
for payment may be made thereunder for any such shortfall, the Agent shall make
a demand thereunder in accordance with the terms of the Surety Bond.
(e) If on any Remittance Date, after giving effect to any
withdrawals from the Reserve Account pursuant to Section 5.1(c), the Net
Investment exceeds the outstanding Principal Balance of the Eligible
Receivables, the Collateral Agent shall withdraw the amount of such excess from
the Reserve Account, to the extent of amount on deposit therein and distribute
such amount as principal on the Note in reduction of the Net Investment. To the
extent the Net Investment exceeds the outstanding
63
Principal Balance of the Eligible Receivables after such withdrawal and
distribution, the Agent shall review the terms of the Surety Bond, and if a
demand for payment may be made thereunder with respect to principal for the
amount by which the Net Investment exceeds the outstanding Principal Balance of
the Eligible Receivables, the Agent shall make a demand thereunder in accordance
with the terms of the Surety Bond.
(f) If on any Remittance Date, after giving effect to any
withdrawals from the Reserve Account pursuant to Section 5.1(c), there remains
any shortfall in amounts available to pay the amount to be distributed in
respect of the Unused Portion of the Surety Bond Premium pursuant to clause
(viii) of Section 5.1(a), the Servicer or any successor Servicer may make a Fee
Advance in respect of the Unused Portion of such Surety Bond Premium.
(g) To the extent that the Collateral Agent shall receive any
late fees, insufficient check charges and similar charges assessed against
Obligors, the Collateral Agent shall remit such amounts to, or upon the order of
the Servicer, if UAC, otherwise, the Debtor. Such amounts shall be so remitted
by the Collateral Agent to the Servicer notwithstanding that a Termination Event
shall have occurred.
(h) In the event that an Interest Rate Hedge is entered into
by the Debtor in compliance with Section 6.1(n), then in such event all amounts
payable by the Hedge Counterparty to the Debtor shall be deposited directly into
the Collection Account and as of any Remittance Date shall comprise Interest
Rate Hedge Receipts and all such amounts shall be treated as Finance Charge
Collections hereunder.
SECTION 5.2 Remittances to the Secured Parties. On each
Remittance Date, the Collateral Agent shall remit all applicable amounts to each
Secured Party in accordance with the provisions of Section 5.1. The foregoing
notwithstanding, the final remittance in respect of the Note shall be made in
the applicable manner specified above only upon presentation and surrender of
the Note at the office of the Debtor specified by it in the notice of such final
remittance or repurchase.
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SECTION 5.3 Reserve Account. (a) On or before the Initial
Funding, the Debtor shall establish a segregated account (the "Reserve Account")
with the Collateral Agent in the name of the Collateral Agent, 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 shall maintain the Reserve
Account at an Eligible Institution. If the Eligible Institution holding the
Reserve Account shall cease to be an Eligible Institution, the Surety Bond
Provider (as long as no Surety Bond Provider Default has occurred and is
continuing) shall have the right to direct the transfer of the Reserve Account
to an Eligible Institution. Notwithstanding the foregoing, the Collateral Agent
shall not withdraw any funds from, or otherwise exercise control over, the
Reserve Account except as provided in this Agreement. All amounts on deposit in
the Reserve Account shall be held by the Collateral Agent for the benefit of the
Secured Parties.
(b) On or prior to the Initial Funding, the Debtor shall
deposit or cause to be deposited in the Reserve Account, the Required Reserve
Account Balance (calculated as if such Initial Funding had occurred). The Debtor
shall deposit into the Reserve Account all amounts which are required to be
deposited therein by this Agreement. The Collateral Agent shall promptly
withdraw from the Reserve Account all amounts required to be withdrawn therefrom
pursuant to Section 5.1(b) and 5.1(c) hereof, and shall either (i) pay such
amounts to the Agent, for the account of the Company (in the case of withdrawals
pursuant to Section 5.1(b)) or (ii) deposit such amounts to the credit of the
Collection Account (in the case of withdrawals therefrom pursuant to Section
5.1(c)).
(c) Prior to the occurrence of a Termination Event and to the
extent that amounts on deposit in the Reserve Account on any Remittance Date,
after giving effect to any required withdrawals therefrom on such day, exceed
the Required Reserve Account Balance, such excess amounts shall be withdrawn
from the Reserve Account by the Collateral Agent and remitted to the Debtor.
(d) (i) Funds on deposit in the Reserve Account shall be
invested in Eligible Investments by or at
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the written direction of the Debtor, provided that if a Termination Event shall
have occurred, such investments shall be made as directed by the Surety Bond
Provider (or by the Collateral Agent if there shall have been a Surety Bond
Provider Default). 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.
(ii) All investments of amounts on deposit
in the Reserve Account shall be accomplished in a manner so as to cause
such investments to be Transferred to the Collateral Agent; provided
that upon the effectiveness in the State of New York of the 1994
Official Text of Article 8 of the Uniform Commercial Code, investments
need not be Transferred to the Collateral Agent. The Collateral Agent
agrees that, without the prior consent of the Surety Bond Provider, it
shall not accept for credit to the Reserve Account any investment as to
which it has knowledge of any adverse claim thereto. NationsBank, N.A.
hereby agrees (and any other Financial Intermediary holding the Reserve
Account shall so agree) to comply with all Entitlement Orders (as
defined in Section 8-102 of the 1994 Official Text of the Uniform
Commercial Code) received by it with respect to the Reserve Account
from the Collateral Agent.
(iii) Funds on deposit in the Reserve
Account on the Closing Date and thereafter shall be so invested in
Eligible Investments that mature such that such funds or the proceeds
thereof will be available for withdrawal pursuant to Section 5.1(b) and
5.1(c) on the maturity date of Related Commercial Paper; in any event
the maturity of any Eligible Investment shall not exceed 30 days. No
Eligible Investment may be liquidated or disposed of prior to its
maturity. All proceeds of any Eligible Investment shall be deposited in
the Reserve Account. Investments may be made on any date (provided such
investments mature in accordance with the preceding sentence), only
after giving effect to deposits to and with-
66
drawals from the Reserve Account on such date. Realized losses, if any,
on amounts invested in Eligible Investments shall be charged against
investment earnings on amounts on deposit in the Reserve Account.
(iv) The Debtor and the Surety Bond Provider
shall each 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 and the Surety Bond
Provider, respectively, that is authorized to provide instructions
relating to investments in Eligible Investments.
(e) 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, N.A. agrees (and any other Financial 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.
All amounts or property credited to the Reserve Account shall
be subject to the lien of the Collateral Agent until released or withdrawn from
the Reserve Account.
(f) If and to the extent that the Net Investment has been
reduced to zero and all amounts owed by the Debtor to the Secured Parties
hereunder, under the Note Purchase Agreement, the Insurance Agreement, the Note
and any other Transaction Document have been paid in full, any amounts on
deposit in the Reserve Account shall be released to the Debtor. In the event
that thereafter the Debtor shall request that the Noteholder increase its Net
Investment, it shall be a condition precedent thereto that the Reserve Account
be funded in an amount equal to the Required Reserve Account Balance after
giving effect to any such requested increase in the Net Investment.
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SECTION 5.4 Carrying Costs Account. (a) On or before the
Initial Funding, the Debtor shall establish a segregated account (the "Carrying
Costs Account") with an Eligible Institution designated by the Collateral Agent
in the name of the Collateral Agent, for the benefit of the Secured Parties. If
the Eligible Institution holding the Carrying Costs Account shall cease to be an
Eligible Institution, the Surety Bond Provider (as long as no Surety Bond
Provider Default has occurred and is continuing) shall have the right to direct
the transfer of the Carrying Costs Account to an Eligible Institution. 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 Carrying Costs
Account. Notwithstanding the foregoing, the Collateral Agent shall not withdraw
any funds from, or otherwise exercise control over, the Carrying Costs Account
except as provided in this Agreement. All amounts on deposit in the Carrying
Costs Account shall be held for the benefit of the Secured Parties.
(b) The Servicer shall deposit into the Carrying Costs Account
all amounts which are required to be deposited therein pursuant to Section
5.1(a)(iv). The Collateral Agent shall promptly withdraw from the Carrying Costs
Account all amounts required to be withdrawn therefrom pursuant to Section
5.1(b) hereof, and shall pay such amounts to the Agent, for the account of the
Company.
(c) (i) Funds on deposit in the Carrying Costs Account shall
be invested in Eligible Investments by the Collateral Agent.
(ii) All investments of amounts on deposit
in the Carrying Costs Account shall be accomplished in a manner so as
to cause such investments to be Transferred to the Collateral Agent;
provided that upon the effectiveness in the State of New York of the
1994 Official Text of Article 8 of the Uniform Commercial Code,
investments need not be Transferred to the Collateral Agent. The
Collateral Agent agrees that, without the prior consent of the Surety
Bond Provider, it shall not accept for credit to the Carrying Costs
Account any investment as to which it has knowledge of any adverse
claim
68
thereto. The Collateral Agent shall cause any Financial Intermediary
holding the Carrying Costs Account to 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
Carrying Costs Account from the Collateral Agent.
(iii) Funds on deposit in the Carrying Costs
Account on the Closing Date and thereafter shall be so invested in
Eligible Investments that mature such that sufficient amounts of such
funds or the proceeds thereof will be available for withdrawal pursuant
to Section 5.1(b) on the maturity date of Related Commercial Paper; in
any event the maturity of any Eligible Investment shall not exceed 30
days. No Eligible Investment may be liquidated or disposed of prior to
its maturity. All proceeds of any Eligible Investment shall be
deposited in the Carrying Costs Account. Investments may be made on any
date (provided such investments mature in accordance with the preceding
sentence), only after giving effect to deposits to and withdrawals from
the Carrying Costs Account on such date. Realized losses, if any, on
amounts invested in Eligible Investments shall be charged against
investment earnings on amounts on deposit in the Carrying Costs
Account.
(d) 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. Any Financial Intermediary holding the Carrying Costs Account
shall agree that it shall 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 Carrying Costs Account given to it by any
Person other than the Collateral Agent.
All amounts or property credited to the Carrying Costs Account
shall be subject to the lien of the
69
Collateral Agent until released or withdrawn from the Carrying Costs Account.
(f) On each Distribution Date, all investment earnings (net of
any losses) on Eligible Investments earned during the related Collection Period
shall be released to the Debtor. If and to the extent that the Net Investment
has been reduced to zero and all amounts owed by the Debtor to the Secured
Parties hereunder, under the Note Purchase Agreement, the Insurance Agreement,
the Note and any other Transaction Document have been paid in full, any amounts
on deposit in the Carrying Costs Account shall be released to the Debtor.
70
ARTICLE VI
TERMINATION EVENTS; WIND-DOWN EVENTS
SECTION 6.1 Termination Events. The occurrence and
continuation of any one of the following events shall be a "Termination Event"
under this Agreement:
(a) failure on the part of the Debtor to pay or disburse when
due the amounts provided for herein (with the exception of any failure to pay
any Yield Supplement Amount), in the Note Purchase Agreement, the Insurance
Agreement, or in the Note and such failure continues for two Business Days or
the failure on the part of UAC to make any payment or effect any transfer of
Receivables under the Purchase Agreement or the Servicer to make any payment
under the Servicing Agreement and such failure continues for two Business Days;
(b) failure (i) by the Debtor or the Seller, to observe or
perform any term, covenant, condition or agreement set forth in Sections 3.2(a),
(d), (e), (f), (i), (k)(i) and (l) of this Agreement or the Servicer in the
Servicing Agreement, or (ii) of any representation or warranty of the Debtor,
the Seller or the Servicer contained herein, the Note Purchase Agreement, the
Purchase Agreement, the Insurance Agreement or the Servicing Agreement to be
true and correct in all material respects on any day when made or deemed made
hereunder or thereunder, or (iii) by the Debtor to observe or perform any other
term, covenant, condition or agreement provided for herein or in the Note (other
than a term addressed in clause (i) above) which, in the case of clause (ii)
above continues for a period of thirty (30) days after the earlier of (u) the
date on which written notice of such breach shall have been given to the Debtor,
the Seller or the Servicer, by the Agent, the Surety Bond Provider or the
Collateral Agent, or (v) the date on which the Debtor, the Servicer or the
Seller became aware of such breach, or which, in the case of clause (ii) above
continues for a period of ten (10) days after the earlier of (x) the date on
which written notice of such failure shall have been given to the Debtor, the
Servicer or the Seller by the Agent, the Surety Bond Provider or the Collateral
Agent or (y) the date on which the Debtor, the Servicer or the Seller became
aware of such failure; notwithstanding clause (ii) above, in the
71
event the Debtor makes the payment required by Section 3.1 as a result of a
breach of the representation set forth in Section 3.1(a), the breach of such
representation shall not constitute a Termination Event hereunder;
(c) the Debtor, the Seller or the Servicer shall consent to
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Debtor, the Seller or the Servicer, as the
case may be, or of or relating to all or substantially all of its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Debtor, the Seller or the Servicer,
as the case may be, and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or the Debtor, the Seller or
the Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of an applicable insolvency
or reorganization statute, make any assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations; or the Debtor, the Seller or
the Servicer, as the case may be, shall become unable for any reason to pledge
Collateral to the Collateral Agent in accordance with the provisions of this
Agreement;
(d) the Debtor or the Servicer (if the Servicer is UAC) shall
enter into any merger or consolidation or shall convey all or substantially all
of its assets to another Person, wherein the case of a merger, it is not the
surviving entity;
(e) a Servicer Event of Default shall occur;
(f) the Delinquency Ratio averaged over any three consecutive
Collection Periods shall equal or exceed 4%;
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(g) the Default Ratio averaged over any three consecutive
Collection Periods shall equal or exceed 1.75%;
(h) the Collateral Agent shall fail for any reason to have a
valid and perfected first priority security interest in the Collateral and the
proceeds thereof;
(i) the Seller or the Servicer shall default and such default
shall continue for a period of 30 days in any payment in excess of $100,000
contained in any agreement for borrowed money to which it is a party;
(j) any demand for payment is made under the Surety Bond;
(k) a Surety Bond Provider Default has occurred and is
continuing;
(l) the term of the Surety Bond is not at least equal to the
term of the latest maturing Receivable plus 366 days);
(m) (i) (x) At any time the Net Investment exceeds the sum of
the Borrowing Base (Boats) plus the Borrowing Base (Personal Watercraft) or (y)
the Net Investment exceeds the Maximum Permitted Borrowing Base for a period of
sixty consecutive Business Days and the Debtor fails to (A) deliver a Settlement
Sheet indicating an increase in the Maximum Permitted Borrowing Base such that
the Maximum Permitted Borrowing Base exceeds the Net Investment or (B) make a
deposit into the Collection Account to be applied as principal in reduction of
the Net Investment in an amount such that the Maximum Permitted Borrowing Base
exceeds the Net Investment;
(n) the Net Yield with respect to any Determination Date shall
be less than 1% and none of (x) a Take-Out, (y) delivery of a Settlement Sheet
by the Debtor indicating an increase in the Maximum Permitted Borrowing Base
such that the Maximum Permitted Borrowing Base exceeds the Net Investment or (z)
the Debtor has entered into an Interest Rate Hedge acceptable to the Surety Bond
Provider, shall have occurred within 30 days;
73
(o) a Take-Out does not occur at least once every 12 months
provided that the initial Take-Out shall occur no later than April 3, 1998;
(p) a downgrade in the claims-paying rating of the Surety Bond
Provider below "Aa" or "AA" by Xxxxx'x or S&P, respectively, provided that the
Servicer has not succeeded in finding a successor Surety Bond Provider
acceptable to the Agent within 30 days of such downgrade; or
(q) any of this Agreement, the Note Purchase Agreement, the
Insurance Agreement, the Purchase Agreement, the Servicing Agreement or the Note
shall cease to be in full force and effect.
SECTION 6.2 Wind-Down Events. The occurrence and continuation
of any one of the following events shall be a "Wind-Down Event" under this
Agreement:
(a) the Liquidity Provider or the Credit Support Provider
shall have notified the Agent that an event of default has occurred under the
Liquidity Agreement or the Credit Support Agreement, respectively;
(b) the Company's Commercial Paper shall no longer be rated at
least "A-2", in the case of S&P, and at least "P-2", in the case of Xxxxx'x; or
(c) either the Liquidity Fee or the Unused Portion of the
Surety Bond Premium shall not be paid pursuant to Section 5.1.
SECTION 6.3 Remedies. If a Termination Event as specified in
Section 6.1 shall have occurred, the Agent or the Collateral Agent may, in each
case, with the consent of the Surety Bond Provider (provided that no Surety Bond
Provider Default shall have occurred), or shall upon the written direction of
the Surety Bond Provider (provided that no Surety Bond Provider Default shall
have occurred) have the right to declare by written notice to the Debtor any
date as the Pay Out Commencement Date and to declare all amounts outstanding
under the Note, the Note Purchase Agreement and the Insurance Agreement to be
then due and payable. If the Note and such other amounts are declared due and
payable, the Col-
74
lateral Agent may, with the consent of the Surety Bond Provider, or shall upon
the written direction of the Surety Bond Provider (provided that no Surety Bond
Provider Default shall have occurred) do any one or more of the following:
(a) take all necessary action to foreclose upon the
Collateral;
(b) cause the Debtor to take all steps necessary to cause the
certificate of title or other evidence of ownership of the related Boat to be
revised to name the Collateral Agent on behalf of the Secured Parties as first
lienholder and to effect any filings or take any actions necessary under
applicable certificate of title statutes to perfect the Collateral Agent's
interest as first lienholder in the boat motors and boat trailers if a
Termination Date has occurred or upon the occurrence of a Termination Event upon
the discretion of the Surety Bond Provider, if the Surety Bond Provider shall
have determined that such action is prudent to protect the interest of the
Secured Parties hereunder. Any costs associated with such revision of the
certificate of title or other evidence of ownership shall be paid by the Debtor
and to the extent such costs are not paid by the Debtor such unpaid costs shall
be recovered as described in Section 5.1 hereof.
(c) cause the Debtor to cease purchasing Receivables from the
Seller, and retain in satisfaction of any amounts owed by 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;
(d) pursue any available remedy by pro- ceeding 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 on 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 con-
75
tained in this Agreement to be observed or performed by the Debtor;
(e) exercise any remedies of a secured
party under the Uniform 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, subject to Section 8.7 hereof.
SECTION 6.4 Application of Proceeds. Any proceeds received by
the Collateral Agent from the sale, disposition or liquidation of the
Collateral, including as a result of any sale or foreclosure thereon as
contemplated by Section 6.3 above, shall be applied as follows:
(a) to the payment of (i) all accrued and unpaid interest in
accordance with Section 5.1 hereof and (ii) principal on the Note;
(b) to the reimbursement of all amounts due and payable to the
Hedge Counterparty under any Interest Rate Hedge;
(c) to the reimbursement of all draws made on the Surety Bond
and the payment of all accrued and unpaid interest related thereto;
(d) to the payment of all other amounts due hereunder, under
the Note Purchase Agreement or the Insurance Agreement to the Agent, the
Collateral Agent, the Company, the Surety Bond Provider or the Bank Investors
(pro rata among them in the event sufficient funds are not available to pay such
Persons in full); and
(e) any remainder after the payment in full of all of the
foregoing, to the Debtor.
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ARTICLE VII
THE COLLATERAL AGENT
SECTION 7.1 Duties of the Collateral Agent. The Collateral
Agent, both prior to the occurrence of a Termination Event or Wind-Down Event
hereunder and after a Termination Event or Wind-Down 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 or Wind-Down 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
Servicer or otherwise will, pending remittance to the Secured Party entitled
thereto, be held in trust by the Collateral Agent for the benefit of the Secured
Parties and together with all other payment obligations of the Debtor hereunder
owing to the Secured Parties shall be payable to the Secured Parties in
accordance with the provisions of Article V hereof.
Except as otherwise provided herein, the Collateral Agent
shall not resign from the obligations and duties hereby imposed on it except
upon determination 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 Secured Parties, Xxxxx'x
and S&P. 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 7.2. No
resignation of the Collateral Agent shall become effective until a successor
Collateral Agent approved by the Secured Parties shall have assumed the
responsibilities and obligations of the Collateral Agent hereunder.
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SECTION 7.2 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 the reasonable
compensation and expenses of its counsel and agents) pursuant to a separate
letter agreement between the Collateral Agent and the Debtor. Subject to the
terms of such letter agreement, the Collateral Agent shall be required to pay
the expenses incurred by it in connection with its activities hereunder from its
own account. Notwithstanding any other provisions in this Agreement, the
Collateral Agent shall not be liable for any liabilities, costs or expenses of
the Debtor arising under any tax law, including without limitation any Federal,
state or local income or franchise taxes or any other tax imposed on or measured
by income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith).
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. The provisions of this Section 7.2 shall survive the
termination of this Agreement.
SECTION 7.3 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 entering into this Agreement, the Note Purchase Agreement and the
Insurance Agreement.
(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
78
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 have been duly authorized by the Collateral Agent
by all necessary corporate action on the part of the Collateral Agent.
(c) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Collateral Agent, enforceable in accordance
with its 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 de- livery of this
Agreement by the Collateral Agent, and the performance of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
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 7.4 Liability of the Collateral Agent. (a) The
Collateral Agent shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the 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.
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(b) The Collateral Agent shall not be liable for an error of
judgment made in good faith, unless it shall be proved that the Collateral Agent
shall have been negligent in ascertaining the pertinent facts.
(c) The Collateral Agent shall not be liable with respect to
any action taken, suffered or omitted to be taken in good faith in accordance
with this Agreement or at the direction of a Secured Party relating to the
exercise of any power conferred upon the Collateral Agent under this Agreement.
(d) The Collateral Agent shall not be charged with knowledge
of any Termination Event or Wind- Down Event unless an officer personally
familiar with and currently responsible for administering this Agreement obtains
actual knowledge of such event or the Collateral Agent receives written notice
of such event from the Debtor, the Servicer, the Company, the Surety Bond
Provider or the Agent, as the case may be.
(e) Without limiting the generality of this Section 7.4, the
Collateral Agent shall have no duty (i) to see to any recording, filing or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest in
the Receivables or the Boats, 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 Boats, 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 Servicer 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 Boats at any time or ascertain or inquire as to the performance or
observance of any of the Debtor's or the Servicer's representations, warranties
or covenants or the Servicer's duties and obligations as Servicer and as
custodian of books, records, files and computer records relating to the
Receivables under the Servicing Agreement.
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(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 Servicer 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
Monthly Debtor's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(h) The Collateral Agent may consult with counsel and any
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this Agreement
in good faith and in accordance with such opinion of counsel.
(i) The Collateral Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement or to
institute, conduct or defend any litigation under this Agreement or in relation
to this Agreement, at the request, order or direction of a Secured Party
pursuant to the provisions of this Agreement, unless such Secured Party 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 or a Wind-Down
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
81
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 or
Wind-Down Event before the Collateral Agent has received notice of such
Termination Event or Wind- Down Event and after the curing or waiving of all
Termination Events or Wind-Down Event that may have occurred, the Collateral
Agent shall not be bound to make any investigation into the facts of matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document,
unless requested in writing so to do by a Secured Party; provided, however, that
if the payment within a reasonable time to the Collateral Agent of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Collateral Agent, not reasonably
assured by the Debtor, the Collateral Agent may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the Debtor or, if
paid by the Collateral Agent, shall be reimbursed by the Debtor upon demand.
(l) The Collateral Agent may execute any of the trusts or
powers hereunder or perform any duties under this Agreement either directly or
by or through agents or attorneys or a custodian. The Collateral Agent shall not
be responsible for any misconduct or negligence of any such agent or custodian
appointed with due care by it hereunder.
SECTION 7.5 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:
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(i) the corporation formed by such
consolidation or into which the Collateral Agent is merged or the
Person which acquires by conveyance or transfer the properties and
assets of the Collateral Agent substantially as an entirety shall be a
corporation organized and existing under the laws of the United States
of America or any State or the District of Columbia and, if the
Collateral Agent is not the surviving entity, shall expressly assume,
by an agreement supplemental hereto, executed and delivered to the
Secured Parties in 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 and Xxxxx'x 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 7.5
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices, Etc. Except where telephonic instructions
or notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be sent by facsimile transmission
with a confirmation of the receipt thereof and shall be deemed to be given for
purposes of this Agreement on the day that the receipt of such facsimile
transmission is confirmed in accordance with the provisions of this Section 8.1.
In addition, the Debtor agrees to deliver to the Surety Bond Provider all
notices provided by it to the Collateral Agent pursuant to this Agreement, the
Servicing Agreement and the Purchase Agreement. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of this
Section, notices, demands, instructions (including payment instructions) and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses and accounts indicated below, and,
in the case of telephonic instructions or notices, by calling the telephone
number or numbers indicated for such party below:
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
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(with a copy to the Administrative Agent)
If to the Debtor:
UAC Boat Funding Corp.
000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000-X
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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If to the Collateral Agent, the Administrative
Agent or the Agent:
NationsBank N.A.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 28255-0001
Attention: Xxxxxxxx X. Xxxxx
Investment Banking
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information:
Bankers Trust Company
ABA #: 000000000
Acct. #:
Reference:
If to the Surety Bond Provider:
Capital Markets Assurance Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director -
Credit Enhancement
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Payment Information: The Bank of New York
ABA #: 000-000-000 IOC 565
Acct. #: 052040
Reference: UAC BFC WH
SECTION 8.2 Successors and Assigns. This Agreement shall be
binding upon the Debtor, the Collateral Agent, the Secured Parties, the Seller
and their respective successors and permitted assigns and shall inure to the
benefit of the Debtor, the Servicer, the Collateral Agent, the Secured Parties
and the Seller and their respective successors and permitted assigns including
any Bank Investors and the Liquidity Provider; provided that the Debtor shall
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not assign any of its rights or obligations hereunder without the prior written
consent of the Collateral Agent acting upon written instruction of the Secured
Parties. The Debtor and the Collateral Agent hereby acknowledge that the Agent
has granted a security interest in all of its rights hereunder to the EFC
Collateral Agent. In addition, the Debtor hereby acknowl edges that the Company
may at any time and from time to time assign all or a portion of its rights
hereunder to the Liquidity Provider pursuant to the Liquidity Agreement.
SECTION 8.3 Severability Clause. 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 unenforceable such provision in any other jurisdiction.
SECTION 8.4 Amendments. This Agreement and the rights and
obligations of the parties hereunder may not be changed orally but only by an
instrument in writing signed by the party against which enforcement is sought.
The parties hereunder agree that they will not amend, modify, waive, or
terminate any provisions of this Agreement without the written consent of each
party hereto and written notice to each of Xxxxx'x and S&P. The Debtor agrees
that it shall enter into any amendment reasonably requested by the Surety Bond
Provider or the Collateral Agent to put into effect any Interest Rate Hedge
pursuant to Section 6.1(n).
SECTION 8.5 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York.
SECTION 8.6 No Bankruptcy Petition Against the Company. The
Debtor and each of the other parties hereto covenant and agree that, and each
such Person agrees that they shall cause any successor servicer appointed
pursuant to Section 4.1 to covenant and agree that, prior to the date which is
one year and one day after the payment in full of all Commercial Paper issued by
the Company it will not institute against, or join any other Person in
instituting against, the Company or the Debtor, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law.
SECTION 8.7 Setoff. To the extent permitted by applicable law,
the Debtor hereby irrevocably and
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unconditionally waives all right of setoff that it may have under contract
(including this Agreement), applicable law or otherwise with respect to any
funds or monies of the Debtor at any time held by or in the possession of the
Collateral Agent.
SECTION 8.8 No Recourse. Except as otherwise expressly
provided in this Agreement, it is understood and agreed that the Debtor shall
not be liable for amounts due under the Note, this Agreement, the Insurance
Agreement or the Note Purchase Agreement, except to the extent of the
Collateral, for any losses suffered by the Company in respect of the Note. The
preceding sentence shall not relieve the Debtor from any liability hereunder
with respect to its representations, warranties, covenants and other payment and
performance obligations herein described.
SECTION 8.9 Further Assurances; Replacement Surety Bond. The
Debtor agrees to do such further acts and things and to execute and deliver to
the Collateral Agent such additional assignments, agreements, powers and
instruments as are required by the Collateral Agent to carry into effect the
purposes of this Agreement or to better assure and confirm unto the Collateral
Agent its rights, powers and remedies hereunder. The Debtor further agrees, that
after the occurrence of a Replacement Event and upon the request of the Agent,
the Debtor will obtain a Replacement Surety Bond, acceptable to the Agent and
the Company within 30 days of such request and shall pay or cause to be paid all
amounts due and payable to the current Surety Bond Provider.
SECTION 8.10 Other Costs, Expenses and Related Matters. (a)
The Debtor agrees, upon receipt of a written invoice, to pay or cause to be
paid, and to save the Collateral Agent harmless against liability for the
payment of, all reasonable out-of-pocket expenses (including, without
limitation, reasonable attorneys', accountant's and other third parties' fees
and expenses, any filing fees and expenses incurred by officers or employees of
the Collateral Agent) incurred by or on behalf of the Collateral Agent (i) in
connection with the negotiation, execution, delivery and preparation of this
Agreement and any documents or instruments delivered pursuant hereto and the
transactions contemplated hereby (including, without limitation, the perfection
or protec-
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tion of the Collateral Agent's security interest in the Collateral) and (ii)
from time to time (a) relating to any amendments, waivers or consents under this
Agreement, (b) arising in connection with the Collateral Agent's or its agent's
enforcement or preservation of rights (including, without limitation, the
perfection and protection of the Collateral Agent's security interest in the
Collateral under this Agreement), or (c) arising in connection with any audit,
dispute, disagreement, litigation or preparation for litigation involving this
Agreement.
SECTION 8.11 Direction of Collateral Agent; Replacement Surety
Bond. The Collateral Agent acknowledges that unless expressly indicated to the
contrary herein, all of its rights under this Agreement shall be exercised at
the direction of the Surety Bond Provider unless there shall have been a Surety
Bond Provider Default. The Collateral Agent further acknowledges that,
notwithstanding anything to the contrary herein, upon the direction of the
Company or the Agent, the Collateral Agent shall release the Surety Bond to the
Surety Bond Provider upon the occurrence of a Replacement Event, provided that;
(i) a Replacement Surety Bond, acceptable to (and issued by an entity acceptable
to) the Company and the Agent has been previously or simultaneously delivered to
the Collateral Agent and (ii) all amounts due and payable to the current Surety
Bond Provider pursuant to the terms of the Security Agreement and the Insurance
Agreement have been paid in full.
SECTION 8.12 Counterparts. This Agreement may be executed in
any number of copies, and by the different parties hereto on the same or
separate counterparts, each of which shall be deemed to be an original
instrument.
SECTION 8.13 Headings. Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the Debtor, the Seller, the Company, the
Collateral Agent, the Surety Bond Provider and, solely, with respect to Sections
4.1 and 5.3, NationsBank, N.A. in its individual capacity have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
UAC BOAT FUNDING CORP.
as Debtor
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Vice President
UNION ACCEPTANCE CORPORATION
as Seller and Servicer
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President and Chief Financial
Officer
ENTERPRISE FUNDING CORPORATION
as Company
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
NATIONSBANK, N.A.
individually and as
Collateral Agent
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Vice President
CAPITAL MARKETS ASSURANCE
CORPORATION
as Surety Bond Provider
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
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